If you are struggling financially or are looking for an opportunity to save money for the future, consider investment. Investment means you purchase something and reap the financial benefits from it in future.
There is a common misconception prevailing in the society at large. People think that you need to have thousands of dollars in your bank account for investment. However, this is not true at all. You can start investment from $10 as well. All you need is a good strategy, well-informed decisions and patience.
There are a million ways to invest your money. Two of the most common and famous investment options are stocks and real estate.
However, there has been an ongoing debate regarding stocks versus real estate. Some people prefer stocks, whereas some people support real estate as a source of investment.
Let’s see how stocks are different from real estate.
Real Estate:
Real estate includes all kinds of property and land including commercial areas, residential areas, agricultural land, and so on. According to recent researches, the growth rate of real estate is 3-5% on average. It means that the average value of your property increases at a minimum rate of 5% every year.
This is considered to be a good investment because you are not actively doing anything to earn profits. You just buy a piece of land (with your hard-earned cash, of course!), sit back and watch your money multiply. In order to get the most out of your real estate investment, it’s important you do the necessary research and due diligence beforehand.
For instance, if you want to invest in Pakistan or capital, you can simply start by searching plots for sale in Islamabad. Find related assets you’re interested in and then choose from them. When in doubt it’s a good idea to involve a local real estate agent.
Pros of Investing in Real Estate:
- It will generate you extra money in the future because the property is one of the few assets whose price continuously appreciates over time.
- Many states and countries give you tax credits just because you own certain property.
- You can also rent/lease out your property to earn more money over time.
- You have control over your investment. You have a choice to rent or sell your property at any time you want.
- It is a secure investment because you have full ownership of your asset and no one can take it from you.
Cons of Investing in Real Estate:
- Getting sufficient benefits from real estate is considered to be a very time-consuming process. Sometimes, you have to wait for months and even years for the prices to go up. If you are someone who wants instant profits, real estate might not be the option for you.
- Real estate is not a liquid asset. It means that you will need time to convert your asset into cash.
- Some properties require certain costs such as maintenance cost, installments, tax, mortgage etc.
- Property can be risky as well. Property frauds are very common across the globe. You can lose your money in an instant. So, always be vigilant and strategic while purchasing a property.
Stocks:
Another effective and practical way to invest your money is through stocks. When you are purchasing stocks, you are indirectly buying a share in the company. Whenever the company makes a profit, you will get some money.
Pros of Investing in Stocks:
- Stocks require less capital. Unlike real estate, you can start investing in stocks with merely $10. So, if you are a student or someone who wants to invest a small amount, stocks are the perfect option for you.
- Stocks are highly liquid. You can buy and sell them anytime. So, if you are looking for a short-term investment, do consider stocks.
Cons of Investing in Stocks:
- Stocks are highly volatile. Unlike real estate, it is very difficult to track the growth and ROI of stocks. One day, your stocks will be sky high and the very next day, they will be doing poorly in the stock exchange market.
- You have no information about the stocks and how they will perform in the future. In short, it is highly unlikely to predict the performance of a stock. Most of the companies do not share their financial information on a regular basis, which makes tracking performance nearly impossible.
So, we have listed all the major pros and cons of investment in real estate and stocks. Give them a read and choose your investment accordingly. What investment idea do you prefer and why? Let us know by dropping a comment in the comment section below.