Investing in property versus h

House Front by EPSTOCK Images

Investing in property versus high-risk portfolios, the pros and cons

You’ve probably heard the saying – ‘safe as houses’ used when referring to property investments. But just how safe is an investment in property versus a high-risk portfolio like investing in the stock market?

Investing in property versus h

House Front by EPSTOCK Images

As with all investments, each comes with its pros and cons – and if you are deciding between the two it is important to weigh these up. Let’s start with the factors which favour property. Buying your own house means you’re investing in a tangible asset – actual bricks and mortar which means a roof over your head and a place for your family to live in and enjoy.

Let’s start with the factors which favour property. Buying your own house means you’re investing in a tangible asset – actual bricks and mortar which means a roof over your head and a place for your family to live in and enjoy.

With an investment portfolio, like stocks and shares – you don’t have anything tangible until you sell those shares. This can be tricky as it means you need to get your timing right – that old saying about selling high and buying low. Timing the market is always risky.

Close Stock Trader Looking at Computer Screens by Kasto via www.canva.com

Of course, the property market also works in cycles – with property prices rising at times and falling at others. But it is fair to say that the property market cycle is much slower – it takes time for a slowdown in the economy to drip feed through into the property market.

The stock market is far more sensitive to everyday events – geopolitical risks such as a change of government, elections or simply the words of a political leader can send tremors through the stock market and wipe out gains in the space of a few days – or even hours.

The other attraction of property as an investment is that it provides you with two types of returns. The one is capital growth – which means the value of your property grows over time and so increases the original capital you used to purchase the property. If you choose to let out your property, it can also provide you with a regular income in the form of rent.

You will require different types of bonds depending on what you want to use your property for, more information on this visit Nedbank Home Loans.

With an investment portfolio, there are investments which can provide both income and capital growth, however, these tend to be limited as most investments either provide one or the other.

One area where property does fall short is liquidity. Liquidity means how long it takes to buy and sell an asset. Property takes more time to sell given the administration process, which includes estate agents, lenders and solicitors. With a stock market investment, you could technically sell your assets within a day or a few days depending on the timing and the nature of the investment.

Here’s some information on different types of investment.

Ultimately, each investment comes with its attractions and challenges. But one thing property can do which no other asset can is provide you with a lifestyle. As they say – think of a house as a home – that’s the best investment you’ll ever make. Whenever you decide to make this investment, you will need a handy buyers guide on owning your own home that will help you with each step in the home-buying journey.