by Jacques Poujade
Many people are looking to level up their financial game in 2020, and are looking for new ways to grow their money with investments. When you’re weighing your investment options, there are two main routes people tend to go down: rental property investments and stock market investments.
As a real estate investor myself, I’ve weighed these options in the past, and have broken down some of the basics of each option. So, which one is the best investment for 2020? Let’s take a look.
You have more of the power with rental properties
When you choose to invest in the stock market, you’re putting your faith and trust in an outside source for the success of the investment. Now, this can be an educated decision, but at the end of the day it’s impossible to predict what’s going to happen to your investment.
While the same can be said for rental properties, you also have more autonomy over what happens to your investment. You decide factors like how much to charge and what renovations to make, and ultimately, the success of the investment is very much in your hands.
Stocks and real estate are vulnerable to different risks
When you’re assessing which kind of investment to make, it’s important to analyze the potential risks to make the choice that is best for you. Stocks are unpredictable, and are vulnerable to market risks and fluctuations.
Different political and cultural factors can impact the stock market, such as changes to taxes. You’re much more open to these risks if you have a very uniform investment portfolio.
On the other hand, real estate can be relatively stable, although it is not immune to trouble (think the 2008 housing bubble collapse). But it tends to be much more stable than the stock market, and appreciate in value.
Because real estate is a physical asset, it may not necessarily be as easy to sell off properties if you need the cash immediately, but it is of course still possible to liquidate your assets as needed.
Some other pros and cons
There are times when stock market investments may be more lucrative for you. For example, if you have an employer-matching contribution to stock market investments, that may end up being very profitable for you. But if you sell off stocks, you could be hit with some major taxes.
Both forms of investment require research and understanding of the space, but I would say that this is especially true for real estate investing. You have to have a very good understanding of what you’re getting yourself into, with your property, the neighborhood, and everything in between.
Looking for more tips on real estate investing?
One of my top priorities as an investor is to help other real estate investors get their start, and grow their portfolios. I recently shared information you should know if you want helpful financial advice during the COVID-19 pandemic and you can always head over to my other blog for the latest real estate trends and insights.