When one thinks about investing their wealth, their main aims might differ. Most of the time, investing money is all about earning more income in the long run. It’s also about not letting one’s earnings sit idle since inflation will soon rescue the amount of wealth you have. This is why investment in the stock market or some real estate is a good idea.
There might be several other reasons why people want to invest. But right now, we’re discussing one of the main considerations before investing: should you go for investing in real estate property or mutual funds stocks?
After all, there have been success stories for both real estate and mutual funds. On the other hand, investing in either of the two does have its risks and limitations. If you want to choose the right kind of investment but aren’t sure what that is, you’ve come to the right place. Making this decision requires a bit of time and thought; a lot of factors about stocks, the stock market, and real estate are important.
Real estate refers to the land as well as any physical property or improvements affixed to the area which includes buildings, houses, landscaping, and the natural resources surrounding it. Real estate is considered an asset with the highest returns that is unmatched by any other asset class. Real estate is less risky as it is a tangible asset and we have full control over it.
With a rental property, though, there’s also the risk of vacancies, deadbeat tenants, and late payments to consider.
Real estate investment offers variety so that there are fluid sub-categories of real estate investment that relieves you of the responsibility that comes with owning and managing a property. The demand for real estate is ever growing, and history shows that the prices have always gone up sharply. This makes real estate one of the most favourite investment options among many investors.
On the other hand, we have a different perspective on mutual funds. A mutual fund collects money from investors and invests the money on behalf of them. The pool of money generated is invested in various asset classes such as debt funds and liquid assets. A mutual fund is an ideal investment vehicle for the people who do not know much about investing. It charges a small fee for managing investors’ money. Mutual funds are considered to be very risky.
Factors to Consider When Deciding Between Real Estate Investment or Mutual Funds
Investment Amount Needed:
Whether we can afford to make a particular investment is one factor to consider before we decide to put our money.
In this case, you will find mutual funds on top because you are only to pay a considerable part of the pool. However, real estate also offers mutual fund investments as well as crowdfunding options where you can invest with less than $50.
The safety of the invested money is the primary concern of all investors.
Both mutual funds and real estate belong to the growth asset category, and both of them involve risk. Their performances are highly dependent on the economy of the country. However, the equity mutual funds are less risky than the real estate as mutual funds are diversified. Sudden changes in one stock will not affect your entire portfolio negatively. You can switch from one stock to another and modify if some of the stocks in your portfolio are not performing well. Whereas, diversification and switching is not possible in the case of real estate as all is invested in one single property.
A good investment opportunity always comes with great returns. That’s the easiest way to spot a good investment opportunity.
In the case of real estate, you need a fair amount of capital to start your investment. However, you should also know that real estate generates incredible gains. For example, Cofundie offers as high as 60% projected return on their Cliffs Haven Investment developed by TempoHousing Nigeria.
On the other hand, when it comes to mutual funds it depends upon the condition of the stock market. Nowadays, economic crashes are common. Recently, it was visible when the stock rates fell drastically. However, the returns are very much limited whereas the investment is big.
Real estate and stocks both present risks and rewards. Investing in the stock market gets a lot of attention as a retirement investment vehicle.
You should opt for a variety of asset classes or sectors to reduce risk. Investing in real estate is an ideal way to diversify your investment portfolio, reduce risks, and maximize returns. Keep in mind that many investors put money into both the stock market and real estate.
If you like the idea of investing in real estate but don’t want to own and manage properties, you should consider Cofundie’s Cliffs Haven – Project.
Cliffs Haven is a short-let rental development located in Lekki Phase 1, Lagos, Nigeria. Upon completion, investors will be able to earn up to 60% returns. Cliffs Haven is developed by Tempohousing Nigeria, Nigeria’s foremost cargotecture firm.
Cofundie is a property crowdfunding platform dedicated to helping you sponsor the construction of affordable housing in return for a share of the profit after the homes are sold or rented out.
The sponsored properties are built using eco-friendly alternative materials which are better for the environment, sustainable and capable of providing high yield returns.
To learn about Cofundie and their offerings, visit their website.