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Real Estate vs. Stock Market

Posted by awbinc on 04/22/2015
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REvsStocksWhen considering where best to invest your money, many options are available.  One question on the mind of many investors is whether the stock market or real estate would provide the better return.  Stories of stock swings, record highs followed by record lows, leave many investors leery.  The housing downturn of five years ago also spooked investors, leaving some unwilling to jump back into the market.  So what’s a savvy investor to do when considering real estate vs. stock market?

Investing in the Stock Market = High Risk

The stock market has historically yielded high returns, but those returns come with risk.  With thousands of options and wild market swings, the stock market is a risky venture.  Many saw their retirement and savings dwindle down to mere pennies the last time the market faced a downturn.  Those who invest in the stock market can also face hefty capital gains taxes.   So while the returns on stock market investment sound appealing, it’s important to consider the risks involved.  For those who have a high risk tolerance, the stock market is for you, but for those who prefer a much less risky way to make money, you may want to consider another option.

Investing in Real Estate= Stability and Control

Real estate investment is ideal for those who like stability and control.  Investing in Turn Key real estate allows you, the investor, to maintain control of your investment, a benefit not available to those putting their money into stocks.  Investing in real estate also allows you to improve or to add value to your property.  Real estate investors are able to invest their money with people they know, another benefit not possible with the stock market.  Real estate is also a tangible investment, one that you can see and touch.

Turn-Key Real Estate= Immediate cash flow

Perhaps one of the biggest benefits of investing in real estate is that it provides an immediate cash flow.  Imagine being able to see an immediate return on your investment.  For those who choose to invest in the stock market, this isn’t always a benefit.  Investors tend to wait for that magic moment to invest or sell, never sure whether the next day might see a large loss in the market.  Most investors sit on their investment watching nervously as the market swings up and down with the possibility of losing it all just in time for retirement.

The real key to making money on your investment in real estate is by purchasing property to rent.  Rental properties provide a steady flow of monthly income, allowing the investor to see an instant return.  For those investors who rely on a property management team, another benefit of investing in real estate rental property is that it is passive, meaning you can maintain a hands-on approach yet avoid the day-to-day hassle of property management.  A good property management firm will also ensure that your property not only has renters but is also maintained, providing you with peace of mind.

Real Estate Investment= Tax Advantages

Real estate investing isn’t just stable, it also has many tax advantages that stocks do not offer.  Investors are able to deduct interest from their loans as well as the cost of repairs and maintenance on the rental property.  Other advantageous tax deductions include insurance, mortgage interest, and property taxes.  Capital expenses or improvements to the property can also be deducted.  Even property management fees are deductible.

Benefits of investing in Real Estate > Benefits of investing in Stock Market

While it is possible to see a substantial return in both the stock market and in real estate, investing in real estate is best for those who like to see an instant return on their investment.  It also suits those who are averse to high risk and prefer a more stable, consistently rewarding means of investing.  Real estate rental properties provide a steady, stable source of income, and with the right property management team, investing in rental properties serves as a hassle-free option for busy investors.  Real estate clearly has the edge for investors looking to see both immediate- and long-term gains.

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