04 Aug

Stocks or Real Estate: Which is a Better Investment?

When you look at the world of prime investments, there are two major categories that highlight the financial world: the stock market and real estate. There are stock investors that can pull off 9-digits from the returns from their investments on an annual basis.

However, it does beg the question – Is stocks a better investment than real estate, or is the other way around? For many, investing in real estate is the wiser choice as opposed to spending valuable time and money in dealing with stocks.

With Real Estate, You Have Better Control

 Every investment you make in the real estate market makes you the CEO of that property. As the prime owner of your investments, you can make all the necessary improvements, raise rents, cut costs, decide on a marketing strategy, and even search for better tenants. However, don’t forget that you’re still going to be at the mercy of the economy. Nonetheless, you’ll have better leeway in creating decisions to optimize wealth.

Real Estate Investments Promote Access to Leveraging With Other People’s Money

 Don’t forget to take into account that you can leverage with other people’s money when you’re investing in real estate. For example, if the real estate market produces inflation, in the long run, there might be a 3% increase on the price of a particular property you’ve already placed a 25%  down payment.  Despite the inflation, leveraging with other people can still help you gain about 15% of cash-on-cash return. In about five years, you might even gain more than double the equity if things continue to do well. For comparison’s sake, stocks can only help you generate about 7% to 9% of returns per year, and that already includes the dividends.

Tax Advantage

 Real estate investments allow you to deduct the interest on mortgage indebtedness up to $1 million from your primary home. Do note, however, that the maximum allowable figure for you to deduct the interest on mortgage indebtedness might be different from location-to-location. If you’re unsure about the value, then you can ask real estate agents like those found in Finest Invest Dresden. You can even sell your primary home to acquire tax-free profits. As with the allowable amount for tax deductible interest for mortgage indebtedness, the figures found in gaining tax-free points might differ in your area.

Real Estate Investments are a Tangible Asset

 When we talk about real estate, it’s something that you can see, feel, and, perhaps most importantly, to utilize. When you create real estate options to potential buyers, you’re automatically improving their quality of life. Stocks, on the other hand, will always be just numbers and nothing more. With a property, you can have a roof over your head at all times. After all, real estate properties are one of the primary requirements to live in this world.

Although there are many reasons why you should start investing in real estate, you shouldn’t count stocks out of the picture just yet. Investing in stocks still has its own sets of advantages, and some of them you won’t get to experience when you invest in real estate. If you can dedicate the time, money, and effort, you can even invest in stocks AND real estate to maximize returns.