When people talk investing, the first thing that pops into most people’s minds is Wall Street, shareholders and hedge funds. However, if you have extra dollars just lying around in a bank account, perhaps instead of investing your buck in “convenient” stocks, bonds and mutual funds, you should seriously consider investing in real estate. Here are the reasons why.
3 Reasons You to Put Your Money in Real Estate (NOT Stocks)
Because people will ALWAYS need homes.
One of the many benefits of real estate is that it is a hard asset, meaning that you can touch it and see it. With the population increasing by the year and with more and more families needing somewhere to live, the demand for single-family homes, apartments and other property types is not going away anytime soon.
So despite the need for ongoing care, due to the lasting demand for homes, the influx of cash should be steady, regardless of whether you choose to sell it or rent it. This makes real estate a sturdy alternative to the ever-fluctuating stock market, where the changes in demand are not quite so predictable.
Because you don’t need an advanced degree to understand the financials.
It is by no means surprising that understanding the rental figures in real estate is so much simpler than that of a full blown stock market’s annual report. So unless you are a business or economics major, it is likely that getting your head wrapped around the stock market will be a lot harder than just reading a spreadsheet about rental figures on real estate. After all, real estate is known as a “dumb man’s game.” Once you have firm grasp on the major concepts, nothing will be able to drag you down.
Because it’s your best bet at keeping up with the inevitable force of inflation.
Real estate has a well-known history against inflation. Generally acting as a protective shield against rising prices, rental rates and home prices increase as inflation increases. This helps shield you financially in terms of both your rental income and the property value. Not to mention, if you are smart enough to choose a fixed mortgage payment, if inflation does occur, it will no doubt offer a great deal of benefit over time. Meanwhile, stocks don’t have the privilege of being directly linked to inflation. It is true that prices do tend to rise over time, but unfortunately, the stock market can’t offer an equivalent protection against potential inflation as real estate.
All in all, you can see just some of the many advantages real estate has over stocks, bonds and mutual funds. Not everyone would agree, but for anyone who wants to a have a steady investment that will help them reap in a nice tidy profit every week, real estate is your best bet.
From the sturdiness of real estate to its simplicity in understanding financials and with the protective backup of inflation insurance, these investments offer a potential for serious power over a stock portfolio. So what are you waiting for? Analyze your market, find a steal for a investment and don’t get too stressed seeing that steady influx of cash!
Investors: Why do YOU love investing in real estate over the alternatives? (And if you don’t — why not?)
Leave me a comment!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.