Invest in Real Estate or Stocks???

[Joycee]

I have some amount of earnings apart from the ones that I save for my necessities. I want the earnings invested in some real estate or may be in stocks. I do have some knowledge on stocks but, earlier my cousin had invested in the stocks and had a set-back. I know that you need to be updated in that but – What is a better option from the two???

[Fergal]

Welcome to Business Advice Forum Joycee.

What country do you live in and how is your local real estate market? Here in Ireland many property investors have experienced large losses in recent times, resulting from the credit crunch and the economic downturn.

One factor in real estate investment is that most investors are heavily geared / borrowed. They will often have a mortgage of up to 90% of the property value. This means that fluctuations in the price of that property have a major impact on your investment.

For example, if the property is worth $100K and you have a mortgage of $90K and the value of the property falls to $90K, then the value of your investment has effectively fallen to zero. The $90K property value is needed to cover the mortgage. Conversely if the property value goes up to $110K you have doubled your investment value from $10K to $20K.

Saying that investors in the stock exchange globally have also suffered losses recently as stock prices the world over have been falling significantly.

If you buy stocks, are you planning on buying into a portfolio investment scheme or picking stocks yourself?

One piece of advice I would give is to only invest money that you can afford to lose, if either market goes bad.

[Nazreen]

Research has shown that commodities and real estate perform well in an inflationary market. Gold too perform well during these times. For myself, I have invested in commodities and also gold and planning on switching my stocks to commodities instead.

[Fergal]

...planning on switching my stocks to commodities instead.

How are the values of your stocks at the minute?

Why do you feel that now is a good time to sell?

[Evaak]

Real Estate or Stocks ---- I would prefer real estate just for the sake that I don’t know much about the stocks ….. but as the case with your cousin goes …. I would advice you to have some investments in the real estate (http://blog.ira-401k-realestate.com/about/) market as the place is at a boom now and you may get good returns for the investments there. Being updated on the stock market is a must for investments there but I find investment a risk in the stock market.

[Fergal]

Welcome to Business Advice Forum Evaak. I hope that you are right when you say that real estate values are at there lowest now. But how do we know that they won't fall further?

[-wataru-]

Well it really depends, if you have good knowledge in stocks trading and you have the skills then it would work for you otherwise if you are good in estimating then real estate should be good as well. It really depends on your expertise.

[deepak_sharma]

I completely agree with wataru.But what i feel is Real estate is considered an alternative investment class compared to more speculative driven items like equity or bonds! Major difference is that real estate is an investment in the "bricks and mortar" of a building and the land. So it is tangible, because unlike most stocks you can see and touch your house, try it! This often creates substantial pride of ownership which for some people matters most.Now its up to you but make sure you do consult your financial advicer.

[Fergal]

Deepak, welcome to Business Advice Forum.

That's a good point you make about real estate investment. I know that I prefer investments where I can physically see what I have invested in. It is also reassuring if you can visit your investment every now and then to check up on it and make sure that everything is in order.

There is also a danger in this. You need to be careful that your investment decision is based on sound business reasons. If you are investing a lot of money, don't do it because you like the investment or because you have fallen in love with a particular property.

[verifiedtrading]

You're always subject to systematic risk in both, that affects the overall market, from interest rate changes to world events. You cannot escape systematic risk completely. And depend upon your intrest, you can take a decision.

[Nazreen]

Before anything else, I'd like to welcome you to the Business Advice Forum verifiedtrading.

You're quite right in what you said that both real estate and stocks are both subject to risks. No investment is totally free from risks even for low-risk investments like bonds. Investing also depends on your risk appetite. If your risk appetite is low to moderate, then better not invest in high risk investments like stocks.

[silent_thunder]

Welcome to BAF!! When it comes to making money there is always an element of risk involved in whatever you do!! So dont be scared by it or dont ignore it!! Risktaking is fine but we have to reduce the risk as much as possible. So how can we reduce the risk ?? the answer is through research, before making any decisions try your best in getting the information on the sectors performance for three years atleast. One year before the investment and a future trends prediction

Divide and conquer

If you divide your investment into several sectors you percentage risk facotr decreases considerably this is what mutual funds do!! get the money from customers and invest in different stocks from different sectors so that even if 40% of the stocks they invest goes red they still endup green..So I think invest some amount in realestate and the rest in stocks

Stocks are risker than real estate..but can more profitable than realestate if you know what you do!!

[Fergal]

Welcome to Business Advice Forum Verifiedtrading, thanks for joining.

Economic events over the last year or so have certainly brought it home to many investors, just how risky stocks and real estate can be.

[george29]

I have some amount of earnings apart from the ones that I save for my necessities. I want the earnings invested in some real estate or may be in stocks. I do have some knowledge on stocks but, earlier my cousin had invested in the stocks and had a set-back. I know that you need to be updated in that but – What is a better option from the two???

Hey,

Both Investment options are good and right in their own senses. First you have to decide where you want to invest money. If you want to invest for a long time like 10 - 15 years real estate is the best option. If you want to invest for around 3-5 Years Stocks might give you better yield than Real estate. However, as being real estate buyers agent (http://www.buyersagent.net), I would suggest to go with real estate as it's less risky than stock.

[Fergal]

Welcome to Business Advice Forum George.

As a buyers agent, have your clients been getting real property bargains in the current economic environment?

[nichewitch]

I live in the northeastern part of the US and if I had the capital, I would be investing in real estate right now. I've seen too many properties sit on the market for so long and their asking prices keep getting reduced. If you are in the right area, you can easily pick up properties for below value. When the market turns around again, there is instant equity.

Obviously, you should do extensive research before going this route. You wouldn't want to purchase properties in a neighborhood that's going downhill because the properties won't rise in value like better areas might. You'll have to hold these properties for a few years to realize a good profit so you have to consider the possibilities in the meantime - would you rent them out? Being a landlord brings it's own host of problems that you need to be prepared for.

[Fergal]

I live in the northeastern part of the US and if I had the capital, I would be investing in real estate right now. I've seen too many properties sit on the market for so long and their asking prices keep getting reduced. If you are in the right area, you can easily pick up properties for below value. When the market turns around again, there is instant equity...

The difficulty knowing when the market has bottomed out. No one wants to invest, only to see prices fall further.

The Irish property market was hugely overvalued and it will be a very long time before prices reach their 2006 peak. People who bought at the peak (like myself for example) will be sitting on losses for some time to come. Property is not selling in Ireland at present, hence it is difficult to know what the value of anything is.

[ricky028]

Where to invest for higher returns is really a million dollar question today. No doubt there are good markets and good investments somewhere. But you are just required to search until you find them. Then pick a few prospects that look promising and invest. Investments in gold and other precious metals, oil and other minerals, real estate, basic materials like copper and aluminum, even foreign investments may be considered.

[simplyjo]

Thats an interesting question. It all depends on the market situation, if you see real estate rates are soaring and are expected to soar higher in the future - go for it ! Though, if you are not ready for a high value investment or risk, then go for stocks - You can invest lesser amts if you don't have a huge appetite for loss.

[marksmithh]

Real estate

[Felix07Richerd]

I advise you to have investments in the real estate market as the place is a boom now and you can get good returns for investment there. Keeping Current on the stock market is a must for investment there, but I find investment a risk in the stock market.