In our world of today where a lot of people believe in cashing out from the Stock Market via trading, a lot of uninformed people venture into the same space hoping to make a lot of money at the first-go. Smart People recognize the importance of investing in solid investments that won’t get devalued with time.
When deciding whether to invest in real estate or stock, there isn't a simple answer. Identifying the better choice depends on your personality, lifestyle preferences, comfort with risk, and more. It also depends on timing. Virtually no real estate could have beat the returns you earned if you invested in shares of Microsoft, Apple, Amazon, or Walmart early on in the companies' history, especially if you reinvested your dividends.
Timing is impossible to predict when making investment choices. But understanding each type of investment is key to choosing the best strategy to help your money grow and create financial security.
The ultra-wealthy, known as ultra-high-net-worth individuals (UHNWIs), make up a group of people who have net worth of at least $30 million. The net worth of these individuals consists of shares in private and public companies, real estate, and personal investments, such as art, airplanes, and cars.
When people with lower net worth look at these UHNWIs, many of them believe that the key to becoming ultra-wealthy lies in some secret investment strategy. However, this isn't usually the case. Instead, UHNWIs understand the basics of having their money work for them and know how to take calculated risks.
When people think of investing and investing strategies, stocks, and bonds normally come to mind. Whether this is due to higher liquidity or a smaller price for entry, it doesn't mean that these types of investments are always the best.
Instead, UHNWIs understand the value of physical assets, and they allocate their money accordingly. Ultra-wealthy individuals invest in such assets as private and commercial real estate, land, gold, and even artwork. Real estate continues to be a popular asset class in their portfolios to balance out the volatility of stocks. While it's important to invest in these physical assets, they often scare away smaller investors because of the lack of liquidity and the higher investment price point.
However, according to the ultra-wealthy, ownership in illiquid assets, especially ones that are uncorrelated with the market, is beneficial to any investment portfolio. These assets aren't as susceptible to market swings, and they pay off over the long term.
A graphical review of comparison between Real Estate and Stock Investment is shown below;
