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Stocks vs Real Estate: Which is the Better Investment for You?

Nowadays, more and more people want to generate good returns on their investments. Many are exploring multiple investment opportunities in the market such as stocks, mutual funds, real estate, cryptocurrency, and gold among others.

Individuals put money in their preferred investment option, which is usually based on their risk appetite and understanding of the asset class. Two of the most popular options if you want to invest and grow your money are stocks and real estate.

There has always been a debate as to which of these two popular options should people invest in, which of the two is more secure, and which would generate better returns. So, before deciding which option to take, it is important to understand the key differences between the two to be able to come up with a more informed decision.

What is a Stock?

A stock represents a share or a part of a business entity, which anyone can buy and sell privately or on a stock exchange. It is a type of security that is transferable and is also referred to as “shares” or “equity”.

The person who holds the ownership of such security is called a stockholder or shareholder who becomes a part of the entity’s assets and earnings.

The buying and selling activity of stocks is being executed under government rules and regulations to protect investors from any kind of fraud. Many financial experts say that stocks are the best investment options in the market as they outperform in the long run.

What is Real Estate?

According to Investopedia, real estate is a term that refers to the physical land, structures, and resources attached to it. Real estate also refers to the buying, selling, and construction of real estate properties.

Real estate categories include residential, commercial, industrial, and land. Residential real estate is a property intended for human habitation. It includes single-family units, townhouses, and condominiums. Common investing strategies include land development, flipping, or leasing.

Commercial real estate, on the other hand, is more on business use and focus, which includes office buildings, malls, and restaurants, among others. Commercial real estate investments focus on having profit-generating activity. They generally have higher start-up costs than residential property investments. Most commercial real estate owners generate income through rent from office and retail space leases.

Meanwhile, industrial real estate includes properties where manufacturing, warehousing, production, and product assembly take place.

To further understand the two assets and the factors that set them apart, we have enlisted some of the key differences between Stocks and Real Estate.

Liquidity and Growth Potential

If you are looking at short- or long-term investments, stocks are the best option for you. Stocks are highly liquid, have high growth potential, and can easily be converted into cash as compared to real estate.

Real Estate investment is entirely different from stock investment. Real Estate is best suited for longer-term investors and can be more expensive especially if you are purchasing a property.

Real estate property is also less liquid because the selling price of the property depends on many factors like the size and location of the property, return on investment (ROI), and investment capacity of the buyer.

In most cases, it would also require legal activities in order to transfer ownership as well as buy and sell the property.

Revenue Generation

If a company's earnings perform well, then it gives a dividend to the stockholders, whereas in the case of real estate property, it does not come with such benefits. However, the owner of the property can still generate revenue by leasing the property.

Investment Diversification

It is a lot easier to diversify your investment in stocks. These days, very few people have time, let alone the cash, to purchase properties.

With stocks, it is very easy to build a broad range of company portfolios, which will not require too much of the investor’s time. One of the best ways to invest in stocks, especially if you don’t have time and if you are an investor with a low-risk appetite, is to purchase shares in mutual funds, index funds, or exchange-traded funds. These funds buy shares from various companies, which can give investors like you an instant yet more secure diversification.

With real estate, it is difficult to diversify your investments. Since location matters when investing in real estate, your sales may go down in one area, while values may double in another. Additionally, diversifying the purchase of real estate properties by location and type requires more money, effort, and time from the investor.

Risk of Investment

The risks associated with each investment asset also differ. While it is easy to purchase a property, it requires a lot of work to maintain it and can entail more work than stocks. When you own real estate, you are also required to pay for the maintenance costs, capital costs, and taxes each month.

In terms of the return on investment (ROI), real estate investing does not guarantee this. While property prices tend to increase over time, there is always the risk of selling a property at a loss, especially during a crisis.

Meanwhile, the price volatility of stocks also posts a risk of investment, which may directly impact the financial performance of the company

The prices of stocks can move up and down much faster than real estate. The price volatility may shock you unless you have a different view on stock investing and you plan to buy and hold despite volatility.

Tangible Assets

Investing in real estate is purchasing tangible assets, physical land, or property, and choosing an exit strategy to grow your money while investing in stocks involves purchasing shares of a business, which is something that cannot be physically represented.

Many local investors are more comfortable with real estate investments because they can touch, feel, see, and inspect the property that they are planning to purchase or even the ones they already own. Additionally, as a property owner, you have more control over the value and use of your investment than the standard stockholder does.

Asset Management

Investing in stocks does not require much work and effort on your end. Stocks are really just pieces of legal title that operate as claims to company profits and possibly dividends as they are realized.

