Tag Archives: others

Stocks vs Real Estate – Which is Better?

Nearly all of the world’s billionaires have created wealth through business ownership. And the way most of them owned businesses was through stocks. So stocks, by default, are the vehicle by which many of the world’s wealthy have gotten there. Does this mean stocks are always the best investment over others? Not necessarily.

Is the list of richest people duplicatable? In other words, is it possible for someone starting off with nothing today, to buy and own businesses that eventually make them billionaires? The answer is clearly yes.

However there are other methods, less versatile that can provide the same type of opportunity: real estate investing. I am talking specifically about rental real estate, real estate built for the purpose of providing cashflow.

So if I’m a young person, deeply interesting in investing and committing to becoming rich, which paths should I take? Well real estate and stocks are both broad categories that are broken more specifically into numerous other sub-categories. So let’s take a brief look at your stock and real estate options:

Stocks

Stocks, which are ownership certificates in little pieces of publicly traded companies, can be broken down into various groups depending on the size of the company. They can also be categorized based on the industry or other factors. There are two general ways to get involved with stocks: direct purchase of stocks (through a brokerage account of some kind) or the purchase of shares of a mutual fund (a “basket” of stocks that is managed by a group of investment managers).

Individual investment in stocks can be a fantastic way to build wealth if you meet the following requirements: 1) Able to control your emotions in favor of logic, 2) time commitment to researching and analyzing your choices and 3) patience.

The other stock option, mutual funds, is perhaps the least involved option. I recommend this path for most people who aren’t wanting to spend a lot of time on their investments. One thing to be aware of in this type of investment is both the type of mutual fund (large-cap vs small-cap) and the fees that the mutual fund charges.

Real Estate:

Real estate is a vast field with both commercial and residential properties to choose from. When considering an investment path you need to pick somewhere and stay consistent. Building your knowledge up in a specific area of real estate can go a long way in mitigating risk, which should always be a big concern.

The best way to create wealth with real estate is by buying rental properties. You can either buy single-family homes, multi-unit properties (2, 3 and 4 units) or commercial apartments (5+ units). You should only invest in real estate if you have both time, interest and are capable of networking and management.

Conclusion:

Stocks can be good for people who have less time and more analytical skills. Real estate also requires analytical skills, but you also have to have interest and time to make money. The best choice for you depends on these factors.

7 Things That People Never Spend Enough Money On

1. Paper

That’s a strange thing to lead the list with. However paper represents a mentality in the U.S., and especially in other countries, that puts people in a scarcity mentality. I’ve been personally at fault of doing this. Often I’ll try to save paper by writing on the other side or cramming everything on to one page.

This is particularly true when I am in school. I’ll take notes by putting everything close together. Any learning and memorization expert will tell you that leaving space on the paper gives your brain room to process and compartmentalize concepts and facts in your brain.

You need to be comfortable using up more paper, even if that means spending a minuscule amount more.

2. Seminars

Honestly this type of personal improvement hasn’t been something I’ve looked into in the past. However in recent months and years I’ve begun to see how others have used these as networking, learning, and inspirational events.

3. Health

I hope most people value health over money. The natural outcome of this value priority is that you should be spending the money you need to to keep your health at its prime. Don’t forget about health.

4. Others

Pouring money into others, whether through time and experiences, or generous gifts of items and money, is both a heart-warmer, and a perspective-changer. As soon as you begin to look outside yourself to help others, life becomes a ton more meaningful.

5. Car Maintenance

Changing the oil, replacing break pads, and doing general maintenance on your vehicles is a responsible thing for adults to do. It feels like you’re throwing money away, but in the long-term it can save you money in emergencies, breaks, and issues.

6. High Quality Items

Often it is wise to skip the name-brand items and go with cheaper things. This is especially true with things that don’t matter as much like cereal brands or food in general. However if you find an item is cheaper than another, this doesn’t mean instantly that it’s a deal. It’s possible that down the road you’ll spend money on replacing that cheaper item.

7. Books

Call me old fashioned, but I find books are particularly useful in learning. I have personally read hundreds (yes hundreds) of nonfiction books in my free time. While spending $1,000 on books (both e-books and physical books) can seem like a big waste of money when the library is just down the street, I see books as an investment.

When you see nonfiction books as resources and insightful gems of knowledge, it becomes natural to look at the cost-benefit of each book as a more than worthwhile investment.

I personally find physical books to be easier on my eyes and simply to read than e-books.

Conclusion:

Seeing every purchase as an investment can be a fun game to get your mind racing on ways to save and spend money wisely.