Maybe you are torn in between investing in the stock market or in the real estate sector. Both investments have their benefits as well as disadvantages. It all depends on your personality and preferences as well as the preferences of your personal investment.

Let us look at the two types of investments:

Stock market – investing in stock market is basically buying part of a company. This means, you will be entitled to whatever profit the company makes, but this will depend on your shares.

Real estate – investing in real estate is buying actual property or land. Real estate can either cost you money or earn you money, depending on how you use the property. For instance, idle land can cost you money, in terms of land rates, while rental houses bring you income in terms of rent.

Investing in stock market vs. buying real estate

Pros

• It gives you an opportunity to own a part of a company by buying its shares and you will not be required to do any work, apart from researching about the company.

• Buying high-quality stocks can be very beneficial. Apart from increasing their annual profits, their cash dividends also increase each year. As a result, you will be receiving bigger checks as the business grows.

• You can easily diversify in the stock market compared to the real estate sector.  

Cons

• Despite the profitability of stock markets, you can lose your money when the economy collapses and the stocks fall.

• The price of stocks tends to fluctuate, depending on the economy. This means you can buy stocks at higher price, and end up selling them at throw away price, this making you to experience massive losses.

Buying real estate vs. investing in the stock market

Pros

• Buying real estate is investing in a tangible thing, which you can see, talk about and even show your friends and family.

• It is hard to be conned in the real estate sector compared to the stock market because you can easily visit, inspect the property and even ascertain it exists before buying it.

• Borrowing a loan to invest in real estate if safer than borrowing to invest in the stock market.

• The real estate market rarely loses its value, even during bad economies.

Cons

• Compared to the stock market, investing in real estate demands a lot from you as you are required to spend a lot of time managing your property. If you don't have the time, you are expected to hire a property management company, which can be very costly.

• You can easily lose money from your property, especially if it is not occupied.

• Dealing with tenants can be stressful, and this can affect your health in the long run.

Speak with a local real estate agent for more help.