Real Estate vs Stock Market: How to Get the Best Return on Your Investments and Build Wealth Today
- Sep 20, 2015
- 2 min read
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Investing in real estate and the stock market are both well-known tools for building great wealth over time, but which one is superior? Stocks and bonds are frequently upheld as the principal means of investment, and many find that most of their assets are tied up in this market. What you may not know is that real estate offers greater return on investment, with far less risk than investing in the stock market. In this article I will make a case for both assets, and explain why real estate comes out on top.
It can be convenient to invest in stocks because they are low maintenance, and can be left alone after the initial purchase. However, that hands off experience can come with a price since you have no control over what happens to your investment over time. With real estate you are in complete control of your investment. You can decide to cut the budget, raise the rent, and sell for a price you dictate. You can make improvements or additions, and increase the worth of your investment if you want or need to. If the value of your stock investments decline there is nothing you can do except sell them for a loss or wait for them to go back up.
Buying stock with a publicly traded company like google can pay out handsomely, but these are the rare exception. What about the majority of corporations? Companies who don’t end up coming out on top create wild swings in the stock market. As the demand runs out for the products and services these companies provide, so do the dividends you once earned. When you invest in real estate you make an investment in a tangible asset that is far less volatile than a stock. New land cannot be created, and people will always need a place to live – making real estate a smart investment both long and short term.
When investing in stocks and bonds investor must pay taxes to the government which take away from the net investment before they ever get a payout. Though as a property owner you to have to pay property taxes, a little known fact is that a real estate investor can write off the tax costs when fixing up and selling properties. You can also sell properties for tax free profits if you live in them for 2 years out of a 5 year period. These tax breaks for those who own property are an excellent investing advantage, and incentive to diversify your wealth by investing in real estate.
It is very important as a diversified investor to physically own something. A stock is no longer even a piece of paper, and if things go bad cannot translate into tangible wealth. As inflation rises your plan for financial security could be seriously altered without assets that rise with inflation. Real estate is one of those rare assets. Your investment is sure to inflate over time, rather than depreciate keeping you and your money safe. As Mark Twain so plainly put it, “Buy land. They’re not making it anymore.”
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