A lot of people have made good fortunes by investing their money in profitable ventures. Investing is one way of making good use of your spare money, rather than keeping it idle in a bank. It is more like saying you’re making your money work for you. As much as investing your money is a lucrative decision, it has its risks and disadvantages, which vary among different kinds of investment options.
The first thing to decide before investing your money is the kind of investment option you are engaging in. Of all investment options, there are two that are fast gaining recognition- real estate and stock. Most people are conversant with investing in stocks, but not many people know how to invest in real estate. However, investing in any of these is dependent on factors like time, risk management, volatility, government policies, and more; and how one can manage them.
I know one question lingering in your mind is, “Which of them is more profitable?”. However, if you read further you will gain insight into the investment option that is tailored for you.
Real Estate and Stock have their Peculiar Risks
One thing you should understand before you venture into any investment is that they come with risks. Usually, investors are advised not to invest more than what they can afford to lose. The risks associated with investing in real estate are quite different from those associated with the stock.
Real estate investors face the risk of possible damage to the properties. Those properties involving renting are subject to the risk of repairing or replacement of certain facilities. The risk associated with stock is dependent on the government of the day as they play a major role in the regulation of monetary policy, fluctuation of interest rates, and even tax revisions. As the stock is very volatile, any unfavourable financial decision made by the government can ruin one’s investment.
Cash Flow from both Investment Options
Of course, the main purpose of investing in a venture is to get a different source of income. Investment in stock or real estate allows you to have a flow of income, which patterns are quite different. The proceeds from stocks are usually realised in the long run, after the financial market has realised a certain level of appreciation. Although, investors can also get cash flow from dividends from their shares paid by the company they invested in. Real estate investors can get a daily or monthly cash flow by renting out their properties, and do not necessarily have to wait for long.
Time and Effort
Investing in real estate involves a lot of commitment, research, sacrifice, and resources. One needs to be grounded in that area before considering investing their money. Investors in real estate should expect a constant call from people occupying their properties when certain challenges arise. They also need to constantly check their properties, monitor the progress of any ongoing construction and others. Investing in stocks also requires constant research and checking in. Investors have to monitor the fluctuation of market prices, watch out for any new monetary policies, to checkmate their risk of losing out on their investment.
As you can see investing in one might not be profitable than investing in the other. They are all dependent on how one can manage certain risk factors, and the duration investors are willing to leave their money before realising a return on investment. However, we advise that you engage the service of your financial adviser before trying out any of the investment options.