Investing in property vs other asset classes and which should you consider

There are many ways to invest your money, with property being one of the most popular with people who would like to invest a large amount of capital in a tangible asset which has monthly returns. People also prefer other ways of investing like in bonds, equities, gold, commodities, and alternative investments. Each of these has its advantages and disadvantages which you have to weigh up when deciding how and what should you invest your money. 

Firstly, property investment is rather different from investing in stocks as property involves buying an asset which you lease to someone for monthly gains whereas stocks involve buying a share of a company, waiting for them to increase in value and selling them at the right time. Some people prefer to invest in property as they feel they have more control over their investment as it is a tangible asset which can be easier to understand than something intangible. The stock market is also more volatile, with prices plummeting and risking all the time depending on many factors whereas property rarely plummets in value. So in terms of risk, you could argue property has its advantages over stocks in terms of risk as the market is not as volatile with housing, but then again you could say that property requires more capital than stocks, as some stocks can be bought for pence, which increases the risk involved. Stocks are usually also less maintenance and work than property investment, making this not as much a hands-on investment strategy. Stocks also have the potential to earn more money than property in some cases. For example, U.S. housing prices have grown 5.4% year-over-year from March 1992 to June 2023, according to data analytics firm CEIC. During the same period, the S&P 500 has increased 8% in price. However, this does not take into account rental yields which can be far more significant than investing in stocks, so if you do not intend on selling for a long time, the monthly income can in some cases amount to more than you are able to earn from stocks and shares.

Some people are against investing in alternative assets such as stocks or cryptocurrencies due to the bad press they have received from stockmarket crashes, preferring to stick to property which they feel they understand more. However, not everyone has enough capital to invest in property so things like property bonds allow you to still get involved in real estate but at a much lower entry fee. Property bond investments are a type of loan from investors to property developers to help fund the building or design process of a building development. The appeal of property bonds from an investor’s point of view is the higher fixed annual interest rate, in an investment which should be quite secure. This is appealing as it gives a fast turn on investment but there are some risks involved, as with any investment. Property bonds are usually fixed terms, with not many ways of getting your initial investment back if you change your mind without affecting the interest payments as it is locked in. They are neither regulated by the Financial Conduct Authority nor will be compensated by the Financial Services Compensation Scheme. 

Investing in other assets like Gold is also appealing as Gold investing offers protection against inflation and market crashes but is more like stocks where you do not get a monthly income from your investment. But with any physical asset, you risk threats such as theft so insurance is another cost to consider when evaluating in the cost benefits of this investment. 

Overall, there are many ways to invest your money, we are biased towards recommending property but varying your investments may be a good idea to avoid the old saying of putting all of your eggs in one basket. Whatever you do, we recommend to seek professional guidance before investing your money. 

Man sitting at a wooden desk looking at his phone and laptop with graphs on each screen. This is to represent investing which Harbour Property Group talks about in this article.
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