It is never too late to invest. Investing money in real estate and stocks is generally a good way to expand your financial horizons. Despite this, many people hesitate to invest in these financial ventures because it seems like a risky and volatile trade. However, with the proper knowledge, you can become successful in your investments. This is especially true when it comes to deciding between investing between the two. Below are the pros and cons of both, so you can decide what’s best for you.
Investing in real estate has a lot of advantages. One of the biggest appeals is that, unlike stocks, real estate is a tangible investment that you can see has value. As a landlord, you have the opportunity to gain steady funds over time, pay off the mortgage, and eventually sell the home at a higher price. Others choose to buy run down homes, fix them, and flip them for sale at a higher price. This trend has allowed not only for a quick profit turn around for investors, but a beautified neighborhood as well. Don’t have the capital to funnel into a home? Consider private lending. In areas where home values are high, many investors choose to use the help of private investors; for example, LA hard money loans can help investors secure the financing they need to jump on a lucrative opportunity in the competitive Los Angeles area. While these loans can have high interest rates, they make it easy for investors of all types to make their mark on the real estate industry.
The downside to real estate is that it takes longer to sell than stocks. As opposed to stocks, you have to wait longer—often years—for the property to reach a true profit potential. One of the most important factors is the real estate market. The risk in real estate has to do with the rise and fall of the market over time. Generally, you will have a better chance at making more profit in real estate if you own more property. Owning multiple properties is usually one of the best ways to diverse your portfolio and increase your earnings.
For many, the stock market can seem like an overwhelming and confusing way to invest. Ever since the recession of 2008, many are afraid of investing in what appears to be a volatile market. However, this is not entirely true. Some stocks are, in fact, high risk and volatile, but this is only true of some stocks. Other stocks are more stable and, if acquired for a longer period of time, may appreciate in value.
When you own a stock, you purchase a piece of ownership of the company. When the company performs well, you will make profits. On the other hand, if there are challenges, funds may diminish as the company’s value decreases. As with real estate, the best advice is to invest in more than one stock. However, unlike real estate, investing in more stocks will raise your net worth at a much greater rate.
Stock investment does not have to be a mystery. Stocks are, in fact, very liquid, which means they are quick and easy to sell, as opposed to real estate. In addition, they are much more flexible and the funds can often be reallocated to a retirement account without any tax placed upon it until you start to withdraw. If you are willing to invest in more volatile stocks, you may see the value of your stock grow rapidly by 20% to 50% within a year.
The intimidation surrounding stocks is not entirely unfounded. If you invest in a company that is going through some financial turbulence, you may see the value of your stocks drop. However, it may not be time to sell just yet. As financial analysts will tell you, many investors make emotional decisions instead of rational ones, which will drive them to sell before they should. Also, it is possible for a company to go bankrupt, which is every investor’s nightmare.
Your best bet to making a profit on investment is going to be to diversify your portfolio. In many circumstances, financial analysts will advise that you invest in both real estate and stocks to give you the best financial value in your future. Consult a financial professional to give you the best options for your finances and goals.