Property Investing vs Other Asset Classes: A Comparison
Investing in assets is essential for financials, future planning, and becoming financial independence over time. These assets grow and value is appreciated over time and other assets like real estate provide a decent source of passive income, and increase the value of the property over time.
Investments lead to generating a passive income source, appreciating the value of your assets over time, it giving tax benefits Also you can leverage your return on investments by investing that in other assets.
What are the different types of assets?
An asset is a group of investments that have similar characteristics and potential to generate returns or appreciate its value over time. The popular assets are stocks, bonds, real estate property, commodities, mutual funds, and cryptocurrency. Investment in different assets gives you different yields or returns depending on the risk you take. Before going for investments in the above-listed assets try to look, study, and research for the potential risk it carries with itself. Here is the elaborative detail of real estate investor's other forms of investment
Real estate investment
Real estate or property investment in which you invest in a piece of land or any commercial or residential real estate like a home, apartment villa penthouse, or any office or shop. This asset typically generates rental income and potentially appreciates. Also, real estate is a more stable form of investment with moderate risk, high rental yield in the case of commercial properties, with a lot of tax benefits and long-term capital appreciation based upon the growth and development of the area.
Stocks
Stocks are shares or equity or parietal ownership of the company. When anyone invests in stocks they become the owner of the company with each stock signifying the percentage of that ownership. Stocks can be best invested in individuals who are looking for high-growth
Bonds
Bonds are the debt or loan that a company or government issues against the money they want for various purposes. Bonds are fixed assets that yield a certain return against the money that is lent to any government or corporation. While you buy a bond this means you lend a certain amount of money to a certain entity for a fixed interval of time and in return they will pay you a certain amount each other as interest. Bonds are typically released by big corporations or entities like the government which are too good to fail hence they are considered a safer investment to put your money in. they offer the return which is generally the interest that is offered by that entity. They offer low returns which is why they are less volatile.
Other Asset Classes
Apart from real estate other asset classes such as commodities, currency, and cryptocurrency are available in the market for investing. They have high risk and they are volatile and have high fluctuation because their price usually depends upon the international market, geopolitics, and other economic factors that are happening. These can be used to diversify the portfolio and risk management depends upon the investment goals and individual circumstances.
Summary
|
Factor/ Assets |
Risk |
Potential Returns |
Income Generation |
Liquidity |
Volatility |
Tax Benefits |
Entry Costs |
Long-Term Potential |
|
Property |
Moderate risk |
Moderate to high return |
Yes (rental) |
Low |
Moderate |
Yes |
High |
Yes |
|
Stock |
High risk |
High reward |
Yes (Dividends) |
High |
High |
Yes |
Low |
Yes |
|
Bonds |
Low risk |
Low to Moderate return |
Yes (Interest Payments) |
Moderate |
Low to Moderate |
Yes |
Moderate |
Yes |
|
Commodities |
Moderate risk |
Moderate rewards |
None |
Moderate |
High |
Limited |
low |
Yes |
|
Mutual Funds and ETFs |
Moderate risk |
Moderate to High return |
Yes (Dividends) |
Moderate |
Moderate to High |
Yes |
Low |
Yes |
|
Crypto-currencies |
Very High risk |
Extremely High rewarding |
None |
Moderate |
Extremely High |
Yes |
High |
Uncertain (Due to regulations) |
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