Stock Market vs Real Estate - Why to invest in the Real Estate instead of the Stock Market? - An Expert Advice by Bharat Nirman Limited
To let your money work for you is what investing in any sector is about, but the good results are not in the class of all investors as many are still confused between the Real Estate Market and the Stock Market without fully knowing the fundamentals of each investment. This is what multi-billionaire Mr. Warren Buffett (American Investor & Business Tycoon) said: “That the risk comes from not knowing what we are doing and that is why the loss accompanies investors in their investments“.
Many of the inquiries that our team reaches are focused on investment incentives in real estate rather than the other areas offered by some financial companies and investment in stocks is one of the most important of these alternatives provided by these companies, which use the illusion of quick profit to attract the attention of new investors. In this article we will explain many of the fallacies surrounding the investment in the stocks and we will try to explain the real estate investment as one of the most rapidly growing sectors in the country.
THE IMPORTANT POINTS:
• REAL ESTATE: When you invest in real estate, you are buying physical land or property. Some real estate costs you money every month you hold it - think of a vacant land that you hope to sell to a developer someday but have to come up with cash out-of-pocket for taxes and maintenance. Some real estate is cash generating - think of an apartment building, rental houses or strip mall where the tenants are sending you checks each month, you pay the expenses and keep the difference as the profit.
• STOCKS: When you buy shares of stock, you are buying a piece of a company. Whether that company manufactures motorcycles, sells furniture, makes ice creams, or provides IT services, you are entitled to a cut of the profit, if any, for every share you own. If a company has 10,00,000 shares outstanding and you own 10,000 shares, you own 1% of the company.
THE REASONS TO INVEST IN REAL ESTATE?
• Real estate is often a more comfortable investment for the lower and middle classes because they grew up exposed to it (just as the upper classes often learned about stocks, bonds and other securities during their childhood and teenage). Its likely most people heard their parents talking about the importance of “Owning a Home”. The result is that they are more open to buying land than many other investments.
• When you invest in real estate, you invest in something tangible. You can look at it, feel it, drive by with your friends, point out the window, and say, “I Own That”. For some people, that’s important psychologically.
CASE IN POINT: During the most recent collapses, the Economical Downfall of 2007-2009 and the Covid-19 Pandemic of 2020, well-known financial advisors were telling people to sell their stocks after the market had tanked 50%, at the very moment they should have been buying.
It’s more difficult to be defrauded in real estate compared to stocks if you do your homework because you can physically show up, inspect your property, run a background check on the tenants, make sure that the building is actually there before you buy it, do repairs yourself... with stocks, you have to trust the management and the auditors of the company.
The price of stocks can experience extreme fluctuations in the short-term. Your ₹100 stock may go to ₹50 or to ₹150. If you know why you own shares of a particular company, this shouldn’t bother you in the slightest. You can use the opportunity to buy more shares if you think they are too cheap or sell shares if you think they are too expensive. As Mr. Benjamin Graham (American Economist) said: “To get emotional about stock prices that you believe are wrong is to get upset by other peoples’ mistakes in judgment”.
In the field of real estate investment, you can review your return on investment through simple calculations that reduce the rate of high real estate prices in the area in which you invested in as prices always change in the positive trend for real estate investment.
Beginning with real estate investing does not require you to have specialized knowledge to start investing in property. Many real estate investors have only started to create their real estate through buying real estate. After discovering the value of their property after a while, many investors are taking a leap towards investment.
Once you’ve settled with a property, you directly own the asset and you have complete control over it. That’s a hugely powerful thing, as it means that you can influence both asset worth (by adding value) and cash flow (e.g. by raising funds) directly - something that’s nigh-on impossible to do with shares in a company.
REAL ESTATE INVESTORS’ STATEMENTS:
• LANDOWNERS BECOME RICH WHILE THEY SLEEP: Many real estate investors are unaware of the opportunities that lie in the land, and the largest real estate investors rely on investment in land to raise their profits.
• DO NOT WAIT TO BUY A PROPERTY, BUT BUY A PROPERTY AND WAIT.