The investment opportunities in real estate and have been largely debated as a better option compared to stocks. Part of the reason for this can be attributed to the complex nature of stock investments, along with the easier access that the people have to real estate and chit funds. While most people believe that the tangible feel, sense of authority & control in real estate trump equity investment benefits like that of the high rate of return and liquidity.
Why Stocks are better than Real Estate?
To begin with, we shall first preface it by saying that yes, real estate investment has a lot of good things about it. And then see if the stock investments manage to beat them to it.
Here are some of the things that make them alluring for the people:
The Tangible Touch – Owning anything has been thought of something that can be felt, used and even touched. The same is true for the land, buildings and other real estate options while the stocks are perceived as something that isn’t even in your cupboard as a piece of paper anymore in this digital age. That being said, the real estate assets definitely has a tangible touch.
Control – Everyone prefers to have a certain degree of control over anything they own, especially when it comes to assets made by their hard-earned money. This is somewhat true about the real estate assets as the owner can do anything he pleases with his property like raising the rents or even replacing the tenants. However, there’s no doubt that this authority and control are still at mercy of government and their economic policies.
The Pride that comes with it – No doubt that having a villa, or even a piece of land is something to show off to the people in your circle. Not only this, passing by your land or spending the weekends at your property is enthralling in the sense that you have achieved something with your life.
Insulated Nature – The real estate assets are believed to be insulated from the rest of the economy by people. However, that is true only to some extent. The introduction of a noisy highway or an increase in crime rates around your property will sure help you realize that it’s not insulated Afterall.
So, is this enough to convince you in ditching them stocks and go for real estate?
We don’t think it should be. For one, the things we discussed in no way can help you rest assured that your money is actually “WORKING FOR YOU”. The best they do is make people more satisfied, which isn’t backed by straight facts, calculations, or even assumptions for that matter. The time frame for which real estate assets demand commitment is just insane, and the enormous down payment that the real estate demands is just not possible for everyone to afford.
By the time a person saves enough money to buy a real estate asset, a decade or two are wasted with their money gaining almost nothing in the banks which offer ridiculously low-interest rates. That’s because of the high-downpayment problem that the real estate investments pose.
Now, here’s the part where we tell you how and why stock investments have managed to be preferred more by people and will continue to be so:
- Liquidity – Stocks definitely are more liquid from most of the investment options and indisputably better than real estate in terms of liquidity. While the owner needs to handle all the paperwork, address the legal issues, finding the right buyer/seller in the first place and whatnot, stocks are easy and quick to sell whenever you feel like and cash on it.
- High-Rate of Return – Yes, there is a certain group of people who advocate for real estate being the option with a higher return, and they’re not at all wrong in entirety. A calculated real estate investment in the metropolitan cities, around Juhu Beach of Mumbai or the Richmond Town in Bangalore back in the time, had surpassed all the stocks. But, will this be true for any random real estate asset?
It’s not like a Malleswaram of Bangalore or Noida around Delhi is coming up every year which will dwarf the stock investments. Is it?
The returns on stock investments, on the other hand, stand a much better chance to grow your money. The fact of the matter is, a quality portfolio beats the market indices in a particular market. For example, the Indian Market Indices have seen a growth of 16-18% on average. So, crafting a great portfolio will sure help your investment surpass the 16-18% benchmark growth.
Low-Downpayment to start – While you need a minimum of 50-80 lacs INR in order to invest in a good real estate asset, that’s not the case with stock investments, even a few thousand or less will do.
Wrapping it Up!
To do a fair and just analysis, let’s have a look at this table here:
The stock investments have everything that an ideal investment option must-have. From being able to use your money in case of urgency to reaping huge returns, you have it all with stock investments.
From choosing the right stocks to finding the right broker for buying them and keeping track of all your investments in stock markets is too much of a task for a normal person with already a ton of responsibilities to carry.
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