The Pros And Cons Of Real Estate Investment

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One of the most common questions in investing is whether you should be investing in stocks or in real estate. The reason why investors invest in one or the other and are happy about the decision is because they have both worked out well though the common factor is obviously the fact that the investor got in and out of the investment at the right time.. In fact, many investors have done well with both and they can both be good investments, depending on the market conditions at any given point in time. A certain amount of financial education and the knowledge of using any investment tool to advantage is critical.

Why investors invest in real estate

Many people are comfortable with real estate investments because they involve assets which …show more content…

Like other forms of investment, real estate also has disadvantages of which the most important is the lack of liquidity.” When you buy a property you cannot sell it at a time and place that you can choose which means that the property has to be held for a period of time in order to realise the maximum advantage. Moreover, the closing costs can add to a substantial amount of money when the payment of taxes and commissions are factored in. The prices tend to fluctuate in the long-term, and it is possible to find a situation in which the current market value is lower than the purchase price. Funnily, it is hard to get genuine diversification through real estate investment though it is possible to achieve this by investing in different types of property and achieve some of the advantages of stock investment by investing in …show more content…

When you buy a stock, what you are in effect, receiving is partial ownership of a company so that your fortunes rise and fall with the fortunes of the company. In good times, you benefit and, in bad times, you could lose money. However, taking a long-term approach to stock investing and building a balanced portfolio should normally result in higher accumulation of wealth over the same period of time compared to real estate investment. It is also possible to use leverage in stock investment with the use of margins though this should be judiciously done to avoid margin calls, which can happen when the equity in relation to the amount borrowed falls below a certain level.Among the advantages of stock investment is liquidity, which means that stocks can be sold quickly and easily. On the down side, stock prices can be highly volatile and often driven by market sentiment. If the company goes bankrupt, your investment will be

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