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Real Estate vs. Stock Market Investments : Learn How To Select Which Option Is Right For You

For the beginner, It can feel very confusing and overwhelming where to invest your money, and in which option, considering that there are so many good options out there, and so much conflicting advice. Here is a primer to help you make the right choice.
January 10, 2023

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There is only so long that you can earn, and set your wealth aside. At some point, you grow too old to be a racehorse, and call it quits! Investing is a great way to shorten the duration you spend running the rat race, by making prudent investments which generate passive income, IF done right, and consistently, it is possible to become independently wealthy, well in advance before your stipulated retirement age.

Isn’t that ultimately what we all want?

This is  a simple but dedicated series to help you achieve that goal, because we understand how risky and intimidating investing your hard-earned money can feel. In our last feature, we weighed the pros and cons between realty versus mutual funds investments hyperlink. Offering our readers another point of view, we will contemplate the efficacy of stock market investments.

Taking Stock

As compared to realty, investing in stock market is far easier. They require cheaper investments. Apart from a Demat and trading account, there are no cumbersome documentations (unlike real estate paperwork which requires a lot of patience.) You don’t even have to get your hands dirty, delegate the job to a stock market broker who will fetch you a good deal, while you focus on other priorities. Finally, while real estate is tangible, stocks can be liquidated in no time.

On the downside, the stock market can give you an addictive euphoria, but it can sweep the carpet from under your feet, equally quickly. Stock markets are really volatile. Depending upon the market conditions, trades tend to fluctuate a lot. One moment, you might see your share having a rising like a shooting star, while on the other hand, it can crash like an asteroid, as quickly. Sandwiched in between a pandemic and a global recession, the present times have taught us that stocks aren’t a very stable investment. Neither have they been in other frequent crisis such as political instability, inflations, weather or land calamities, drought, and so on. 

Real (Estate) Investments

The longevity of real estate investments, whether commercial or residential, last as long as the brick-and-mortar foundations they are built on. If you’re buying a residence, consider a gentrifying neighbourhood in not necessarily a posh, but at least a safe neighbourhood, so it fetches you excellent selling prices whenever you are ready to move.  In the case of commercial property, the investment should be made in a centralized business district that has great footfall, seamless connectivity and good infrastructure. 

Making the REIT choice 

Real Estate Investment Trusts (REIT) make realty investments, working in the same way as  mutual funds do. REITs are a pool bank that allows multiple investors to invest in income-producing properties.  They deals with property finances, its management, and ultimately multiplication, in such a way that no one, in particular, has to manage and take care of the finance of the property. In fact, everybody earns dividends from the investment, making this a win-win situation for all.

REITs streamline a steady amount of income for its investors. However, in the case of capital appreciation, it is not much of a giver. Unlike a property investment that does not allow you to liquidate at any given point, REIT does the opposite. Therefore, by breaking one of the biggest barriers to real estate investment, REIT is definitely proving to be a gamechanger.

Types Of REITs

Equity REIT 

Allows investors to achieve regular income from rentals.

Mortgage REIT

Earnings are generated through net interest margins by lending money to the realty owners.

Hybrid REIT

Amalgamation of the Equity and Mortgage REIT that uses both investment strategies.

Publicly-Traded REIT

Functions like the stock market, shares of such property are listed on the national securities exchange market. The trade takes place between the investors.

Non-Publicly Traded REIT

Not listed on the stock exchange market, therefore, enjoy lesser liquidity.

Private Traded REIT 

Sold privately to institutional investors.

Before opting for an REIT, you need to make sure that the company is registered under the Securities and Exchange Commission (SEC). With the help of the SEC tool, available online for free, you can ensure the authenticity both of the broker and the company.

We hope this elaboration will help you choose your goose which lays the golden egg.

Team Cube

Top 5 Reasons To Try Our Powerful Investment App!

Schedule a call based on your convenience. And get an expert to help you invest.

  • High Quality Mutual Funds
  • Top Notch Stock Advisory
  • Invest in U.S. Stocks
  • Alternative Investments
  • Low Minimum Investments
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