With the way the market is functioning, investing in components seems like the best idea for people who do not wish to deposit their money in the banks. However, there has been a dispute for long time on whether one should invest in real estate or good old stocks. Certainly, both have their advantages and disadvantages, making choosing between the two a challenging task.
Whether you invest in diverse portfolios in the stock market or 2 BHK flats in a bid to eventually make use of it, you are bound to face some challenges along the way that could make you rethink your decision. In order to choose one among the two, it is important to realise the benefits and the low points of both the options to figure out what could be suitable for your standard of living and taking into account your potential expenses.
Advantages of Stock Investment:
- Stock investment allows a diversity to invest that is lacking in real estate investment. You can choose from a multitude of option to invest in with stocks.
- Stocks earn higher returns as compared to other investment option, giving you the chance to raise your profits and income drastically with each passing year.
Disadvantages of Stock Investment:
- The greatest disadvantage of investing in stocks is the unpredictable fluctuation within a short term. This makes the risks of losing out higher too.
- Lack of knowledge and discipline may often hinder investors from earning higher returns. For example, people were advised to sell of their stocks by financial advisors in a recent collapse where the market fell by 50% when purchasing stocks should have been the right way to go about it.
Real Estate Investment
Advantages of investing in real estate:
- Since real estate is a tangible component, it is easier for people to see the benefits of investing in real estate. This proves all he more beneficial when owners rent the home out to tenants who indirectly pay them back all the investment they made into the property in the first place.
- With the implementation of the Real Estate (Regulation and Development) Act., 2016, investing in real estate has become less challenging with the government ensuring that home buyers benefit through the act.
Disadvantages of investing in real estate:
- Often, projects tend to stop mid-way due to the allocation of resources to other upcoming projects or properties. This leads to investors having their savings stuck along with delay in the projects by the real estate builders. Although RERA plans to put a stop to it, there are many exceptions that still make the possibility of delays likely to happen.
- In case the home you own remains unoccupied, the pressure of paying for maintenance and other utility bill falls on you, making a monthly dent in your budget.