You’re probably familiar with the concept of investing in stocks, but here’s a quick overview.
The “stocks” you buy are small investments in a company- a share of ownership. These can cost more or less depending on the value of the company at the time of your purchase.
People buy stocks with the intention of making money on them, which can happen in two basic ways: either through cash dividends, which a company might distribute to shareholders if it’s doing well financially, or by selling the stocks for more than they were purchased for.
Stocks are one of the first things people think of when they think of investing. That does NOT mean that they’re the best investment option, though.
Stock prices are influenced by so, so many factors. Supply and demand? Those are factors influencing every market, but the stock market is especially susceptible to that influence. If you’re trying to invest in a particularly popular company… well, good luck. When the demand for a stock is high, the price gets high with it.
A single share of the most expensive stock in the New York Stock Exchange, Berkshire Hathaway, costs around 340k per stock.
But here’s the thing. On March 23rd, 2020, that price was closer to 240k– a hundred thousand dollars less. What’s going on with that?
Well, a few more things influence the stock market. Supply and demand can be shot off in different directions depending on things like how safe people are feeling in the current social and political and economic climates.
March was around the time the pandemic started getting really bad, and for that reason, people were selling their shares like crazy. That’s the thing about stocks. They’re pretty easy to liquidate, and so when people get antsy, they cut their losses and run, taking the value of the stock down with them.
Another thing about stocks is that they’re heavily, heavily influenced by the economy at large. If you invest in Apple, and then everyone stops buying iPhones because the economy is going sour, then suddenly, your stock isn’t going to be doing you any good. And the economy has been all over the place lately.
So, what’s a market you can count on to weather the storms of the economy?
Think real estate.
Real estate is a solid market. It’s right there in the name: real estate is Real. A solid piece of land, and the sturdy building that sits on it? Those things aren’t going anywhere, no matter what the economy is doing. Stocks are, in a way, abstract. They’re just reflections of how a company is doing, but they’re not an actual thing.
Real estate is stable for a few reasons. One is the above-mentioned solid nature of it. Properties you’ve invested in don’t just get up and walk away.
Supply and demand also aren’t as topsy-turvy in real estate as they are in the stock market. No matter what the economy is doing, people still need places to live or do business. That’s always going to be the case. The demand is always going to be there. And the supply? That’s pretty much set. The Earth isn’t getting any bigger. The demand is more likely to outrun the supply- and that means that property you invest in is going to, if anything, increase in value.
Even when external factors do influence the real estate market, they tend to do so much more slowly and less drastically than is the case in the stock market. Let’s talk about Berkshire Hathaway again. We already said that on the 23rd of March, it had a value of 240k per share. Want to know what it was worth three weeks before?
324k. A drop of 84 thousand dollars, in three weeks.
Real estate doesn’t pull that kind of trick on you. If you are looking for an investment that won’t give you the run-around every other week, think about investing in properties.
investwithcaroline.com has been actively involved in the Ontario area real estate market investing for a number of years. Our mission is to provide quality housing for quality tenants, while at the same time providing an above-average return on investment (R.O.I) for our investor partners and ourselves. It is truly a win-win-win way of investing!
Caroline offers her investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without the hassle of being a landlord, please contact Caroline.