Debates have raged over the years about the investments to go for between real estate and stocks. Answering this question in a definite manner is difficult since it all comes down to one’s preferences, style and personality. In short you need to take into consideration the specifics of the individual investments.
You will need to invest in physical property or land when it comes to real estate. You will need to expend money on a monthly basis as long as you have interest in particular real estate. On the other there are real estate investments that will generate revenues for you.
Investment in stocks means that you are buying a portion of a company. If the company is trading profitably, you are entitled to a cut of the profit. The Board of Directors watch over your investment and gets to decide what is paid out as dividends after reinvesting a level of the profit back into the business for expansion purposes.
The tendency of people in the lower and middle classes to lean towards real estate investment is higher. The reason for this is because as they grew up, they were exposed to it. They also heard their parents discussing the prospects of investing in real estate.
A lot of people opt for real estate investments as they can see the tangible thing where their money is. The psychological effect that this has on a good number of investors is essential. There is a level of confident ownership they get as they can see and feel their investments.
The likelihood of being swindled in a real estate deal are lower. You have the chance to physically see and inspect your investment. This is unlike in stocks where you have to trust the management and auditors.
On the other hand, you need a lot of hands-on work in case of real estate investment. The issues of oversight and attending meetings will still come up even when a property manager is on your payroll.
Investing in stocks gives you the opportunity to benefit from a great wealth creator. There is no better asset ownership as owning a part of a company which is what stocks is all about.
The process of diversifying in stocks is easier and less expensive. Doing so in real estate is resource intensive.
Investors in stocks tend to have an emotional and undisciplined attitude which leads them to lose in their investments. A lot of losses witnessed in the stock market are largely due to psychological factors.
The price of stocks often fluctuates in extreme proportions. Compared to real estate there is higher volatility in stock market.