Real Estate vs Stocks – Where you should Invest in 2022?

real estate vs stocks - in which to invest

“Rule number one: Don’t lose money. Rule number two: Don’t forget rule number one.”

– Warren Buffett.

If you want to save money and gain financial stability for the future, start investing today.

Investment is all about buying things that are not consumed today but generate profits in the future. If you are someone who wants to gain financial independence in the future, you should invest in assets. It requires patience and time, but trust me, the gains will be worth the wait (if you invest strategically of course).

There are many types of investment opportunities in Pakistan but two investments that are widely popular and easy to start are real estate and stocks. You should consider some of the real estate podcasts, real estate YouTube channels, blogs, and real estate books to better understand about real estate industry insurance companies and house construction cost  if you want to invest in this industry.

However, people are always confused between real estate and stocks. Some prefer real estate because of the high degree of control associated with property whereas some prefer stocks because of low capital requirements.

Today, we are going to discuss the nature, pros, and cons of each type of investment. The article will act as a guide for people who are confused about which investment to choose.

Contents:

 

real estate vs stocks-where to invest in

 

Why you should Invest in Real Estate?

“Pakistanis spend about $5.2 Billion on construction on a year that is equal to 2% of Pakistan’s GDP”

  • Real estate is an excellent way to invest your hard-earned money. If you are looking for a long term investment, you should definitely go for real estate. You can invest in real estate projects or can purchase a piece of land, house, flat, shop, whatever suits your budget.
  • Real estate investment allows you to hold a tangible asset. Your property is physical, hence, it is relatively easier for you to analyze your asset and make decisions accordingly.
  • Real estate gives you a high degree of control, something we all want while investing. When you purchase property, you get full ownership of the asset. This means that nobody can take your assets from you. Even if you are purchasing an asset on the partnership, you still get to have a very clear and well-defined share; something that you can quantify.

“In America alone, there are around 28.1 Million Residential Real Estate Investors”

  • Real estate is very popular among the masses. In America alone, there are around 28.1 Million Residential Real Estate Investors. Also, 1 in 8 American adults consider themselves to be residential real estate investors or own residential investment property.
  • Real estate is a diverse asset. For instance, if you have a house or a flat, you can rent out the spare space. This will help you generate some extra cash every month. So, real estate does not only gives you future benefits but it also an excellent source of passive income.
  • Land is one of the few assets that appreciate over time. This means the chances of financial loss is low in real estate. So, if you are looking for a safe and secure investment, go for real estate.
  • In many regions, people who invest in real estate get tax exemptions. In many countries and states, people do not have to pay taxes on investment gains from properties.

 

Things to Consider before Investing in Real Estate

  • Real estate can be time-consuming. You may require more than a year to reap the financial benefits from your investment. So, if you are looking for instant returns, real estate may not be the option for you.
  • Real estate requires a hefty amount of capital. If you are someone who does not have enough money stacked aside or you do not want to take loans, then real estate may not be the right option for you. You may need $5000 to $50,000 to purchase a property which is quite an amount.
  • Real estate has a high degree of risk attached to it. But, you must keep in mind that with great risk comes great profits. However, always be careful before investing in real estate. Make sure that the property is approved and the owner is not shady. There have been multiple cases of property fraud. So, to stay away from property scams, do your thorough research.
  • There are certain fixed costs associated with real estate such as insurance, maintenance costs, renovation costs, etc. these costs may build up and cause you financial distress.

 

Why Invest in Stocks?

“Among non-investors, 53% say they don’t have the money to invest and 21% say they don’t trust stockbrokers or financial advisors.” 

– Lexington Law.

This is not always true. For investments, you do not need millions. You can start investing from a mere $10.

“There are 60 major stock exchanges in the world with a total value of $69 trillion”

Another excellent way to secure your money is through stocks. Stock trading has a great scope in the investment market. There are 60 major stock exchanges in the world with a total value of $69 trillion (in 2016). When you buy a stock, you indirectly own a share in that specific company or business. Whenever the company will make a profit, you will be rewarded in the form of dividends.

 

What will you get from Stocks?

Stocks are liquid assets which means that you can convert them into cash within a short duration of time. So, if you are looking for an investment that yields profits in a short duration of time, stocks are perfect for you.

Unlike real estate, you do not have to pay heavy taxes on stocks. Also, you do not have to pay maintenance costs and insurance fees.

 

Why not Opt for Stocks?

To deal with stocks, you need to have good financial knowledge and analytical skills. It is extremely important to have knowledge about stocks, how the market operates, how to calculate ROI and vice versa.

The majority of the time, you have to rely on external sources such as financial advisors and brokers to deal in stocks. These people charge you hefty amounts for their consultation services.

When you are dealing with stocks, the degree of control becomes less. If the company in which you invested is going out of business, you cannot do much about it. In short, you will have to sell your stocks to mitigate risk. Get to know real estate factors.

Stock prices fluctuate drastically, leading to uncertainty. Unlike real estate, it is nearly impossible to predict the stock market.

So, with all this important information you where would you invest? Let us know in the comments below. Get to know where to invest plot or plot plot file.

Disclaimer:

None of the information published in this article should be construed as investment advice. We strongly advise our readers to always do their due diligence before investing in any project. It is the reader’s responsibility to know the laws regarding investments in their region.

About Narmeen Taimur

Comments

  1. Alice Carroll says

    You made a good point that the tangibility of real estate is what makes it seem like a safe investment to have. I’ve heard from my father that undeveloped land is one an interesting form of real estate investment because all the possibilities in holds due to its emptiness. Perhaps that would be a good place to start in my real estate investment journey.

    Reply

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