Being an investor is all about making well-thought-out decisions – and when it comes to the classic question of whether to invest in real estate or stocks, there is indeed much to think about. 
 

In today’s blog, I lay down the factors that you should consider in comparing these two types of investments: 

 

Stock Investment – Pros and Cons

There are good reasons why a third of the people in the UK individually invest in the stock market. But like in any investment, there are also risks to take into account. 

PROS:  

How big or how small the amount you wish to invest is entirely up to you. You can start with as little as £25 a month.  

Liquidity is arguably the most significant advantage of stock assets. Just as quickly as buying it, You can sell your share within a day and pull them out for quick cash.

Investors know the importance of diversifying assets. With stocks, you can freely invest in multiple industries so as to not be dependent on the economic performance of a single market. 

CONS:

The stock market is notorious for being volatile. Prices may change on a daily basis and a crash in value can be costly. 

 

Property Investment – Pros and Cons

Many investors choose to go with real estate because it is much more stable than stocks. 

Of course, there is never a guarantee, but property value tends to gradually increase. The reason for this is quite basic: land, as a commodity, is naturally limited and has no alternative while people who rely on it just continue to increase.

Nevertheless, this investment type does not come without challenges. 

 

PROS:

Unlike stocks, real estate value is relatively stable. Investing in property can be a form of protection during inflation or economic recession.

With some work, a property can generate a steady income for you through strategies including Rent-to-Rent or Serviced Accommodation.

Leveraging is an investment technique wherein you make use of borrowed capital to purchase an asset in able increase the potential investment return. This is a common practice in real estate investments but is considered highly risky in stocks.

Tax deductions and exemptions are bonus perks when you invest in real estate. For example, your expenses in operating, managing, and maintaining the property are excluded from taxes.

While stocks are represented by mere numbers on a screen, a property is an asset that you can physically utilize. You can choose to live in it, use it as storage, or as a commercial facility. 

 

CONS

A key factor to consider is that a property will take time to be sold. Unlike stock shares, you cannot expect to convert your asset back to cash in a day or two. It may take at least a month to find a buyer and transact a sale.

Owning a property comes with responsibilities. You have to take care of it through regular maintenance and repairs. If you use it as a rental business, you have to mind your operational expenditures too. 

  

Though it could be a bigger financial undertaking compared to stocks, real estate is generally considered a less risky investment with good opportunity for profit – if you know how to manage well. 
 

Educate yourself by getting a FREE Guide on how to invest in real estate amidst a volatile market.

 

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