You are not an employee of the company, nor do you participate in any management decisions. You may get ownership and voting rights in different types of situations, but you cannot contribute and be involved in the management’s decision-making.

Stocks are more liquid assets than real estate. It is easier to buy and sell shares than it is to list and sell a property.

Easy Borrowing

Even though you can borrow against both investments, it is easier to borrow against stocks. Mostly, banks provide loans to purchase a real estate property, whereas loan facilities are not available to buy stocks.

Now that you have an idea of the major differences between stocks and real estate, you can see that both of them have their pros and cons. Real estate can be used as an investment or for personal use while stocks are mostly bought by investors to get quick returns and re-invest the money. No matter what your choice is, it is very important that you invest your money.

In order for you to build your wealth, you have to invest it. Investing allows you to put your money in different platforms that have the potential to generate better return rates. If you don’t start investing now, you are missing out on a lot of opportunities to increase your financial worth.

Investing your money has a lot of benefits. Here are some of the reasons why you should invest your money now.

Grow Your Money

When you invest your money, you are allowing it to grow on its own. There are a lot of investment vehicles that offer better returns over the long term like stocks, bonds, cryptocurrency, among others. Don’t just put all your money in the bank. Invest some of them and watch them grow in value over time.

Save for Your Retirement

As early as now, you should have started saving money for your retirement. Instead of just saving it in the bank, why not put it into a portfolio of investments? Depending on your personal tolerance of risk, you may want to consider being risky at a young age with your investments.

As we may know, the greater the risk is, the greater the chances to earn wealth. You can be more conservative with your investments as you grow older, especially when nearing retirement age.

Reach Financial Goals

Investing your money can help you achieve your financial goals. If your money is earning a higher return rate than a savings account, then you will be earning more over the long run and within a faster period.

You may use the ROI to achieve your financial goals such as buying your own home, purchasing a car, or starting your own business.

Put Up and Expand Your Business

Investing will help you a lot in case you are planning to put up your own business or expand your existing one. Many investors possess that entrepreneurial mindset and would like to support entrepreneurs by establishing and creating new businesses that can eventually provide them with a strong return on investment.

Start a Venture

New ventures are exciting opportunities that will test your creativity and management skills, but they will also test your financial capacity. As we may know, new ventures need the backing of money, most founders are looking for investors for that backing.

This new venture can lead you to achieve your financial goals especially if it becomes very successful in the long run.

There are a lot of bigger opportunities in investing your money. However, many people avoid investing because they are afraid of committing mistakes or worse, losing their money. Start young, be not afraid to commit mistakes, especially when it comes to making your first investment. Always remember, no matter how old or young you are right now, it is never too late to invest. Start investing now.

If you are planning to invest in a real estate property like a condominium, you may want to look at the various ready for occupancy and pre selling condominium projects of the top property developer, Vista Residences.

Vista Residences is the condominium arm of the country’s largest homebuilder, Vista Land & Lifescapes, Inc., which offersready for occupancy and pre-selling condominium projects in Manila and Quezon City that is strategically located within inner-city areas, in close proximity to premium universities and developed business districts.

At Vista Residences, condo unit owners can take advantage of the property’s centrality. The properties of Vista Residences are strategically located near the country’s premium universities and CBDs, making them an attractive investment for both local and foreign investors.

Vista Residences has ready for occupancy condo projects in Manila such as Vista Taft, Vista Heights, Vista GL Taft, 878 Espana, and Crown Tower University Belt. It also has pre selling condo projects in the said area which include Vista Recto, Plumeria Heights, Tennyson Heights, Bradbury Heights, Sky Arts Manila, and Kizuna Heights.

Meanwhile, its ready for occupancy projects in Quezon City include Wil Tower, the Symphony Towers, Pine Crest, and Vista 309 Katipunan. It also has pre selling condo projects in the said city such as Hawthorne Heights and Vista Pointe.

Living in Vista Residences enables you to enjoy convenience, where everything is pretty much within walking distance or a few minutes away from the property; comfort because the project features and amenities are designed to deliver comfort at all times, which makes condo living a worthy investment; security that is 24/7 and CCTV monitoring, which makes the residents safe and secure within the property.

In line with Vista Residences’ thrust to offer convenience among its residents, it also features an AllDay Convenience Store and Coffee Project in all its projects.

Vista Residences is part of Vista Land’s roster of vertical housing brands that cater to millennials and young professionals. The other vertical brands include Camella Manors, COHO, and Crown Asia.

For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and Youtube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.