Should I invest in property or shares?

By Bricksave Admin | Bricksave

February 07, 2022

News > Blog Article > Should I invest in property or …

The most balanced casual investors should look at building a portfolio with both real estate and shares in it. The wealthiest investors, like the great Warren Buffet, may be happier to take risks by betting all of their cash on one asset. For the average investor, however, who has far less cash to play with, spreading out your money will cushion you against any dips in one asset class.

But let’s say you only want to invest in one asset class to get yourself started. Which is best - property or shares? Let’s take a look at the pros and cons of each. 

Investing in property

Property is a solid investment and one that is relatively simple for most people. You don’t need to navigate the complex stock market and your solicitor will simplify any jargon you do come up against. However, that’s not to say there are no drawbacks to investing in property. 

Pros:

There are lots of great reasons to invest in property - here are just a few:

• Real estate has historically been one of the most stable asset classes. During the pandemic, even prestigious bluechip stocks have been severely impacted by the ongoing uncertainty. Real estate, by comparison, is thriving across the globe; in the US, the price of the average home rose by 18% between October 2020 and October 2021. 
• Property will always be in demand (particularly if you invest in residential property) meaning your investment will never become obsolete and unsellable.
• Real estate is a longer-term investment that has significant appreciation potential. In Chicago, for example, house prices have increased by an average of 53% since late 2011; even a few dips in the market haven’t affected the long-term price trends. 
• You could potentially earn rental income in the short- to medium-term while you wait for the property to appreciate in value. Alternatively, you can use rental income to supplement your income or fund your retirement and keep the property as a steady source of income.

Cons:

While real estate is a great option, it’s unrealistic to say there are no drawbacks to investing. 

• Real estate cannot be immediately liquidated. If you want your cash to be fairly easy to access (for example, if you’re planning on making a big purchase within a year), real estate may not be the best option.
• Investing in international real estate can be complex, particularly if you don’t speak the language or understand the country’s tax or property purchase rules. Thankfully, investing through a platform like Bricksave can minimize this issue (but more on that in a moment …).
• The cost of buying an entire property is out of reach for many investors. 

Investing in shares

Stocks and shares give you the option to invest in a wide range of sectors and across countries. You could grab a piece of some of the world’s most successful companies, or support young, exciting enterprises on their way to the top. However, most people are pretty unfamiliar with the process of investing in stock markets, since they can be a little confusing to navigate. 

Pros: 

Here are just some of the best bits about investing in shares:

• You can enjoy impressive short-term returns. As with any investment, no returns are ever guaranteed. But if you’re willing to take more of a risk and put your money into growth stocks, there is a chance you could get your money back (and more) pretty quickly. 
• There are lots of options, so you can support businesses and sectors you’re genuinely interested in and excited by. Whether you support green energy, VR technology or innovative fashion, the choice is yours. 
• There are two ways to earn an income: through dividends, which are paid yearly, and by selling the stock for a higher value (though neither is ever guaranteed!). 

Cons:

There are a number of things that could work against you when it comes to stocks and shares:

• No company is immune to market fluctuations, so even investments in huge brands are vulnerable to economic downturns.
• Buying stocks in new companies can be much cheaper but is a lot riskier, as you’re gambling your money without a solid track record to go off.
• You may need to be patient with some stocks (such as startups that take many years to become profitable) meaning they are not going to produce short-term results.
• It’s sensible to seek the advice of a financial advisor before going ahead, which adds to the cost. You may also have to pay them to manage your stock portfolio if you’re not sure what you’re doing. 

Creating a balanced portfolio

Balancing your portfolio is the best bet for investors who are more risk-averse. While no investment is ever guaranteed, dipping your toe into a number of asset classes, including property, stocks, bonds and more will give you a better chance of achieving your financial goals. 

Let’s say, for example, that you bet all of your cash on one company. While it may appear that you’ve struck gold at first, cautionary tales like that of doomed biotech company Theranos show just how dramatically investments can go south. However, with the buffer of a property investment behind you, your loss could be cushioned by your rental income or house price appreciation.

How Bricksave helps you diversify

Looking for a way to add real estate to your investment portfolio for as little as $1,000? Bricksave lets you do just that. You can crowdfund attractive properties in desirable locations across the world, including the US, without the hassle or expense of purchasing one outright. You’ll also enjoy a share of rental income and potentially get an impressive return on your investment if the property appreciates in value. 

Find out more about how to start investing in real estate with Bricksave.