Chris Hotze Commercial real estate

Have you ever tried to play the stock market? If so, you’re certainly not alone. The stock market is a unique game played by people across the world as they try to guess which companies will rise and become profitable and which ones are on their way out. It’s an exciting game, don’t get us wrong, but like any game, there are winners and losers. If you make two or three wrong bets, you can lose your entire investment portfolio or if you decide to play it safe and go into a managed group account, you may not see more than pennies of payback for years and you have little to no way to influence the results. Most people can agree that the stock market is a lot more like gambling than it is like managing a stable business. So why, then, do so many retirement plans include stock investments to determine how much money you have in your old age?

Investment Managers Love the Stock Market

The answer, in most cases, is because that’s how investment managers and wealth-planning services like to play the market and they often suggest their favorite numbers game as a form of retirement planning to their clients. Almost every kind of retirement plan on the market has a variation where you rely on stocks instead of savings investments. From your 401k to retirement annuities, the investment managers would really like to play with your retirement money in the stock market rather than letting it sit quietly and build up interest to pay for your last few decades. For almost any kind of retirement savings account or plan you can put together, you can choose to invest in stocks instead of interest payments but this is almost never more profitable than simply keeping your money safe and can even result in having less money when you retire than what you put in.

Private Investments is Tempting, Too

Of course, investment managers aren’t the only ones interested in playing the stock market. Almost everyone can feel the temptation to make a prediction, put a little money on it, and see if it comes back at a profit. Done in moderation, you can play the stock market with a small amount of your recreation budget and no harm will be done if you lose the bet and the money. Unfortunately, the other major temptation when it comes to the stock market is to try and make it big, to put down some of your family’s savings on an investment and see it return doubled. This, again, is the temptation of gambling and the problem is that you can’t know for sure that a stock is or is not going to do well. Even if you pick a stable company, there’s a chance that the stock will drop slightly in price and stay there, resulting in you losing money.

The fact of the matter is that no matter how tempting and occasionally successful investing in the stock market may seem, it’s too unstable to rely on. If you want a steady income to back up your paycheck or to take care of you in retirement, stocks just aren’t going to do it. According to Investopedia, 80 percent of day trader lose money meaning that most people don’t have the ability to see profitable stock opportunities.

So How Should You Invest?

So what should you do with your discretionary money? Sure, you could spend it on yourself or pour it into a savings account to slowly build interest but most people who are attracted to the stock market are thinking about ways to generate new income with the money they have. You find yourself thinking that surely there is something you can do with a few thousand dollars piled up that could turn into a lot more than a few meager percentage points each year. If the stock market isn’t safe for big investments, that leaves you with starting your own business or buying real estate.

Becoming an entrepreneur can be a great choice for someone who is very energetic, has a head for business, and is ready to put in a few decades of hard leadership work. It can also take several years before you see the profitable side of your startup loans. Real estate, on the other hand, is practically passive income every single month when managed properly.

Real Estate as an Investment

Real estate has been the preferred type of investment for money-savvy families for centuries. The reason for this is because any good quality property that is maintained annually will continue to slowly rise in value year after year. This is the result of the steady rise in both population and housing demand, especially for single family homes near growing cities. Because more and more people are looking for homes, demand rises and so do home values.

The other aspect of investing in real estate is sure to please anyone looking to see returns on their investments immediately. Once you buy a cozy home in good repair, you can start renting it immediately. As long as the value of each month’s rent payment exceeds your mortgage and maintenance costs, anything left over immediately becomes profitable income for your household. What is even better is that once the mortgage is paid, the all that rental income that used to go to the bank now goes directly into your pocket, often just in time for a cushy retirement.

Control Over Your Investments

The final point in our reasons to invest in real estate instead of the stock market is control. In the stock market, you’re essentially betting on a horse race with zero control over whether the companies you’re invested in rise or fall. With real estate you own, you have complete control over almost every aspect of the property. You can renovate it to increase the property value and reasonable asking rent, you can sub-divide it into units, turn it into a profitable Airbnb, lend it to family for a year or two, or turn it into a business like a home daycare. Rent is the most reliable way to make income from the property but because it’s completely yours, you can choose to make it profitable any way you want and have direct control over the profits you make.

The most important thing to understand about where to invest is what you can get back. The stock market may be exciting and tempting, but stocks don’t provide a recurring revenue stream and many of the high flying stocks that everyone talks about, don’t even provide a dividend. Real estate, on the other hand, can not only pay for itself in rent or Airbnb bookings, it can provide steady additional income to your family from the moment you find your first tenant. We believe that everyone should understand the power of recurring revenue. If you are looking for a way to invest and want to check out good passive income opportunities in real estate near you, Crescere Capital is here to help. Contact us today to find out more!