Stock Market or Real Estate Investment – Why not invest in both?

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One of the most common questions that we get asked by potential investors is ‘why should they invest in Bricksave instead of Stocks?’ Those same people who ask us that question are usually shocked by my response ‘ Don’t invest in stocks instead of Bricksave, invest in stocks as well as Bricksave.‘

We firmly believe that one of the most important elements of any investment strategy is to diversify your portfolio and whilst we offer investors the chance to do that through the Bricksave platform, with a range of properties across different countries, we also believe that they should invest in other asset classes to reduce the level of risk in their portfolio.

Before the emergence of real estate Crowdfunding, investing in stocks was the most common way for people to start investing. It is quick and convenient and if you have an understanding of stock markets and how stocks work there are solid returns available.  Additionally, well-chosen stocks can result in you earning dividends when the company is profitable meaning that you are earning a residual income, not just an appreciation on the value of the stocks; this is similar to earning a rental income on a property, just on a much smaller basis.

As well as advantages to owning stocks there are downsides to investing in stocks and when making any investment decision it is important to look at both sides.

Short term volatility: The stock market fluctuates considerably and this means that the value of your stocks can increase or decrease in value very quickly. The best stock investors are investing for the long term and are able to absorb big decreases in value without changing their strategy.

You can lose all of your initial investment: It is possible to lose all of your initial investment, if a company has a bad year or even goes bankrupt then the value of your shares may go down to almost zero. It is important to do financial research on any company before choosing to invest in their stocks.

Good stock analysis is complicated: For most individuals doing proper research and due diligence on a stock takes a lot of time and requires some in-depth financial analysis skills, it is important to not just trust a magazine or blog before investing, if you are not able to do a proper analysis talk to a financial advisor before investing.

Stocks are not a good option for retirement income: As you get older and closer to retirement it is wise to move away from investing in stocks. As retirement gets closer it is important to target less volatile investments such as money market accounts or real estate. In retirement you need a consistent source of regular income and low volatility.

It is these disadvantages that make it important to diversify and they are also a good argument for investing in real estate alongside stocks. Below are what I would personally consider some of the main advantages of investing in Real Estate.

Stable returns: Real estate tends to offer secure, stable and long term returns. This means that you do not face the day-to-day stresses of stock volatility but instead can be fairly sure of how much income you will earn from them each month and then with well-chosen property you will also secure a solid appreciation on the properties.

There is an obvious asset behind the investment: At the same time as offering you a monthly income and appreciation on the property value real estate is backed by actual bricks and mortar, even in the worst real estate crashes in history assets have not become worthless, unlike companies that can go bust. This offers investors additional security and peace of mind when choosing their investments.

Recurring income: Real estate investment generates an ongoing monthly return. This is a great asset to many people as it can mean additional monthly income whilst they are working or can provide a stable income during retirement.

Historically the main barrier to investing in real estate alongside stocks has been the high level of capital needed to purchase a whole property. Now with the emergence of real estate Crowdfunding however it is possible to invest in properties around the world for as little as $1,000 meaning that individuals have more opportunities to create a balanced portfolio with investment in both stocks and real estate.

While each investment has its benefits and drawbacks having both in your portfolio can reduce your risk exposure and truly help you earn a passive income and build your wealth for the future.