Should You Invest In Real Estate Vs. Stocks? You Might Try Both

To invest in real estate or stocks — or both? That is the question.

Deciding whether to invest in stocks or real estate requires being honest about your risk tolerance and lifestyle preferences. Both investment strategies have their advantages and disadvantages, so it really comes down to your financial goals and budget.

Understanding the differences between the two will help you determine how to move forward. Let’s take a look at the benefits and drawbacks of both and then discuss which investment makes the most sense for your portfolio. Spoiler: it might make sense to invest in both.

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Real Estate vs. Stocks

Investing in real estate means you acquire a physical piece of property. Regardless of the type of real estate investment you make, most investors make returns on monthly rental income and/or when they sell the property on account of it being an appreciating asset.

On the other hand, when you buy shares of stock, you purchase a piece of a company. As the company’s value grows, your stock value also grows. You can also receive income in the form of dividends on your shares if you hold onto your stocks over time.

An alternative to purchasing physical property is investing in real estate investment trusts or REITs. REITs are individual companies that own income-producing assets in the commercial real estate space such as office complexes, retail spaces, hotels and apartment buildings. 

Many REITs are publicly traded like stocks and tend to pay higher dividends than their equity counterparts. REITs, like stocks, allow you to reinvest these dividends and build your investment value. For this reason, they are quite a popular option for retirement investment accounts. 

Stocks

To buy stocks, you will have to go through a broker, or an entity authorized to buy stocks. You can use a brokerage firm, individual broker, and even online platforms or robo-advisors. Increasingly, many investors choose to use online investing platforms for their convenience and low costs. 

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