Real estate or stocks: which one is a better investment?

Written by Posted On Tuesday, 03 September 2019 22:31

Investing in real estate opportunities include the purchase, management, ownership, sale, and rental for the maximisation of profit. It has often been argued that investing in the stock market is quite similar to gambling in a casino. This argument is true to a great extent as both of these activities involve taking risks and making calculated choices. 

However, while investing in stock is a more temporary activity, the consequences of real estate investments are more likely to last longer, perhaps even for a lifetime. 

While making an investment, there is a fixed amount of money that can be put forward to secure a good return. However, the case is not the same when we discuss about gambling as that involves more momentary investment which might even jeopardize the assurance of an adequate and profitable return. 

Another important factor is that the returns from an investment might be affected by the commission amount that has been paid by an investor to a broker in order to purchase stocks on their behalf. While considering our involvement in any of these activities, something you should also look out for is the strategies for minimising any potential loss that might happen. 

Both real estate and stock investments could be confusing to deal with, especially for beginners, and therefore it is highly recommended that if you are just starting with either of these, you might want to seek some help either from other people with some experience or from companies or firms which facilitate the same.  

Comparison between real estate and stocks investment:

  1. The question of time: While investing in stocks is an event which is bound by time (usually a short period), investment in real estate is a process which requires longer commitment and the entire process can take up to several years. Therefore, time becomes a crucial point of difference between these two activities. Another important factor when it comes to the time involved is that investing can be quite time-rewarding in nature, when compared to gambling, which eventually becomes simply a question of win or loss according to the wager that has been made. When talking about time, we must also think of the differences between short term and long term consequences. While a temporary loss incurred by gambling in stocks might be comparatively easier to deal with, the negative consequences (or loss) incurred in real estate investment might span across a longer period of time and be harder to compensate for. 

  2. The assurance of return: The promise of return is an important factor which should be looked at while understanding the differences. It is quite common-sensical that the chances of securing a return is higher when it comes to investing, while, on the other hand, a higher amount of risk is associated when it comes to investing in stocks and that leads to more uncertainty. This automatically translates to lower chances of assured return on the investment. 

  3. Information asymmetry: While you are better informed about the procedure and the associated prospects when it comes to real estate investments, the case is quite different for gambling on stocks. Therefore, it is perhaps easier to make a well informed and balanced decision, which is directly reflected on both the risk factor as well as the assurance of return. However, the problem of information asymmetry can be tackled if you seek assistance while "gambling" on stocks. For example, if you are looking for an online casino with real money would be involved in the process in a much more cautious way. This would help balancing out the uncertainty.  

  4. The mitigation of loss: A very important difference between real estate and stock investing revolves around the possibility of mitigating the loss. In the case of investing in stocks, there are no possible ways to mitigate or even control the loss that is occurring. In other words, there are no prominent loss-mitigation strategies in this field, which might put you in a slight disadvantage. However, on the other hand, loss-mitigation is slightly more convenient when it comes to investing in real estate opportunities. One such way to mitigate the loss is, for example, to set a steep loss on the investment limits. 

  5. The risk factor: As has already been hinted at, the risk factor is higher for gambling than it is for investment opportunities. In order to make cautious investments, external help is highly advised when it comes to gambling in stocks so that you do not sign yourself up for any unaccounted loss. 

Therefore, although it looks like the odds are mostly against the people indulging in gambling, an informed decision would definitely pay off in both these cases. Doing your research properly beforehand as well as seeking online help from websites and companies would go a long way in maximising profit and securing returns on your investment. 

 

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