When you have finally decided to invest your funds, it doesn’t get easier ahead on your journey of trying to secure your future. It is further critical to choose between Stocks, Bonds, or Real Estate because you may not know what sector is more lucrative than the other.
The following piece is an expert review of the pros and cons of Stocks, Bonds and Real Estate. This analysis will help you select the best investment suitable for your lifestyle and finally get started swiftly.
1. Stocks
Investing in stocks entails you anticipating for shares in a company. You will be able to see profit in your investment when that company does well in the market. Similarly, you will also incur losses if the company performs poorly.
Pros
- Stocks are liquid assets which you can easily buy and sell whenever you want.
- You will see significant rises in annual profit because the stock market is extremely volatile
- The transaction cost for your investment is considerably low
- You can use your earnings as leverage to attain more shares in the company
Cons
- The volatility in the stock market keeps you at risk of losing your whole investment if the company you have invested in goes bankrupt.
- It is challenging to yield profits during the commencement stage.
- The stock market involves the rises and falls of stock prices. This can give you a lot of pressure and adrenaline rush every minute.
2. Real Estate
In Real Estate, you opt to buy rental properties which you can sell or rent at a profit after some time. You can either choose to invest in residential or commercial properties.
Pros
- Real Estate is a tangible asset which gives you a sense of assurance.
- The trend in Real Estate is predictable.
- You can use the equity of Real Estate to produce capital for other financial investment opportunities.
- During the times when your properties in Real Estate are unoccupied, you can choose to reside in them and save passive income.
- The appreciation rate of Real Estate properties is high.
Cons
- It takes time before you can realize profits generated from Real Estate.
- Real Estate incurs additional charges of insurance, notary fees, and commissions.
3. Bonds
Investors lend money to companies or the government and earn interests through fixed rates for a set period then given back the principal amount.
Pros
- In the event of liquidation, the investors are paid first as compared to stockholders.
- You are sure on the total amount of profit you will gain from your investment.
- Even though the value of bonds can fluctuate due to inflation, it is still more stable than the stock market.
Cons
- Requires a large sum of capital in the initial investment
- You will be more exposed to interest rate risks
Verdict
A good investment is not an easy thing to come by in the modern world. It is essential that you do a lot of research and also considers the subjective factors that may impact your area of investment. Stocks, Bonds, and Real Estate are all lucrative. Your perfect suit will depend on your nature of lifestyle, your primary preferences and how you want to boost up your portfolio.
