Real estate
Real estate

Is Real Estate a Better Investment than the Stock Market?

Real estate or stocks: which is the better investment? This is a great question often asked by people who are new to investing. The short answer is either investment can be great. The long answer is that one can be better than the other, depending on the things that you can and cannot control.


Real estate or stocks: which is the better investment? This is a great question often asked by people who are new to investing. The short answer is either investment can be great. The long answer is that one can be better than the other, depending on the things that you can and cannot control.

The things that you can control that will make either investment successful include your goals, the factors you are considering and your circumstances. Those things that you simply have no influence over are things like economic policies and market conditions. It is best to invest in both real estate and the stock market. But if you can only pick one for now, here are three things that you can consider.

Leverage

Leverage, in investment parlance, generally refers to the use of loans or debt to increase one’s purchasing power. For example, if I had $50,000 in cash, I can own a property worth $250,000, if I use my cash as equity or down payment and get approved for a mortgage loan of $200,000 from the bank. That’s leverage.

For stocks, if I only own $50,000 in cash, I can only buy stocks worth $50,000. Banks don’t normally grant loans for you to try to dabble with their money in the stock market—especially first-time investors.

Less risks

One reason why banks approve mortgage loans is that real estate is pretty much a stable investment. It does not loose its market value over a short period of time. In fact, it generally appreciates in value over time. Even if the value of the property depreciates, it is usually not that significant, and not abruptly. Moreover, properties can easily be insured from accidents and calamities.

Stocks, on the other hand, can increase or decrease its value abruptly. That’s called volatility. And that’s usually due to factors beyond your control. Hence, the back is not so inclined to give out loans for such a volatile investment. Also, there is no insurance for stocks. You can certainly use some options and strategies to protect your stock investments, but there is no insurance per se.

Control

With real estate, there are so many ways you can do to increase its value. You can simply clean it up or repair it and oftentimes that will have an impact already, especially for distraught properties. Or you can do a complete home makeover if you wish. Add up a few amenities like a pool, Jacuzzi, Zen garden, circular driveway, etc. and you can increase its value significantly.

With stocks, there is little you can do to influence its market value. You are very much dependent on the people who run the companies you invested in, or the investment manager who manages your portfolio on your behalf. You are at the mercy of other people, the company’s performance, and market forces.

After reading our thoughts, it may seem like real estate may be a better investment after all. Well, before you jump into any conclusion, remember that there are other key factors that determine whether it is the better investment or not—your goals and circumstances, for example.

You can get further guidance in investing if you are truly interested. For us here at Domobase, we specialize in helping you find the best real estate property that suits your needs.

Real Estate, redefined

Whether you’re buying as an investment property, or just because you’d like somewhere new to live, let us here at Domobase make it easier for you. We connect you with only the very best Real Estate Agents and Landlords, meaning you’re only shown the very best properties that fit your requirements as closely as possible. How do we make it easy for you? By keeping it simple. All you need to do is download our app, fill in your details and link up your social media profile. within a few days, we’ll have up to three first-rate industry professionals get in touch with you. That’s all there is to it.


Jeff is a full-time family man by day and a multipotentialite by night. When not writing for Domobase, he's usually creating music, learning new skills, or working on his businesses till the wee hours of the morning.