Which is the better area to invest in, the stock market or real estate?

Well, let the Financial Advisors Perth help. Below, we’ll provide a simple, easy to understand breakdown of the two, and a conclusion on what sort of investor might want one or the other. In the end, the choice is up to you, with Financial Advisors Perth only providing advice and expertise.

Real estate tends to appeal to people because it’s physical – you can touch it, feel it, and despite being ill-advised, some people have tried tasting it. Therefore, it feels more “real” to some people. The most significant practical advantage of real estate is in associated costs and fees.

You can, for instance, write off wear and tear on a commercial property when doing your taxes. There are many ways to get tax deductions on this, as well. Depending on the kind of property you have, you might even be able to avoid some taxes.

Real estate also tends to appreciate over time. While you won’t be regaining your investment fast, you can recoup it and more a few years down the line.

However, property has weak liquidity. It’s monumentally difficult to sell land or structures in a hurry, which can lock your money up for years at a time. It also requires a much higher initial buy-in than other investments. This, combined with the slow rate of return, can be a significant problem.

On the other hand, there’s also stocks. At Financial Advisors Perth, we’ve noted that a lot of people default to shares when thinking of investments. Depending on what you choose to invest in, you could get as high as 10.31% annual rate of return.

Stocks can be volatile. A share is partial ownership of a corporate entity. If the entity is doing well, you have more valuable stocks. If business is not so well, the value dives.

Stocks provide the option of leveraging things. You might even choose to trade one type of share for another, losing any decision-making ability in exchange for higher profitability.

A stock is easy to sell. The inherent flexibility allows you to sell, buy, and even deposit them into a retirement account. All of this is tax-free until the money is withdrawn.

Finally, stocks have the chance of providing better, faster returns in one year than real estate.

The bottom line is that you are probably better off splitting between the two, as challenging as that may be. However, for first-time investors, stocks are likely the better choice for “getting your feet wet.”

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