Before investing in anything you must understand what you’re getting yourself into. There are many similarities and differences between investing in stocks and real estate but the differences sure do outweigh the similarities. When investing in the stock market; where exchange of company stocks or collective shares of the companies and other kinds of securities and derivatives take place. Stocks are traded in stock market by the help of stock exchange. On the other hand, real estate is a legal term that includes land along with anything permanently attached to the land, such as buildings, specifically property that is fixed in location.
Active entrepreneurs want their money to double or even triple! When investing in real estate you are putting your money in a growing asset which is on a continuous rise. Property investing lets you leverage your investments with capital gains of 25-50%.
As a full-time investor here are a few reasons why some prefer to invest in property over stocks;
They are control freaks, with stocks you are at the mercy of Presidents, CEO, CFO, etc.
Options upon options, real estate you have tons of options such as rental, wholesale and rehab
Special tax breaks
Buy at a good price
Leverage though financing
Even though stocks cost can be cheaper than real estate initially the risk is more severe. The stock market can move wildly. One may invest in a stock, and their investment can literally go to zero if that company goes out of business. Another risk is a psychological damage if the latter takes place. Many beginners underestimate the difficulty of trading and overestimate their ability as a beginner, also they have a unattainable expectations. Therefore, some lose money and afflict some sort of psychological damage on themselves.
Here are some of the downfalls in investing in stocks;
Weekly research in a lot of nonsense
There is little tax advantage when investing is stocks
Unable to leverage like real estate
Brokers normally get paid on your initial balance, not on performance
Risk of investment literally going to zero
Real estate is a great source of investment and in the long run does not involve a whole lot of risk if the investor buys right. It is a great investment and helps build wealth long term. To be a successful investor one must be knowledgable about the market and do research to understand the key drivers of prices in real estate.
Dylan Tanaka spends everyday in the trenches of Metro Detroit buy