Between real estate investing and stock investing, which one do you think is better and why? Real estate and stock are different types of investment options that come with unique advantages.
Real estate is a significant investment for many reasons. You can enjoy excellent returns and build a steady cash flow.
Investing in stocks can be an effective strategy for growing wealth over the long term.
In this article, we talk more about the two concepts and why real estate investing has an edge over stock investing.
Investing in Real Estate
Real estate investing involves acquiring properties with the aim of financial gain.
This form of investment can be purchasing and owning properties, such as homes, commercial properties such as hotels, malls, hospitals, bars, clubs, etc.
This is done with the expectation that they will increase in value over time or generate regular income through rentals.
Pros of Investing in Real Estate in Nigeria
1. Stability
Real estate is considered a safe long-term investment. Throughout history, property prices have increased over time, providing stability and financial security.
2. Cash flow
If you decide to invest in residential or commercial real estate, you can generate passive income through rentals, which can provide you with a steady cash flow.
3. Asset valuation
As time goes by, the value of your properties may increase. If you know how to invest in real estate strategically, you could benefit from capital appreciation and make significant profits when you decide to sell.
Also Read:
- Why Location Matters When Investing in Real Estate in Nigeria
- Different Types of Due Diligence You Must Do Before Buying a Property in Lagos
- How Safe is Umueri for Real Estate Investment?
Cons of Investing in Real Estate
1. High initial capital
Investing in real estate typically requires a considerable amount of initial capital to purchase properties which can be a hindrance to many people.
2. Maintenance and management
An essential aspect of knowing how to invest in real estate is to consider responsibilities. The responsibilities here are things like property maintenance and finding tenants.
3. Lack of liquidity
Real estate is a long-term investment and isn’t as liquid as investing in the stock market. Selling a property can take time, and there’s no guarantee that you’ll be able to quickly get the money you need.
Investing in Stocks
This involves acquiring ownership stakes in a specific company by purchasing shares in the stock market.
These shares represent a fragment of ownership in the issuing company and grant investors rights to the company’s assets and profits.
For example, buying shares of Dangote Cement, GTBank, and Bua Cement makes you a shareholder and entitled to dividends as returns.
Pros of Investing in the Stock Market
Potential for high returns
Investing in the stock market offers the possibility of high returns in a short period. Shares in successful companies can increase in value quickly, allowing you to make significant profits.
Diversification and low investment costs
Investing in the stock market allows you to diversify your portfolio. You can invest in different sectors and companies, which reduces risk by spreading your investments.
Liquidity
Compared to real estate, the stock market is highly liquid. You can buy and sell shares quickly, giving you the flexibility to access your money whenever you need it.
Cons of Investing in the Stock Market
Volatility
Investing in the stock market can be extremely volatile, meaning stock prices can fluctuate rapidly.
Knowledge and time
Investing in the stock market requires a good understanding of the market and time spent researching and monitoring the companies you decide to invest in.
External influence
Economic and political events can have a significant impact on the stock market. External factors, such as financial crises or regulatory changes, can unexpectedly affect your investments.
Why Investing in Real Estate is Better Than Investing in the Stock Market.
1. Real estate offers better returns than the stock market and without much volatility
Risk never changes in the stock market and there are countless factors beyond your control that can negatively impact your investment.
When investing in real estate, you have more control over your investment, as your property is a tangible asset that you can leverage to capitalize on multiple income streams, while enjoying capital appreciation.
2. Real estate has a high tangible asset value
There will always be value in buying a property. Other investments may leave you with little or no tangible asset value. A typical example is the stock market. A stock can drop to zero or a new car can depreciate over time.
3. Property values will always increase over time
History continues to prove that the more you hold onto your property, the more money you will make.
Maintaining and improving the quality of the investment with reforms and infrastructure optimization, for example, adds value to the investment, enabling even greater profits.
Many investors intentionally purchase properties that lack certain features so that can improve on them and resell them. They do this by calculating the value of the improvements required to ensure they do not exceed their cost.
4. Control over the investment
Unlike other forms of investment, such as stocks or bonds, investors have greater control over their investment in real estate.
You can be able to influence the value of your property through improvements and efficient management.
5. Earn passive income for life
The number one reason to invest in real estate is to generate passive income for yourself. That way, you can enjoy more of the things you want to do.
Rental property can provide a steady cash flow through rental income, offering long-term financial stability.
6. Enhancement of local area and urbanization
An important aspect to think about when investing in real estate is where it is located. Another important factor is what the growth potential of that region is.
Areas near universities and new neighborhoods in areas further away from city centers, for example, have great growth potential, which increases the value of properties in these areas.
Also Read:
- 5 New Infrastructural Developments in Enugu Attracting Real Estate Investors
- When is the Best Time to Buy Land in Enugu?
- What is the Difference Between Excision and Governor’s Consent in Lagos?
Conclusion
Investing in real estate or stock clearly has its advantages and disadvantages. But real estate tends to be a safer and better long-term option.
An investment in real estate is not only a safe financial investment, it is also an investment that can provide years of enjoyment and return on capital.
Having the support of a company that specializes in real estate helps you make assertive and profitable investments.
So, if you want to know more about investing in real estate, get in touch with us today.
To explore any of our real estate investment packages like land banking, retirement plan, kids education investment plan, trade apprenticeship plan or if you want to purchase some plots where you will have residential or commercial buildings, send an email to us at info@affablehomes.com.ng or call +2349134056630.
