So you have a little extra money, and you’re trying to decide how to get the highest rate of return with your extra cash. Should you invest your money in the stock market, or turn to real estate? My choice: Real estate. Each. And. Every. Time.
The Stock Market: There are advantages and disadvantages with investing your money in the stock market. When investing in a stock market, you are actually purchasing shares in that company, so you have a little bit of ownership invested. You can also sometimes get a great return on your investment (ROI). If you look at when times are good, sometimes you can make 10% percent ROI. That’s great! However, the stock market is so volatile. There is a very real possibility that a company can go bankrupt, and your money will go right down South with them. That would be devastating! It’s also very easy to pick stocks based on emotions and not on facts. I really love to travel, so I should buy stock in an airline… I feel like airlines will never go bankrupt because everyone travels, right? (Note: the list of bankrupt airlines is pretty long from 1980-2017) (Note #2: In March 2008, the Dow Jones was at 12,216.40, then one year later it plummeted to 66,296. Yikes!)
Real Estate: The advantages outweigh the disadvantages in my personal opinion. When you invest in real estate, you are investing in a tangible item that, according to your planning and ability to take care of and control your own asset, can increase in price with natural appreciation. From the time of purchase, until the time you sell your real estate, the ROI will be significantly higher than the ROI you will get from the stock market, if you buy real estate with caution. There are certain things you should look for when purchasing real estate for investment purposes, we will get in to those at another time. Also, real estate will give you extra cash in your pocket every month, AND when you sell your purchase. What can get better than that? The only downside of real estate investing is that it is illiquid. Meaning that you cannot pull all of your money out quickly, like you can with the stock market. However, if you plan appropriately, you shouldn’t need to pull your money out for immediate liquidity.
Good luck with your investing endeavors! Please reach out if you are interested real estate investing and would like to join the monthly meetup in Sheridan, Wyoming.
*Appreciation= when your house is worth more when you sell it than when you bought it.
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