If we are going to attempt to show what the best investments are, we must first define what we mean by investment. Therefore, we will say that an investment is a vehicle in which money is placed, by the investor, that will bring back more money (or hopes to) than the amount invested in it to the investor. It’s that simple.
Let us look at the two most common, best investments: stock and real estate.
Stocks have the potential to make you as rich as you could ever want to be; some of the richest men in the world made all of their money through stock. Stock is ownership in a company; therefore, if you buy it, you will become an owner of that company. While there are many theories about the proper way to buy stock and in finding good stocks to invest in, there is one way that is inherently superior to all other forms: value investment for the long term. Holding on to stock for a period of ten to twenty years is necessary sometimes before the stock price comes to fruition. One should look and find stock that is valuable but undervalued; this way, one is assured of safety and profit.
When it comes to stock, there are two disadvantages for the common user: lack of control and lack of financing. Unless you have enough to buy a controlling share in a company, you lack control over your investment. And, unless you have lots of experience, finding somebody to give you a loan to buy stock with will be very difficult. It’s just a fast that you can’t go too far in this world on your money alone.
Real estate also has the potential to make you as rich as you ever would want to be. When you buy a piece of property, it’s like buying a little business. There are also many theories on the correct way to invest in real estate, but one thing is for sure: you cannot rely on appreciation for your safety and profit. Buy undervalued homes, and buy homes in need of repair. You can easily find many books that will teach you how to invest in real estate, and they can serve as a fantastic investment guide for purchasing rentals, flipping properties, fixing up homes and more.
When it comes to real estate, the advantages of property investment over stocks are clear. When you buy investment properties, the control is yours, and the financing is easy to get, as long as you have a good mortgage provider. Therefore, we say that, for the average person, real estate is a far better investment vehicle. However, it is not always this way. Investment vehicles like stocks and ETFs can appreciate much faster than money can be made in property, so you could get rich faster in stock. Perhaps it is wise to switch to stock when you can have control and financing on your side, especially when looking to refinance an investment property. Until then, stick to real estate and make sure to get good rental property insurance if you are holding and renting your investment properties.
For the average person, real estate is the best investment. If you have a more aggressive personality but know or want to learn how to hedge risk well, you certainly can do well in the stock market.