Stock Market Investment Vs Real Estate Investment

Stock Market Vs. Real Estate: Which is a Better Investment for Small Investors

Generally speaking, small investors cannot invest in the real estate market because they need a lot of money. For example, if you are buying a $300K home, you might have to pay a 20-40 percent down payment, which is a lot of money. However, when you want to invest in the stock market, you can do with even small funds. But if you can manage a down payment, do you think you will profit more from real estate investment or from the stock market?

The answer depends on your risk tolerance level.  When you invest in real estate, you can start collecting rental income, which you can use to pay your mortgage fees. If the market improves, you can even flip your property to make a lot of money. In order to profit from the stock market, you need to invest for the long term. However, you can benefit from real estate even for a short duration because you can start earning rental income right away.

You need to start with stock market investment because you can start investing in the stock market with a small amount, you will have to gradually increase your investment. You will also have to diversify your investment, therefore apart from the stock market, you will also have to invest in real estate. Real estate needs big investment, but if you really work hard you can actually start investing in the real estate. All you need is some money to make a down payment

Buying a Home Vs. Buying Stocks

Buying a home or buying stocks, which is better?

This is the question that a lot of people are really interested in finding the right answer to.

It is really difficult to give you the answer in simple English because which one is better depends on a lot of factors.

Let’s say you are buying a $200,000 home. You have to pay a 20 percent down payment or $40,000 and an 8 percent annual mortgage rate. So, you will be paying 8 percent interest for $160,000, which is $12,800. This is just the interest, you need to add repayment installments as well. Let’s say, you used the money to buy stocks that you were supposed to make a down payment for your home and you receive 8 percent dividends. You will make $3200 yearly profits.

When you are buying a house, you will be paying $128,000 in 10 years just to cover the interest on your mortgage. However, when you have invested in the stocks, you will be earning $32000 in dividends and this sum does not include your principal investment, which could go way higher in value. 

Another issue with buying a home is you will have debt, when you have debt you can hardly sleep soundly. Therefore, in my opinion, investing in stocks is better than buying a home.

Stock Market Investment Vs Real Estate Investment: Which is Safe Investment

The stock market and real estate market are two common ways to make investments. However, for new investors, it is very confusing which one should they choose.

The perfect answer is: choose both.

When you invest in stocks and real estate, you are diversifying your investment and minimizing your risks, however, if you cannot invest n both, you will have to choose one. In that situation, what should you choose?

You can start investing in the stock market with just $10-$20. If you invest every month, in one year, your investment portfolio will be $120-$240. If you continue to increase your investment and also compound your return on investment, you can build a good portfolio. This is the best thing about real estate investment. 

When you want to invest in $300,000 real estate property, you need at least $60,000 if you are required to make a 20 percent down payment. This is already a big amount.  However, if the down payment is not a big issue, and if you invest the same amount and get the same return on investment, for the same period of time, real estate will give you better profits. For instance, you will profit more by paying $60,000 as a down payment for a $300,000 property compared to investing $60,000 on stocks.