Investing in Real Estate vs Stocks: Where Should You Invest First?

Investing in Real Estate or in Stocks

Many financial instruments, institutions, platforms, and markets exist just for one purpose: Profit-making. Two of many investing markets have always been part of the debate, on what is the best way to make a profit out of, either through Stocks or real estate? Therefore to make profits, you need to understand both of the first, their rights and wrong and what actually suits your needs.

What you should look forward to in this article

• Why You Should Invest In Real Estate.
• What Are The Advantages And Disadvantages Of Investing In Real Estate?
• Why Should You Invest In Stocks?
• What Are The Advantages And Disadvantages Of Investing In Stocks?
• What Will You Choose? A Conclusion

Investing in Real Estate

Real estate investment is as real as any physical building you can see and feel. It exists as an asset and tends to grow in value with the passage of time. Many properties, land, and societies are bought and sold every day.

The timing is the key for real estate. Whereas many of the other investment avenues are also linked with timing. Real estate, however, grows in the long run, irrelevant of what ups and downs of the market may happen in between. In the short run, the time of investment does matter. Investing in land, or property at the right time can get you more profit than stocks.

Basic Types of Real Estate

There are two main types of real estate: residential & commercial. The commercial and residential real estate are different but both are bought and sold as per the need of the investors, commercial, however, are generally bought for rentals and for longer terms by investors. Other types of real estate include malls, buildings, apartments, villas, condos, duplexes, penthouses, store-front homes, etc.

Read More: Taylor Swift $81 Million Worth of Mansions and Penthouses. Newyork | Nashville

Advantages of Investing in Real Estate

There are many benefits related to investing in real estate, especially in the real estate of Pakistan. The monetization factor of property; the variable and passive source of income from property; the property tax and capital gain tax deductions, and future resale value is always a profitable future.

Disadvantages of Investing in Real Estate

One of the major disadvantages of real estate while investing is its illiquidity. The asset remains in the form of a tangible asset, and it’s hard to sell it off for cash as easily right away.

The other thing is that you have to wait for several years to realize its true value. The profit off of real estate comes in the long run. Then comes the flip side of real estate in short-term investing, where the market fluctuation can sink your investment if you plan to ‘trade’ property.

Investing in Stocks

Investing in stocks can be the most profitable investment avenue for you, as many millionaires had started with stocks when they started investing. The stocks are traded in the respective stock exchanges.

To invest in stocks, you must have a plan beforehand:

• Do you plan to do short-term, fast, day Trading
• Do you plan to do & hold Long-term stocks
• Are IPO stocks your go-to stocks?
• How about index funds?
• How about playing safe through Mutual funds?
• Or going to the forex market? 

The avenues and strategies are many but all depends on where you are heading. If you plan to go long and strong then mutual funds, long-term stocks, and IPOs are your things. If you prefer high-risk and high-reward then short-term or day trading could be your thing, but beware that not many generate profit through this method.

Why do many investors fail in stocks?

Stocks require extensive study & research, analysis of the market, current economy of your respective county & the world, current affairs of your country and the world in general, and in relation to the level of impact it could have on any financial market. The risk and reward of stocks are what keeps the stock market attractive for investors, but preparation and insights, and studies are key if you plan to invest in stocks.

The Advantages of Investing in stocks

The main advantage, as opposed to real estate, is it is liquid. Stocks can easily be cashed out and you can leave the market at a given point in time.

The advantage of stocks is that they can be easily measured and a decision can be made against the information at any given moment. Many companies grow exponentially in just a year or two, therefore stocks can be very profitable as compared to real estate.

The Disadvantage of Investing in Stocks

The disadvantage of stocks is that it is much reliant on day-to-day activity in and out of the company. The challenges faced by the company, or the economy can change the value of stocks overnight, which means you may or may not expect the volatile change and lose the investment.

Bankruptcy and the sudden changes in the economy or political scenarios can be very frustrating and you may lose beyond any point of return. You may lose your investment at any point if the company ends up bankrupt.

Where Should you Invest: Conclusion

Countries where investments are secure and people generally feel secure in investing are more focused on taking a necessary risk. But developing countries just like Pakistan, India, Ukraine, etc have volatile markets, therefore market trends shift.

Personally, you can invest wherever your knowledge and desire lead you to invest. The stocks can be as good as real estate but not in the long run as risk is always there. Short-term stocks are profitable but carry huge risks. Real estate is the most successful way to grow your portfolio, as profits are exponential in the long run but you have to wait to reap your rewards.

Read More: Where is The Best Penthouse in Karachi?

Get in Touch With Us

Interested in knowing more about your investment options in Pakistan? We at RedBox Real Estate have a large portfolio where you can invest under our consultancy. Click here to learn more.