Investments are a great way to make some extra money, especially if you’re planning to have an early retirement or simply need funds to finance something important. Two of the most common investments are real estate and investments in the stock market. The good thing about each of these kinds of investments is that, in addition to providing a good return, they’re both very flexible. If you want a long term investment that requires very little day to day attention, they both have options that can do that. At the same time, if you want a short term investment or an investment that requires daily decision making; they both offer options for that as well.
So, now all that is left is to decide which investment you prefer personally or you can decide to invest in both. Although both are great investment methods, it’s probably best to start small with stocks. Investing in real estate is a much bigger commitment.
Investing in the Stock Market
Before investing in the stock market, you’re going to want a lesson in smart investing. If you’re not properly trained in making smart stock trades, you could lose everything. There are qualified professionals out there who have your best interests at heart and can teach you to make smarter stock market investments. They will help you make smart choices for your investment portfolio.
The stock market offers many ways to invest your money. There are many great options for long term investments that require relatively minimal attention, such as buying stocks long. Stocks that you buy long can provide dividends; and limited risk, as you are only risking your initial investment.
The stock market also comes with short term investing options. If you are looking for a quick investment that requires more attention, then you can sell short. This offers a chance for a higher rate of return. But it also has more risk, as your potential losses can be unlimited. You can even buy stock options to balance your risk as you see fit. With all the different stock market investments available it is important that you become as educated as possible before you make an investment; this way you can choose the option that is best for you.
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Investing in Real Estate
Similar to the stock market, real estate offers many different investing opportunities. You can make long term investments in real estate investment groups or in a real estate investment trust (REIT). Here the investment is long term and requires minimal day to day attention. Or you can invest in long term investments that require significant daily attention. For example owning rental properties; where you must manage the property and the tenants.
Then there are relatively short term real estate investments (less than a year on average) such as real estate trading or flipping houses. But this requires substantial daily attention for the entire length of the investment. Just like any other investment, it is important to remember that real estate investments come with their own set of risks. To be successful you must educate yourself on these risks and manage them wherever possible.
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Stocks vs. Real Estate
When deciding whether to invest in real estate or stocks, it all comes down to personal choice. Stocks are easier to liquidate, meaning that it is easier to turn a stock investment into cash than it is a real estate investment. Once you sell a stock, cover a short sale, or act on an option; the investment is turned into cash. Stocks can even give you cash without being sold, in the form of dividends.
With real estate that is not typically the case. Selling a property or “flipping” a house can be a long process. You need to find a buyer, consult a broker, and complete the sale. So it can take a very long time before actually you see any returns on your investment.
Choosing Your Investment
When it comes to investing, it’s all about personal preference and comfort. Some people are more comfortable with real estate because it is tangible. Other people prefer stocks because they are more liquid and offer more flexible options. But, regardless of the type of investment you choose, you should remember that all investments come with risk. So it’s important to educate yourself as much as possible and seek professional guidance whenever necessary. This will help you to mitigate your risks and make the best possible decision for yourself.
For you, which is the better financial investment- real estate or stock market? Feel free to comment your thoughts and opinions below.