- December 19, 2023
- Posted by: Muhammad Afzaal
- Category: Blogs
Buying property is often seen as a good way to make money, but many money experts suggest that putting your money into stocks is an even better plan. Both real estate and stocks can make you a lot of money if you do it right. If you’re just starting and trying to decide between the two, or if you want to focus on one, it’s smart to learn about the good and bad sides of each.
Investing in Real Estate
Investing in property in Pakistan has two main parts: residential and commercial. Residential is about places you live in, rent out, or fix up to sell. The commercial is about places like shops, malls, mixed-use buildings, and offices.
Benefits of Investing in Real Estate in Pakistan
Here are some benefits of investing in Real Estate:
Buying a house might seem daunting, but it’s pretty simple. Get money, pick a place, seal the deal, keep it in good shape, rent it out if you’ve got more, and try selling for more later. A good real estate agent can guide you through it, even if you’re new to this.
Lots of big-shot investors like real estate because it’s something you can touch and see. Having a physical property can make you feel more secure about your investment, unlike owning bits of companies through stocks.
When prices go up because of inflation, owning property can be a smart move. It protects your money’s value and can make you good money because house prices and rents usually go up too. Just remember, during inflation, focus on less popular areas, choose the right property, and consider fixer-uppers.
Money While Sleeping:
Owning property means getting money without doing much. If you have a few properties, renting them out brings in regular cash. You can even raise the rent a bit every year. Or, if you need quick cash, sell the property for a good profit.
Investing in property has its perks, like making money while you sleep, and protecting against rising prices, and it’s pretty straightforward once you get the hang of it!
Drawbacks of Investing in Real Estate
Takes Up Lots of Time: Buying property isn’t quick. It needs more effort than investing in stocks. Even with help from a real estate agent, you’ll spend time checking properties, learning about the area, bargaining prices, and sorting paperwork.
Need a Lot of Money front: Property costs a ton. Whether it’s a house, apartment, or land, you need a big chunk of money upfront. Even if you get a bank loan, you still need cash for down payments and extra fees. Plus, there are fees for the realtor too.
Hard to Spread Out: It’s not easy to mix up your property investments. Experts say it’s good to buy in different places for better profits. But if you want both homes and shops, it needs loads of money and someone to handle them all.
Risky Business: Like any investment, real estate has risks. You might end up selling for less than you bought, losing money. Though it’s rare for a place to lose all its value, sometimes the housing market goes down, and that can hurt your investment plans.
Investing in property needs time, and lots of money upfront, and it’s not always a smooth ride. But it’s good to know the ins and outs before diving in!
Investing in Stocks
Companies sell stocks to get money for their business. When you own stocks, it means you have a piece of that company. Stocks are sold on stock markets, and there are two main types: common and preferred.
Benefits of Investing in Stocks
Buying and selling stocks is faster than dealing with property. You can sell stocks easily whenever you need cash, unlike property that ties up your money for a long time. Also, figuring out how much your stocks are worth is fast, and you might not need a broker, which saves you money.
Stocks make it simple to spread your investments. It’s way easier than buying different types of properties in different places, which takes lots of cash and time. With stocks, you can buy bits of many companies quickly, even with a smaller amount of money.
Less Costly to Start:
Getting into stocks costs less than real estate. There aren’t many fees when you buy stocks, and even if you get help from a broker, it’s not as pricey as a real estate agent.
Investing in stocks is quicker, lets you spread out your money easily, and costs less upfront compared to diving into real estate.
Drawbacks of Investing in Stocks
Unstable Market: Stocks can be unpredictable. Prices go up and down fast, depending on how a company is doing. If you’re just an individual investor, you can’t control what happens in the company, which can be a problem when the stock prices change suddenly.
Not as Big Profits: Unlike real estate, stocks might not make you as much money. Real estate in Pakistan has often made more money over the years. Every investment has risks, but property investments might give you more profit than stocks.
Less Control Over Money: When you buy stocks, you don’t have much power over your money compared to buying property. Real estate lets you use your money in different ways to make more cash, even when the economy isn’t doing great.
Investing in stocks means dealing with a shaky market, not always making big profits like real estate, and having less control over your money compared to buying property.
Real Estate VS Stocks: Which is More Beneficial?
Deciding between real estate and stocks often boils down to preferences and goals. Real estate offers tangible ownership, the potential for consistent income through rentals, and a hedge against inflation. However, it demands hefty upfront investments, requires significant time and effort, and can be less diversified.
On the flip side, stocks offer liquidity, and easier diversification with lower initial costs, but come with market volatility and less direct control over investments. Both have their merits, and the choice often hinges on individual risk tolerance, investment horizon, and desired involvement in managing assets.
Choosing between real estate and stocks is about what you prefer. Real estate is tangible, and gives steady income, but needs lots of money and time. Stocks are faster, and easier to spread out, but can be unpredictable and give smaller profits. It’s about what risks you’re okay with and how involved you want to be in managing your money.