Many people that read this blog have probably thought about the differences between stocks and real estate, and where they should put their money. There are many factors that go into determining the different avenues of investing, and I think that if done well, both will be profitable. Since they will both be profitable you will probably want to distribute your cash between real estate, stock, and savings.
What makes real estate a good investment? Leverage. You can use someone else’s money to build your wealth from both amortization and positive cash flows. Not only that, but your tenants are the ones that absorb interest from the loan. There is also the possibility to create capital by simple improvements. Another big advantage of real estate is that a lot of the times you make money or income on a monthly basis from your property.
What makes stock a good investment? Liquidity. If you do not want the liability of owning a piece of income property, then stocks are a good alternative. With a stock, you can have your money out by the end of the week if you decide you need it for another investment or something. Just like real estate, there are many additional benefits.
Now real estate and stocks are just two investment mediums, and there are many to be looking at. Things to keep in mind when looking at investments such as real estate, stocks, and others is how much money it will put in your pocket every month, and how much capital appreciation you expect in 5, 10, 15, and 30 years. After you start to figure this out, you can start to balance various investments in your portfolio.