Real Estate VS Stock
Real estate consists of water, minerals, trees, building, bridges, houses, and everything that can be called real property.
Whereas the stock is a share of a company. For example, if you purchase 10 shares of a company you become part of 10 shares in the company.
1. Real estate is damn more profitable than stocks.
Real estate is an expensive investment to start with, but it also puts a lot of money into your pockets.
For example, if you purchase a house worth 100,000 USD and sell it for 150,000 USD it is a damn 50,000 USD profit on your first investment.
The stock also gives a fat return, but it's reliable for long-term investment, plus there is not much guarantee of profit in the short term.
For instance, if you purchase a share of a damn company, there is no guarantee that you will earn the profit on that day itself. On the other side, the price of real estate always appreciates.
2. Unlike real estate, the stock is more volatile.
Stock prices fluctuate every day, someday you make huge profits and some days huge losses.
But, it is not the case with real estate as there has not been a single day where the price of a house has gone low.
Plus, it is a decent investment as you can earn rental incomes, flip properties, or even just buy and sell houses and buildings.
You will never know if a damn stock price is going to collapse the very next day.
A person who can wait for damn years to make out profit and hates risk at every moment should go for real estate, whereas a person who wants to make out profit at every damn moment and is ready to tackle the risk of losing his own money should move into the stock market.
3. Stock demand more financial literacy than real estate.
A person in the stock market should essentially have two evaluative skills and two thoughtful skills:
Evaluative skills:
- Analytical: The ability to analyse and understand the pattern of a stock by looking at the chart/graph/table.
- Research: Stock market professionals use researching skills as a medium to collect relevant data. They identify the strongest and the weakest position of the stock. The most successful traders have the sharpest knowledge about the company history and its portfolio.
Thoughtful skills:
- Patience: Most of the time, amateur traders lack patience and tend to sell the stock way before they approach the actual profit. Skilled traders do not panic even when they are in a loss situation. Keeping cool is the ultimate path to success.
- Discipline: A professional stock trader sticks to his own made rule and follows it even in a tough time. Inner motivation play a significant role in keeping a damn person disciplined in a field.
But in the end, a real estate owner may not need as much financial information as in stock.
4. Selling real estate is tougher than selling stock
There are tons of documents required for selling property as a real estate owner or agent:
- Sanctioned plan
- Sale deed
- Society documents
- Sale agreement
- Encumbrance certificate
- Insurance records
- Proposed marketing plans
- Seller's net sheet
- Mandatory disclosure
- Pre-inspection report
- Recent tax statement
*Required more than these documents in other damn cases.
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| Properties | Stocks | Real Estate |
| Capital Flow | Money rises in the long term. | Can make cash flow daily. |
| Supervision Charges | Brokerage charges included. | Continuing maintenance charges included. |
| Time and Labor | Analysis and examining periodically are required. | Constant oversight and regular interplays are required. |
| Volatility | Value can vary daily. | Price changes happen usually over months or years. |
| Liquidity | One can sell stock in a day for swift money | One can take at least a month for the sale of the property |
| Diversification | Expand with different stocks or buying a mutual fund. | Money is tied up in a few acres. |
| Entry | One can get in with limited money | One must have at abruptest 20% of the property price in a bulk total. |
| Risk factor | The risk is pretty high | The risk is poor. |
| Information required in the financial field. | Proper planning is required. | Very less |
Frequently asked questions:
What's real estate?
Real estate consists of water, minerals, trees, building, bridges, houses, plus everything that can be described as a physical property.
What's stock?
Stock is a share of a company. For example, if you purchase ten shares of a company you become part of 10 shares of the company.
Can I do both?
Both are great for passive sources of income. It depends on your financial status and energy. If you have both, you can go for both.
Which is more profitable?
Both are profitable. Stock requires energy (skills) whereas real estate requires time and money. In modern history, we can certainly see many real estate billionaires.
It's tough to show which one is more profitable because one can earn more in stock while the other can earn more in real estate.
But if we look at the return potential, then the real estate has more return potential as you aren't going to sell it away in a year or two, probably wait for 5 or 10 years.
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| IME PERIOD | S&P 500 Total Revenue | Vanguard Real Estate ETF Total Revenue |
|---|---|---|
| 1 YEAR | 9.4% | 13.3% |
| 3 YEARS | 47.6% | 13.1% |
| 5 YEARS | 68.7% | 45.7% |
| 10 YEARS | 296.6% | 329.5% |
| 15 YEARS | 270.5% | 260.3% |
| 20 YEARS | 213.1% | 619.7% |
| SINCE MAY 13, 1996 | 621.8% | 865.3% |
Data origin: yCharts. Time sessions finishing on 7/16/2019.
How much financial knowledge is required in each case?
Both required financial literacy, but stock demands more research and analysis.
How many governmental documents are required in each case?
Scroll up to know in brief.
What's the market cap of real estate and stock?
Stock clearly wins as it's all about the total dollar value of all the shares of a company.
As per the report of MSCI, the net market cap of Real Estate is 10.5 trillion USD in 2020. While the total market cap of the stock market is about 100 trillion USD according to CNBC.
How to kick-off in the respective fields?
Stock required a Demat account, whereas, real estate requires a license and a brokerage.
Types of real estate and stocks:
Real estate:
- Raw land
- Residential
- Commercial
- Industrial
- Special use
Stocks:
- Large-cap
- Mid-cap
- Small-cap
- Hybrid stocks
- Growth stocks
- Income stocks
- International stocks
- Cyclical stocks
- Defensive stocks
- Value stocks