Financial goals differ from one person to another and if you are left with substantial amount of money after repaying your loans or retirement contributions, then you might explore other investment options such as stocks or 401Ks or real estate. Investing in home buying or home selling is always lucrative but then again they come with their own set of risks. However, this does not imply that investing in stocks will take you nowhere; of course there are several millionaires who are able to pull in more than $100 million dollars a year by investing in stocks.
In this article we will try to see how real estate is being considered to be a safe investment when compared to stocks or 401Ks:
- Greater Control
The moment you carry out a home buying activity, you turn into the owner or in other words the CEO of that property. You have the liberty to raise rents, search for better tenants, make improvements and even go for cost cutting. You are in absolute control of whatever you do with your investments and there are a very few external factors that affect your actions or income.
On the other hand, when you are investing in a public or private company, you can only buy a minority of their stakes. You have put your faith on the management of that company, which is vulnerable to frauds and mismanagement. They hardly care about your investments and all your money can go down the drain because of a blunder on the company’s part.
- Tax benefits
You have the option of deducting the interest to a limit of $1 million in mortgage on your primary residential property. Profits on primary home selling are tax free for up to $2, 50,000 for singles and up to $5, 00,000 for couples who have been living in the home for at least 2 years. Even the expenses you incur for maintaining your house are deductible from your income. There are immense tax benefits on real estate investment, which is again at the top of home trends in 2017.
- Analysis and quantification is easier
Real estate investments can be easily analyzed and quantified because you will have to calculate only your expenses and income. If you are able to borrow at 2.5% and rent out your property at 5.5% then you have winner on your hands. Why would you bother yourself with the investments in stocks or 401 Ks that requires in-depth analysis and calculations?
However, there will always be people who prefer to invest in stocks or 401 Ks because they can’t ignore the lure of higher returns, greater liquid, low transaction costs and greater variety. Always choose to invest based on your investment goals and risk taking ability.