Why Real Estate is Better Than Stocks?

This is an age-old debate – which is better, real estate or stocks. There remain some never-ending comparisons. For example, will you own a house, or paying rent is better? Or something like the comparison between an LCD and LED television. Similarly, in the business or personal finance section, this is a very pertinent question. If you want to explore is real estate better than the stock market, then have to enter into the depth. So let’s dive right into our question “Why Real Estate is Better Than Stocks in 2021?”

Reasons to Invest in Real Estate Vs Stocks

Reasons to Invest in Real Estate Vs Stocks - Why real estate is better than stocks?

Let’s enter into a comparative analysis to find if real estate better than stocks or you should invest in both. Traditionally, several investors regard the stock market as the ideal place to invest dollars. The main reason behind that is the return gives by those stocks. 

This is an established way of investing your fund. But, there is another section of people who consider real estate also as another way of investing their money. In a true sense, under perfect circumstances, real estate has all the potential to be one of the best alternatives to the stock market. It generally offers lower risk, better return, and greater diversification. But, both are subject to market or industry conditions.

Whether it is for income purposes or for saving money for a tour or even for the retirement plan, every individual needs an investment strategy from a young age. That planning should be as per their budget and requirement. Although the budget, as well as the invested amount, might change over the years in due course. But a proper planning and robust strategy is required for the same. In such cases, a comparison arises between real estate vs stock return. So real estate is better than stocks?

General Overview – Real Estate Vs Stock Chart

General Overview - Real Estate Vs Stock Chart - Why real estate is better than stocks?

Investing in either real estate or stocks is completely the personal choice of any individual. It all depends on your financial condition, goal planning, investment style, and risk tolerance ability. For a section of people, it is safe to invest in the stock market because it is a traditional way of investment and it does not take too much money or time from you while buying stocks. But, on the other hand, if you are planning to buy real estate, you have to invest a good amount of money and time.

When you are buying a stock, you are purchasing a small part of any company. But, in the case of real estate purchase, you are acquiring either any land or building physically. Some people invest in real estate only to earn rent out of that for the entire year while some buy and sell real estate properties.

Return Possibility – Real Estate Vs Stock Returns

Investment in the stock market is always good when the company is reputed and you are ready to buy a substantial portion to be kept with you for several years. In between, the stock price will go up if no adverse situation hits the market, and every year you will get dividends also. But the return in real estate is a huge one compared to the stock market. 

If the industry is on the good side and the economy is flourishing, you will get a great return out of your real estate investment. If you compare real estate vs stocks for retirement return and benefits, you will observe the same condition. 

Real estate vs stocks historical return shows that you can start with a lesser amount of investment in stocks and that will give you an average return. On the other hand, as an investment in real estate itself is a big one, so the return also comes in a good amount subject to the real estate market scenario at that time. So real estate is better than stocks?

Risks Involved – Real Estate Vs Stocks Long Term

Risks are associated with both of them as stock and real estate are completely dependent on the market conditions. It has been noticed that real estate price has been dropped due to numerous reasons starting from banking crisis to covid-19 issue. 

Even in stocks, the falling of scrip prices is not at all astonishing to many investors. But, in the long run, both can give good returns subject to the stability of the overall economy and market.

A real estate property needs to be well researched before buying. You just can’t go and buy any property as the investment amount is always on the higher side. Further, real estate assets cannot be cashed quickly whenever you want and you have to give a certain time for that. 

For stock, you can buy as of your decision. But buying in a larger quantity of high-priced stocks requires market analysis, inflation risk analysis, and economic condition analysis. The stock price can be volatile at any point and decisions need to be taken in those times whether to buy more stocks (when the price is declining) or to sell the stocks (when the price is soaring). Even you can explore what is the best real estate stock to buy in a given situation. So real estate is better than stocks?

Pros and Cons of Real Estate and Stocks

Here we list advatages and disadvantages of each one so that you can get your personal answer for “Why real estate is better than stocks?”

Pros of Real Estate Investment

  • Passive Income
  • Ability to Leverage
  • Hedge against Inflation
  • Tax Advantages

Cons of Real Estate Investment

  • High Transaction Cost
  • Expensive & takes time to Liquidate
  • Appreciation not Guaranteed
  • More Research than buying Stocks

Pros of Investing in Stocks

  • Highly Liquid
  • Easy to plan for Tax Saving Retirement Plans
  • Low Transaction Fee
  • Easy to Diversify

Cons of Investing in Stocks

  • More Volatile than Real Estate
  • Emotion Driven Investment in several cases
  • Sideways Movement of some Stocks
  • Selling Stocks in Short Run attracts Higher Tax

Real estate is better than stocks – Bottom Line:

Why real estate is better than stocks in 2021?

So, if you have any questions like is real estate a better investment than stocks or how to invest in real estate for passive income or even is real estate a good investment for retirement, then this is for you. The decision to invest in either real estate or in stocks is completely yours and it also depends on your ability, plan, outlook, and target defined by you. 

Both real estate and stocks have different types of risks as well as opportunities. Considering the higher investment part, real estate will give you more return than the stock market. You have to go through both the options and need to check which is more convenient for you. Accordingly, you can invest in that. – Reza Abbaszadeh