There are several factors to consider when choosing investments, including your financial circumstances, objectives and the timing of the investment. While successful investing is often all about having as diverse a portfolio as possible, sometimes you’ll be faced with a straight choice as to what to invest in.
Many investors lean towards traditional forms of investments: fixed deposit, gold and stocks but very few investors are aware about the significance of real estate investment. Under the right circumstances, real estate can prove to be a worthwhile investment.
Lets’ take a look at real estate investment vs other forms of investment.
Real estate VS Stocks
In real estate, one can invest in a new property with a 20% down payment or less and finance the rest of the property’s cost. Investing in stocks with debt, known as margin trading, is extremely risky and strictly for experienced traders. Moreover, owning a tangible asset gives more control over investment than buying slivers of ownership in companies through shares of stocks.
Real estate VS Bonds
Bonds are a low risk and low profit investment. Investors receive revenue through bonds once they reach maturity. However, the revenue depends on the rate of inflation. As the inflation rises, returns on the bonds drop. On the other hand real estate hedges inflation. As economies expand, the demand for real estate drives rents higher, which translates into higher capital values. So, real estate tends to maintain the buying power of capital by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure in the form of capital appreciation.
Real estate VS REITs
Investing in Real Estate Investment Trust (REITs) stocks and investing in physical real estate are two different things. REITs give annual dividends of 2 to 3% whereas owning property gives a higher equity and dividend. This is because REITs focus on markets with low yields so it takes longer time to generate capital gain. But investing in real estate not only gives individual ownership but also an opportunity to expand the portfolio at a quicker rate than REITs. A real estate investor can receive profits and build equity in physical assets.
Real Estate VS Gold
Investing in gold is a straightforward hassle free process but it is a waiting game and subject to high volatility. Real estate allows an investor to earn revenue while waiting on an asset to appreciate in value, resulting in higher cash flow.
Real Estate VS Certificate of Deposits (CDs)
CDs are low risk investments that generate low profit margins compared to real estate. The profits are dependent on the interest rates and are taxed similarly to bonds. On the contrary, in real estate there are tax reduction benefits.
Real Estate VS Crypto
Crypto is a new entrant in the investment market, which makes the long-term viability questionable. But real estate is traditionally secured long-term investment.
Looking to invest in real estate in India or the UK? We’ve got you covered. Here are a few happening deals to check out.
