Investing In Gold, Property Or Stocks: What’s Best For You?

The choice of where best to invest your money is an important factor. You have to ensure you’re making a wise investment that could potentially yield a lot of profit. Yet the most raised question in this context is “which is a better investment- gold, property or stocks? The truth is that there really isn’t a specific answer because a majority of it comes down to your taste, personality and style. It is also centred on the details of each investment. Trying to figure out which is better is like comparing apples to oranges. However, to understand which form of investment is best for you, you’d have to delve deeper into the features they all have. 

REAL ESTATE

When you invest in real estate with the right real estate companies, you’re purchasing property or physical land. A high yield property investment is cash generating. For example, think of a commercial building, strip mall or rental shops where the tenants are sending you monthly fees. To secure your profit, you pay the bills and keep the difference. On the other hand, if you purchase an empty parcel of land that you plan on selling to a site developer in the coming future. You’d be investing wrongly. Paying for taxes and maintenance would have to come from your own pocket till you can sell the land. Use an investment property calculator to examine the potential return that may be generated from an investment property.

However, the unstable pricing of properties can fall; an example is the crash of 2008 which is enough to show that no investment options including real estate is completely foolproof in the industry.

STOCKS

You can see stocks this way – When you purchase shares of stock, you are purchasing a piece of a company. It doesn’t matter if the company offers food delivery service, sells fashion wears, installs solar panels or manufactures vehicles, you still benefit from the company’s profit for every share that you buy. You can look at it this way, if a company has 2,000,000 shares and you purchase 20,000 shares of it then it means you own 2% of the company. An advantage of this is that you can own a part of a company without doing any work. Some companies may simply want your take on how much profit should be reinvested in expansion. Plus stock investments are easily liquidated so you won’t have your money tied up for weeks or months. 

GOLD

When you buy gold, it can be encashed at any point in time due to its high liquidity. Buying and selling this asset is a simple process and is best for the long haul. Numbers have shown that gold is a valuable asset to keep and possesses less volatility than stocks. Investing in gold can even be more rewarding if you are planning for retirement or planning to save up for your children’s college fees. In tough economic situations, there’s less possibility that gold would lose all of its valuable features. In situations where there’s high inflation, the price of gold as a commodity goes up. This is possible because during such downturns, investors trade money for gold in a bid to secure value and protect their wealth. This is one reason why gold is seen as a stable asset in such downturns. 

Each investment options have their pros and cons so it will be best to invest in the one that guarantees you a quick return. To better understand them, it’s best to know the pros and cons of each investment.

INVESTING IN REAL ESTATE

PROS

  • Investing in real estate is one of the best ways to produce a consistent monthly income in the form of liquid cash. Part of the monthly fees received from tenants can be used for maintenance while the remaining can be used to pay the non-bank home loans. With the help of an investment accountant, you’d be able to manage your investment transactions more efficiently.
  • People are more familiar with real estate investment than stock and gold investment.

CONS

  • Investing in property requires more work and effort than stocks.
  • When compared to gold, real estate investment offers less liquidity. When planning to sell a property, it could take a couple of days or even months. There are paperwork and stamp duty involved which makes selling off the property take more time and complex.

INVESTING IN STOCKS

PROS

  • Other than researching which company is right for you, there won’t be any actual work to do. 
  • Investing in high-quality stocks will not only increase profits year after year, but they will also increase their cash dividends. What this means is that as the year passes by, you will earn a bigger profit as the company’s earnings grow. 
  • Stocks offer more liquidity than real estate.

CONS

  • The price of stocks can undergo heavy fluctuations in the short-term. For example, your $80 stock may drop to $20 or go up to $150. However, this situation shouldn’t be much of a problem to you if you know the reason you own shares of a specific company. This can serve as an opportunity to purchase more shares if they tend to be too cheap or sell them if they tend to be more expensive.
  • An unemotional approach is required for you to invest in stocks successfully which can prove difficult for most investors. Most investors get too emotional, indecisive and undisciplined even though stocks have been proven to generate more profit over the long haul. They end up losing money due to psychological factors they could have otherwise ignored.

INVESTING IN GOLD

PRO

  • The size of investment needed for gold is dependent on your investment appetite. You can purchase as little as a 1 or 2 grams of gold. Consider investing in gold coins rather than pieces of jewellery.

CON

  • Investing in gold also means that the profit changes with the market. If the price of gold goes down then the investment value also drops. 

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