The world has confronted an enormous surge in inflation amid and after the pandemic. The prices for everything from food to flights are sky-rocketed. Many investors are now embracing low-risk investment options to shield their funds instead of stocks.
Even popular stocks may not deliver the anticipated returns or can cause unexpected losses. Still, real estate is emerging as an excellent investment option that can outshine other investment prospects like stocks, bonds, and ETFs. You might wonder why real estate is better than stocks? Let’s dig down deeper!
Key Takeaways
- Real estate investments are safer than stocks as they give you the ownership to tangible assets that produce steady cash flow.
- Real estate ownership demands the timely maintenance of assets you own to deliver maximum benefits when you sell or rent them out.
- Real estate offers stability, and the prices of properties are likely to remain intact and rarely decrease.
- Stocks are risky to invest in but offer excellent liquidity— investors can quickly convert their stock investment into hard cash.
- Short-term volatility in the stock market is inevitable and can lead investors to buy or sell stocks at the wrong time.
Investing in stocks has been the most liked strategy to make money for established investors and beginners in the US. However, the sudden downfall in the economy commands safer yet lucrative investment options.
You are more likely to receive lower returns if you continue to invest in stocks in 2021. But, if you’re looking to multiply your wealth cautiously through investments, real estate is the answer.
Contrary to popular beliefs, investing in real estate isn’t only reserved for influential individuals or wealthy investors. Anyone with a small budget and research can acquire a valuable asset to make money.
If you haven’t considered real estate your primary investment option and depend solely on stocks, it’s high time to change your investment preference. We’ve put together some promising factors to vindicate the significance of real estate investments.
Real Estate Investments
The best thing about real estate is that real estate is a tangible investment and acts as a hedge against inflation. It just sits in one place and can’t be stolen. Real estate can yield sky-high returns when backed by research and well-defined strategies.
Real statement investment requires purchasing a property and providing returns depending on your strategies. There are plenty of options for real estate investors to invest in; raw land, residential properties, commercial properties, and industrial properties to generate income.
If you’re not sure whether to invest in real estate or not, we’ve some promising stats to share. Let’s check them out!
- Real estate investments have contributed to produce 90% of the millionaires in the world.
- Individual real estate investors own approximately 73.4% of rental properties in the United States.
- The real estate market has experienced a 7.2% rise in home prices in the United States since 2018.
- More than 28 percent of investment property owners are currently renting or are pondering renting their homes as short-term vacation rentals.
1) Real Estate Investments Are Simple
We acknowledge the fact that buying a property involves a solid strategy but overall an easy process. Days are gone when it used to take months to get the right piece of land within a short period. There are several ways to buy a property— you can hire a realtor, explore property listing, and vacant land for sale marketplace. Using property listing sites, you can buy a property without meeting the owner in person. Beginners can invest in affordable properties to kick off their investment journey. Established investors may invest in multiple properties to diversify their portfolios and safeguard their investments from recessions.
2) Real Estate Investments Generate Steady Cash Flow
We expect investments to deliver a substantial amount of money in the end—the least we can anticipate from any investment. However, owning real estate brings you passive income every month without having to sell it. Whether you invest in secure land in Oregon State, farmland or hunting in Arizona, Florida, or any commercial real estate anywhere in downtown USA, you can earn passive income through rent or lease.
For instance, if you invest in a few multi-family buildings or apartments, each property will deliver passive income every month. Eventually, one day, you’ll be getting enough to get relief from your exhausting job.
3) Hedge Against Inflation
Real estate investments can protect against inflation as the cost of rental properties and property values increase. Most investors make a modest amount of passive income off their properties through rent or lease. Purchasing vacant land or any other real estate can give out steady passive income and long-term financial security.
4) Real Estate Investments Yields Tax Benefits
Besides recurring cash flow, real estate investments provide several financial perks such as tax deductions, short/long-term capital gains, etc. Those who own rental property can deduct depreciation to compensate for the value loss of your asset.
5) Real Estate Investments Provide Long-Term Security
Even if you earn a sufficient amount of money from your 9-5 job, you would need multiple sources of income to fulfill your financial objectives. Real estate investments are ideal if you seek financial stability. They are more profitable, especially when you hold them for extended periods. Investors who prefer long-term strategies can invest in a large plot of land, spacious residential or commercial property, and obtain long-term security.
Investing in Stocks
You can quickly get started with stock investments as soon as you obtain an online brokerage account. Most importantly, stocks can generate an ample amount of money and offer unmatched liquidity, unlike other investments. Purchasing and selling stocks is done simply in seconds. Moreover, you don’t need to wait for years to get your cash. But don’t get tempted to jump directly into investing unless you’re fully aware of what you are doing. Rookie investors must learn about stocks, funds, understand risks, constantly monitor the stock market, and always be ready for unexpected and rise and downfall of stock prices.
1) Stock Investments Are Risky
Sometimes you can make a wholesome amount of money through a diversified investment strategy. But stock values can dramatically rise and sink before you know it. Certain stocks appear safer to invest in, but there’s still a risk. You may lose some money you invested in promising stocks or even all of it out of the blue. We suggest looking for more trustworthy investment options, especially if you are a beginner. Stock investments are for those with awareness of stock price volatility and have long-term strategies.
2) Stock Investors May Need to Pay Capital Gains Tax
Most beginner stock investors remain unaware of capital gains tax and lose a significant amount of their investment. Stock owners may need to pay capital gains tax when selling the stocks. However, investors who retain their stocks for over a year can leverage a lower rate. Stock trading is indeed quick and sometimes pretty straightforward. Although it always costs some money as a fee every time you buy or sell stocks.
3) Timing Risks
Stock investment necessitates precision with the timing as prices constantly change within seconds. Even expert investors fail to pin down the best time for selling or buying stocks. The ultimate goal of stock investors buying low sell high is harder to achieve when you have no sure shot way to protect yourself from risk caused by poor timing.
Stocks VS Real Estate – Which One is a Suitable Investment for You?
Indeed real estate offers benefits that stocks do not. But to be honest, there are some drawbacks to investing in real estate, and stocks can be suitable for some individuals. One of the main drawbacks of real estate investing is the lack of liquidity—it’s challenging to convert your assets into cash as you do in stock investments. Sometimes buying or selling a property can extend to months to complete.
It depends on your budget, expectations, and knowledge of the particular investment type. Individuals and investors who fancy real estate investments would invest in real estate anyway. But if you’re looking for lucrative investment options with higher returns and can wait for a long period to get your money, consider investing in real estate. Anyone looking to invest with a small amount of money and build wealth may find stock investments easier.
The Bottom Line
As you’ve made it to the end of this article, we’re pretty sure that you’ve found your answers to decide why real estate is a better investment option than stocks. Just like every investment, real estate demands investors carefully research and analyze market conditions, trends, and follow best practices to determine where to buy, when to buy, and how to increase the value of your assets.
Considering all the benefits of real estate and current situations, we’ve concluded that real estate investment wins the battle against stocks.
If you’re thinking of investing in vacant land to build the highest historical returns for years to come, feel free to check out the land for sale listing at APXN Property. It’s an emerging land marketplace offering exclusive land buying opportunities with seller financing and a money-back guarantee.
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