You do not have to borrow. Buying a house implies asking for a mortgage. Investing in the stock market, however, you can do it for a lot less money. Debt to invest is very risky, and if it goes well, it is great, but it can also go very wrong.
Diversification in assets
If you invest in real estate, you can buy one or two floors, nothing more. If you want more, you will need millions of dollars.
Diversification over time
Buying shares allows you to apply the DCA. If you buy an apartment, you will have to risk buying at a bad time without knowing it, something you can avoid by investing in the stock market.
Dividends vs. Rental
Buying an apartment to rent is very good, and you get a decent interest (approximately 4-5%), and when the floors went up, you could always sell more expensive for each day that passed. The problem comes when the tenants do not pay you, the floor is empty for a while, a pipe breaks…etc.
Not all shares give dividends, but you can choose from those that give (some have been given for uninterrupted decades), and you will charge it even if you don’t know the delivery date exactly on the stipulated day year after year.
The average waiting time to sell a house is 1 year, while the average time to sell shares in seconds.
Expenses, taxes, and commissions
To maintain a house, you have to make periodic reforms, pay the IBI, the community, spills, insurance …, amounts that accumulate potentially can become a lot of money.
Depending on your broker or depository, the actions can involve $0 in maintenance costs, having to pay a small amount only when buying and selling them.
The stock market’s profitability is higher than that of real estate, with an average of around 7-8% per year during the last 200 years. If your barrier is that you don’t know how to start investing, I recommend you take a look at my course to start step by step and from 0.
Investment in the stock market is much more profitable, and in my opinion, also much simpler. It takes less time and implies fewer headaches.
Why do people prefer real estate investments to the stock market?
The real estate can be touched
Although it seems silly, people like to see their things. One of the biggest barriers when investing in the stock market is that the shares and investment funds cannot be seen or touched.
Actually, they are equally safe, but the fact of not being able to see them pulls people back a lot.
The bag is like a casino
Another excuse that people who do not invest in the stock market puts is the fact that money can be lost. True, you can lose money, but only if you are not sure what you are doing.
If you go long term, you understand that fear and greed are your biggest enemies, you make temporary purchases, you invest following a clear strategy, and you also do it only with money that you will not need in the near future, really losing money in the stock market is very difficult.
The floors always go up
Directly, lie. In 2007 they fell approximately 50%. You simply do not have an app on your mobile that tells you the price of your home every day. Forget about looking at short-term stock quotes, as that is irrelevant.
I don’t have time to invest in the stock market
Fortunately, there are very good ways to invest your money without spending more than 5 minutes. Without any doubt, I prefer to invest in the stock market than to invest in real estate.