Looking to make your next investment? With all the options available to you, this investment comparison will help you whether you’re a seasoned investor, a retiree looking to optimize your investments, or anything in-between, because the fact remains that deciding on the best way to invest isn’t always easy.
If you’re like many investors however, your research has probably narrowed your choices down to three potential options: bonds, stocks, or real estate. By exploring the potential advantages and drawbacks of each, you can ultimately make a confident and informed decision.
Investing with Bonds
In simple terms, bonds refer to a long-term debt where you lend your money to a company or an organization with the promise to be paid back at a greater amount on a set date in the future. The most common types of bonds are those issued by the government, though they’re available from a number of organizations and institutions.
Advantages of Investing in Bonds
Perhaps the most redeeming quality of bonds is that they carry the least risk out of the three options; it’s very rare to have a bond investment fall through, as it would essentially require the company to file bankruptcy in order for you to not be paid.
Potential Drawbacks of Bond Investments
On the other hand, the potential gain from bonds isn’t anywhere near as high as it is with stocks and real estate. Not to mention it could be years or even decades before you see your return on a bond investment.
Investing with Stocks
When you invest in stocks, your individual shares represent a certain percentage of ownership interest within a company or corporation.
Advantages of Investing in Stocks
With stocks, it’s quite easy to diversify your investments. With a little bit of research and planning, you can determine which stocks are best for you to put your money into based on the current market and future market predictions. You can also sell your stocks at any time you see fit, rather than having to wait a fixed period of time.
Potential Drawbacks of Stock Investments
Stocks are inherently risky: even with the most reliable predictions and algorithms, you still run the risk of losing out. The stock market can be very volatile, so you’ll need to constantly research and stay up-to-date on changes so you can make the right investment decisions.
Investing with Real Estate
Last but not least, there’s always the option to invest in either commercial or residential real estate.
This can involve house-flipping, renting out a commercial space, renting out a home, or anything in-between.
Advantages of Investing in Real Estate
Many investors like the fact that real estate is a tangible investment. It’s something that can be physically seen and felt. Furthermore, potential returns on investment for real estate properties are extremely high. In many cases, ROI on real estate investments is higher than that of stocks and bonds.
Potential Drawbacks of Real Estate Investments
Perhaps the biggest challenge with investing in real estate is that it can be difficult to diversify within this type of investment. There are always additional costs associated with real estate investments, such as closing costs on a sale or maintenance/repair costs.
Marketplace Lending
With the innovation of marketplace lending, savvy investors can work around these potential pitfalls. For as little as $1,000 per share, you can easily and affordably invest in real estate in ways not previously possible. You can also eliminate the expenses associated with direct ownership: repairs, maintenance, and sales.
Overall, bonds, stocks, and real estate (including marketplace lending) can all be wise investment opportunities. The key is to focus on what’s most important to you when it comes to your investment and go from there.
