Why Investing in Real State is better than investing in the Stock Market
Welcome back to our Top Level Home Loans Blogs. Miguel Gómez is the host of this channel, where we provide tips on how to get a mortgage and tactics to help you realize your dreams.
Recently, some of my friends have suggested to me to invest in Bitcoin and the stock market due to the growing and unaffordable costs of real estate. I frequently say that the numbers speak for themselves, therefore today we're going to contrast stock market trading with real estate investing.
We will directly look at the numbers to determine which of the two is the better option.
When investing in the stock market, statistics show that over the past 100 years, the market has increased by around 10%. This does not imply that the market has increased by 10% annually, but rather that it has increased by about 10% on average over the past 100 years. But when we look at the houses, at least in Utah for the previous 30 years, they've increased by an average of 5%, and that 5% does not take into account what happened only a year ago, or even two years ago, when they increased by 20% or 30%.
Let's imagine we have $25,000 to invest and are debating between buying a house and investing it in the stock market.
So, in the stock market (remember they go up 10%), then in the first year, from those $25,000, you earned $2,500. It's not bad, it's creating some money, 10% is a very good thing, it's better than having it in the bank or sitting at home.
Now let's say you're going to buy a home, if you buy a home remember that in Utah over the last 30 years, home values have gone up about 5%.v
So you go and buy a house for 500,000 dollars, you do a down payment of 5% which is $25,000 and you have your house. But remember that the value that houses rise is based on what the property is worth and not what you invested. So, if that property is worth $500,000 when you bought it, assuming it goes up 5% in the first year, we are talking about you earning $25,000 in just one year. Much better than the 2,500.
It returned all the money that you already invested and remember that this is a statistic for the last 30 years. So in my opinion it is always better to invest in a home.
In addition, the residences offer additional excellent features. Let's imagine you decide to buy a rental property. Unlike shares, which frequently pay dividends that are not equal to the percentages that a property pays back to you, the money you invest in the rental property will start to pay you money each month. The worth of the residence is also continuing to rise. I have money invested in stocks, so every time I look at it, it's more like putting money in other places, but to be honest, I haven't seen anything like real estate.
At the end of the day, that percentage is based on the value of the property, not what you owe or what you invested, so it provides income for you while also saving you money. That detail is crucial.
Therefore, in my opinion, real estate investment is always preferable.
I hope you were able to learn something from this video, and if you have a friend who might benefit from it, send it to them as well so they can learn if they should invest in stocks or real estate.
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- Miguel
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