Real estate vs stocks as an investment

As with any type of investment, real estate and stock investing come with risks and advantages. So when deciding which option is best for you, you need to understand that, in addition to the market opportunity (timing) and the economic cycle, it all comes down to your personality, age, lifestyle, financial goals, as well as risk tolerance.

While timing is almost impossible to get right every time, you will have a better chance to succeed if you understand the different types of investments you can use to make your money grow and better diversify your portfolio. Let’s focus on real estate and stock as investments.

Why should you consider trading shares?

Thanks to certain financial products, like CFDs (Contracts For Difference), traders can invest in stocks without owning them, allowing them to take advantage of bullish or bearish market conditions to win regardless of the trend.

Share CFD trading also allows you to take advantage of margin trading. Thanks to a leverage effect, stock traders can increase their market exposure well beyond what their funds would ordinarily allow, as they don’t have to pay the total amount to get full exposure to the market. They only need to put aside a certain amount of the total value of the position – the margin.

Therefore, traders can start trading the stock market through CFDs with only a hundred dollars or less and a device with reliable Internet connection. That’s all they need to take advantage of cheap, robust, and reliable trading platforms. But to use platforms like this, it’s important to first determine your trading profile and risk tolerance to be able to select the right trading strategy for you.

Why should you invest in real estate?

Investing in real estate is easier to understand than investing in shares, but usually requires more money upfront. Investing in real estate is also often considered as one of the best ways to fight inflation, as home values usually increase depending on inflation rates. Owning a property can also offer tax advantages and bring month-to-month money inflow, when the property is rented out.

There are different types of real estate you can consider, such as like residential, commercial, and industrial real estate, as well as land and special purposes properties. Each one has its own economic and physical characteristics you will need to understand before considering real estate as an investment.

There are also different ways you can invest in real estate, such as homeownership, rental properties, and house flipping. You can also invest in real estate indirectly, with funds that are dedicated to the real estate market like a real estate investment trust (REIT) or ETFs on mortgage-backed securities (MBS).

Real estate vs stocks as an investment

Buying shares can be very profitable, especially over the long term. Despite all the market crashes, buying stocks to hold over the long-run has been one of the best ways to create wealth over time. No wonder it attracts so many traders and investors.

It’s also worth mentioning that the stock market is a great market to trade compared to the real estate market, as it is liquid and easy to access. It is also easier to diversify your portfolio with stocks than with real estate.

However, the choice between real estate and stock as an investment is entirely up to you and your goals. Both options can provide financial gains if managed properly, but they both come with risks that you need to understand and accept when choosing your strategy.