The Covid-19 pandemic has shaken the world and has caused a substantial shift in the world economy. As the dynamics of economic markets change across the globe, it is important to understand the kinds of investments that work best for you now.

Irrespective of the situation at hand, all investments require a clear analysis of the associated risks and return opportunities before you invest in them. Real estate and stock are no different. A large portion of the investors market often finds itself in a fix when it comes to choosing between these two investment options.

A closer analysis of each of their leveraging points is vital to gain an in-depth insight into the real estate vs stock debate.


Stocks: Pros and Cons

Stocks leverage over real estate in terms of liquidity ⁽¹⁾. Shares can be bought or sold at the drop of a hat. It is also easier to track the value of your stock investment at any given time ⁽¹⁾. Moreover, options such as purchasing mutual funds or exchange-trade funds allow you to diversify your investments across companies and industries. Not only do you save money with stocks, but they also provide you with an advantage if invested through a tax-advantaged retirement account ⁽²⁾.

This being said, nimble stocks also have their disadvantages, especially during periods when the market is fluctuating like now; volatility can be a tricky business for investors to handle. If in such cases you do choose to sell stocks, you will be liable to pay a capital gains tax against your stocks ⁽²⁾. This is especially daunting when you’ve held them for less than a year in which case you’ll end up paying tax without any relief.

Certainly, buying and selling stocks is a tricky business.


Real Estate: Pros and Cons

Compared to stocks, real estate investments are relatively easy to understand. Initial analysis and research on the best real estate properties in Malaysia will give you plenty of insights into what works best for you in terms of location, pricing and size. Your investment is a tangible affair which makes you feel more in control of your money ⁽¹⁾. There are fewer chances of you waking up one beautiful day and learning about a sudden loss in investment ⁽³⁾.

Moreover, in economically uncertain times such as these, real estate investments have the potential to serve as a hedge against inflation where property prices only go up ⁽¹⁾. You can also leverage your real estate investment as a means to acquire loans from financial institutions which you can then use as a tax advantage, qualifying for tax reliefs against mortgage interest ⁽¹⁾.

This being said, investing in real estate has its downsides too. Unlike stocks, real estate properties don’t give you the option to diversify your investments ⁽¹⁾. There are high transaction costs associated with buying a property ⁽¹⁾. Moreover, real estate offers a minimal scope of liquidity. Getting money by reselling your property couldn’t be said to be a wise decision ⁽³⁾.

Still interested in investing in real estate?