When it comes to investments, the most commonly held investments include stocks and bonds. However, if you are looking to secure financial freedom in the long run, investing in real estate is a good option to include in your investment portfolio. With the right mix of conditions (location, cost, growing economy, etc), you will be able to earn a steady stream of income by investing in real estate as compared to investing in the stock market. I’ll share the five reasons why real estate investment is better in the long run.
1. Real Estate Investment Is Less Volatile Than Stocks
Stocks are liquid assets as they can be converted to cash easily whereas real estate investments are non-liquid assets as it can take up to a period of time before an investor receive cash from sale of property. Although real estate investments may not be as liquid as investing in stocks, it is less volatile. The risk of investing in stocks is high as many factors can affect the stock market whereas the risk of real estate investment is lowered the longer you hold on to your property.
2. Increase In Real Estate Value Over Time
Real estate investment is a long-term investment. The longer you hold on to your property, the higher the property appreciation over time. Equity is built when the value of the property increases in a positive real estate market. Although property prices will drop as housing bubble burst, investors who hold on to their properties will enjoy property appreciation once the property market recovers.
3. Real Estate Investment Yield Better Returns
Real estate investment provides investors with long term financial security. Property investors can earn a steady passive income (via rental) as well as property appreciation in the long run. It is recommended to invest in a few types of properties in order to diversify your real estate portfolio and increase your cash flow.
4. Real Estate Is A Tangible Asset
Property is a tangible asset as there will always be a value tagged to the property as compared to stocks or a car. Value of stocks is dependent on numerous factors and might be worthless in an economy downturn. Likewise, the value of a car will depreciate over time. However, valuation of the property typically increase in the long run.
5. Hedge Against Inflation
With the rising cost of living and inflation, income from rental and property value will increase as well, leading to increased cash flow and returns.
The Bottom Line
Investing in real estate is a lucrative option if you are looking to diversify your investment portfolio and earn a steady stream of passive income in the long run.
All information in this article is correct to the best of our knowledge and belief at the time at which the article was originally published.
This article was written in the author’s personal capacity. Any opinion expressed in this article are the author’s own and
do not reflect the view of Vivaz Capital Pte Ltd.
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