Opening Remarks About Investment Choices Available
Stock market and real estate are always the top contenders when it comes to investing, In the last few months, more and more individuals are investing in stock markets as there is a growing interest in stock market. You must have come across people who constantly talk about the stock market and the importance of participating in it. On the Other hand, real estate has been a reliable form of investment for quite some time. Those who have invested in real estate and managed to get good returns rave about it. If you want to understand investments a little bit more, perhaps you are a novice in the investment world, and still cannot decide which of the two is a safer and more profitable investment, then keep on reading.
Efforts Made Towards Real Estate Investment at The Pros And Cons Level
Pros of Investment in Real Estate
- Returns through Rent
Real estate investment does come with decent returns as long as there is rental income. Such low risk comes with minimal returns if any, from other sources of investment.
- Reasonable Value
The most crucial aspect of investing in real estate is capital growth, even in the case of buying a residential unit. The property’s resale value is anticipated to increase by 6-10 times in twenty years. Additionally, Tier 1 &2 cities have an annual appreciation rate of 7-10% in value.
- Reliable Income
One more thing that is great about real estate is that it brings you a guaranteed monthly rental income. This can be a livable function in itself. It can improve your monthly cash flow which otherwise may take much effort to change. All you need is the appropriate set of tenants for constant cash flow.
- Control of Risk
The risk involved in such an investment can be greatly reduced if proper inquiries of the real estate being bought are made and the papers submitted by the seller are authenticated. Once the title of an appropriate property is acquired, it can serve as a tool of achieving great monetary returns.
Disadvantages of Real Estate Investments
- High Upfront Capital Requirement
Buying any type of property involves a lot of money. It is true that purchasing land requires you to cough out a substantial amount of money as opposed to just buying stocks. Saving means that real estate investors are able to purchase them. This significant initial investment is what makes people shy away from purchasing a property. However, on a positive note, view it as one structure that allows you to set it and forget it whilst receiving guaranteed monthly returns.
- Liquidity Risk
The sale timeline translates when addressing liquidity concerning real estate investment. In this case due to poorness of the existing amount that the owner has. It is most difficult to sell or buy parcels of land. Not at the snap of a finger. Firstly a time period is needed for advertising and securing all the necessary documents. Hence consider a real estate deal cash at a given point; however the cash transaction isn’t quick.
Pros and Cons of Investing in Stocks: Finding Balance
Cons of Investing in Stocks
- High Risks
It is well established that stocks are highly volatile, making them one of the most expensive asset classes one may invest in. This high volatility equates to a high level of risk for the investor, giving greater rewards for those versed with the market but also greater levels of loss, sometimes up to the point where an investor might lose his entire investment. Thus use of leverage in this case is highly inadvisable.
- Taxes applicability on capital gain
In the case where the stock is held for a short term and not for the long term, then taxation on capital gains distraught the potential annualised returns on investment, providing a low overall return. Thus the stock should be held for the long term period of more than a year so as to deliver satisfactory results. As always it is crucial to avoid bias and follow best practices consistently to manage risk adequately.
- Ability to Start Up Small
To enter the stock market, there is no requirement that you have millions in your bank account. Stocks allow you to invest even with a couple of hundreds of rupees which pretty much equates to nothing. For someone who wishes to invest but does not have enough money to get started, stocks can be a good shot for them. This feature makes stocks a good form of investment for the young that do not have much to invest.
- But Have Patience for Better Rewards
The best situation for anyone to be in is to start investing in stocks as early as possible. Making long term investments in stocks that you put your money in is almost guaranteed to give you very high returns.
Disadvantages to Stock Investment
- High Risk Associate with Stock
There is no secret that stocks are a high risk investment. A single stock market event can increase your investment by a large amount or erase a big amount from the stock market entirely.
- The Bull and Bear Effect
Your money is countered to the bull and bear effects of the market. The stock exchange is adversely affected by any government policy or change in economy. As the owner of the stock you have to live through those effects.
- Volatile Returns
When investing in assets such as stocks, remember to factor in low or no gains at all, despite other sectors of the economy shrinking this appreciation over time. The same can, however, not be said for the real estate sector, which hardly sees depreciation and always appreciates.
Conclusion
There are many parameters that you can consider when deciding whether to invest in the stock or the real estate market. For instance, what is your risk tolerance? If you have enough capital and are not willing to take risks, then real estate is the most appropriate investment for you. Conversely, if you have a willingness to take risks but are looking for smaller initial investments, then stocks could be an alternative. If you are a young, experienced person, then you can consider investing in stocks. But, if there is a requirement for steady monthly income and assured ROI, then investing into a good property is a lot better.
For more information about Dream Location and to search your dream property, please visit Dream Location on Google Map. Contact us today to know more about the best real estate deals in Delhi and North India; we will connect you to the right property investment.