Both the real estate market and the equities market give opportunities for investors to make profits with their capital. However, these markets can be very diverse and complex. There are many choices and approaches when it comes to each market.
The stock market is an open market where anyone can purchase public equity. The equity is represented by pieces of company ownership called shares. Anyone can buy a piece of a company at a stock price and reap benefits or losses from the company’s performance.
This market has many angles and approaches. Shares can be traded for profit, held for dividend payments, or even exchanged in complex and abstract ways through derivatives. There is high profit potential, but this requires knowledge, skill, and access to market insights.
Compared to the real estate market, the stock market is easily accessible. Anyone can open a retail account with a stock broker and begin buying and selling in under an hour. However, doing so profitably is an entirely different question.
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Without investing too much time, an everyday stock investor can put their money into index funds like the S&P 500 or QQQ Nasdaq 100 without having to pick individual stocks or try to beat the market. This is the most accessible approach to the stock market.
These products give access to expert management of stock assets without requiring the buyer to do their own market research. However, a well-informed stock investor can leverage publicly available information to make serious profits from individual stocks.
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There is an extensive range of choices for investing in the stock market. The most basic strategy is to buy common stock in companies and funds. This stock gives you exposure to the marketplace that can lead to gains or losses.
There is also the opportunity to invest in a dividend stock that pays out regular amounts of company profits in cash. This is a good choice for dividend investors with larger amounts of capital to work with and simply looking for a steady income stream.
Lastly, there is a market of derivatives that can be purchased over-the-counter on underlying securities. These allow you to approach the markets in ways that are not possible through simply buying and selling stock.
There are several angles that a new investor can approach to monetize their investments and turn them into a source of personal revenue.
The most immediate and obvious monetization method is value investing through buying undervalued shares in companies and selling them at a higher price for a profit. Dividend investing offers an opportunity to build a steady passive income, while growth investing seeks to grow capital by purchasing new and fast-moving shares quickly.
Finally, derivatives allow investors to use smaller capital to achieve serious monetization through options and leverage. Even an everyday retail investor can stretch their dollar through sophisticated derivative means, and larger investors can use the same means to take on massive positions and reap profits for their employers. However, derivatives can be risky as you can lose out on your investment based on the premiums you paid on.
The real estate market is great for intermediate investors as the knowledge required to enter is not prohibitive, but an asset with a large amount of debt can be devastating during a market downturn.
Many will enter this market by taking on large debts, but this is not always necessary. While it may be popular to use real estate loans to invest in property, other approaches, such as wholesaling has less risks.
If you have sufficient capital, purchasing property outright is difficult. However, for most, accessing the real estate market requires a carefully vetted mortgage loan process for approving large debts.
There are ways to turn a profit in real estate that don’t require loans, but these methods require skill, connections, or large amounts of capital. Overall, the real estate market is harder to access relative to the stock market because usually of the downpayment if you follow the tradtional method of real estate investing.
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The most direct and obvious method of real estate investment is to buy the physical property, but there are also many other ways to enter the market or to collect profit from activity in the real estate market.
Another method is purhcasing REITs, which is a bundle of real estate that pays out 90% of the cash flow from the properties to investors. You can purchase REITs through the stock exchange.
The most common way to monetize real estate is through rental properties. Many people will secure a mortgage or home loan to own a home for personal use. However, rental properties can be leased or rented to other tenants for a steady and reliable income.
Additionally, property managers can be paid a fee to look after the leased property and attend to the tenant’s needs on behalf of the owner. This makes real estate a desirable, low-maintenance investment option. The rental income from leasing can cover the costs of maintaining the property and still turn a profit for the owner.
Additionally, becoming involved in property purchases as a middleman is a way to make a fast profit without taking on debt or purchasing a property. This is called wholesaling, and it involves securing a purchase agreement from the owner, finding a new buyer, and collecting a small fee on top of the purchase agreement for your services.
Finally, the property can be owned and sold later for a higher value. Land tends to appreciate in value as development grows along with demand. Simply owning land can increase net worth by the yearly appreciation of its value.
There are many ways to invest your capital and make a profit. The stock market and the real estate market are just two examples of ways that you can invest.
If you are looking for liquidity and convenience, then the stock market may appeal to you. It’s straightforward for anyone with a computer and an internet connection to register with a stock broker and purchase shares.
If you are looking for large assets and physical ownership, the real estate market may appeal to you. You can contact a real estate broker and work out a purchase, loan, or wholesaling transaction.