Things Do Get Normal:
When it comes to investing in the stock market, one thing that everyone needs to remember is that history repeats itself. No matter how much inflation or fall stock market faces, it will eventually come back to its normal self, be it sooner or later.
A passive investor will always end up with win-win situation with his passive investment strategy as he knows that the market will return to its original prices.
However, on the other hand, if he goes with the real estate investment and due to any reason the prices instead of increasing starts decreasing, there is a high chance that the property you bought will stay low priced and won’t bring in much benefits. Real estate market takes the longest time to recover inflation and even then chances are that the prices might not touch their old glories.
One of the most important tips that every investor should know is the importance of the balanced portfolio. Yes, it is important for you to understand that your portfolio is well balanced and has diversity in it. Rebalanced portfolio can help you with:
If you have diversified portfolio then it means that you have invested in more then one thing and have made a low risk investment. However, investing in real estate means that you are using all your capital to buy a piece of property which may or may not bring you any benefits.
Investing in more than one thing means that you are more likely to enjoy stable returns. Unlike real estate, the only returns you get are not from rent but from different sources.
One of the major benefits of choosing passive investment is that you have to pay fewer fees. The reason behind it is that you do not have to analyze all the securities in index, which means you have to pay low fees.
No matter how tempting real estate investment seems to be, it is a lot more work and effort as compare to passive investment in stock market. The investor ends up paying huge amount of money while there is no guarantee of getting huge returns. Furthermore, it is not easy to resale your property. However on the other hand, choosing stock market means that you are opting for fewer risks and much more diversity.