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Stocks vs. Real Estate: 3 Things You Need to Know

Stocks vs. Real Estate: 3 Things You Need to Know

Some investors believe that stocks give you the best return on investment (ROI), while others suggest that real estate is the top contender. While your ultimate goal is to get a high ROI, there are other considerations to help you make the right choice. So, before you invest, there are three things that you should know.

Real Estate Gives You a Higher ROI Than Stocks

The average rate of return for real estate (after expenses) tends to be marginally lower than that of stocks. However, the annual appreciation of properties contributes to the overall increase in value. So, the returns over a period of time are significant.

With Real Estate, You Have Greater Control

When you invest in stocks, you have very little control over the company’s operations. You are basically relying on the fund and management to keep their value. However, with real estate, you are in charge. You decide what property to buy, how much to spend on renovation, the price to ask (if you are doing a house flip), or what to charge your tenant.

Real Estate Offers More Tax Advantages Than Stocks

You pay taxes on the current value of your stocks. However, with real estate, you have tax advantages such as write-offs, depreciation, and other deductions. The advantages will vary, based on your tax bracket and the type of investment that you have.

Choosing how to invest your hard-earned dollars is a major decision. Considering all of the above points, it is clear that a real estate investment can be worth every cent. While it will require greater investment capital than stocks will require, you can enjoy greater returns.

One note of caution: Consider developing a diversified portfolio. So, do not put all of your eggs in one basket. In addition to real estate investments, you can add other investment products, such as stocks, bonds, and insurances. This way, you can spread the risk and increase your financial stability.

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