You have read the last couple economic reports. There is improvements in the stock and real estate markets. Now the question is which one to chose to build a strong investment portfolio. This competition between stock market investing and real estate has been going on for many decades. The stock market has been regarded as the defacto place to invest. However, is real estate a better place to invest than the stock market?
With both markets poised to show gains in the next couple of years, where do you invest. Personally, if I have to choose between the two I choose real estate investing. First of all, my comments here are based on sound investment strategies and not the get-rich-quick schemes that got us all in trouble with the financial, real estate, AND stock market meltdown. If history teaches us anything is that more people have become wealthy when they implement saavy decisions in their real estate transactions. Real estate has been compared to gold, which in historical times was considered as a tangible vault of value. The main reason I prefer real estate investing is the tangibility of the asset. Most buyers and investors would prefer for an asset that they can see and touch, that one where at best you have a piece of paper of a company many times you do not even know who is in charge of the future of the company. Another, reason is that it easier to understand and analyze than stock market investing. The forces of supply and demand are easier to grasp than those of the stock market. People can relate to it. Another factor in favor is availability of financing. It is easier to leverage your real estate investing transactions than to obtain financing to build a stock portfolio. Banks generally give loans on appraised values, and an appraiser of a residential realty determines its real market value with a relatively higher degree of accuracy. This is easier than a stock analyst trying to evaluate the books of a corporation accurately. The main reason for this is that real estate assets could be of similar values if they are of similar infrastructure, located at the same place and having similar furniture. However, the same reasoning cannot be applied to different corporations because of several variables, such as location, number of employees, performance, technology, market sector, politics, taxes, rapid growth in population, density, age and other relevant factors in current context of Real Estate over the Stock Market.
Real estate investment is being considered more rewarding as compared to the stock market investment, as people just not believe in spinning money but also securing values. I like both method of investing and recommend it as a way of diversifying once portfolio. The key element on any investing strategy is preparation, research and action.
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