Guide to Real Estate Investments vs Company Shares The best way to mitigate investment risk is still akin to our old saying “never put your eggs in the same basket”. So if you are to invest on something, make sure that yo spread your investments in different directions to give a higher return that what you will gain by doing the usual investment that you are already in. These comprise diversification to add value to your product, and asset allocation to balance the risk and the reward induced by your enterprising business. Therefore, since real estate is a share of a well-diversified portfolio, most investors get themselves involved in real estate. In recent years, brick and mortar businesses have taken a knocking, but real estate is still one of the most robust investment classes especially is the long run. it is easy to compare the difference between the risk from buying real estate property and the risk of buying company shares or stocks. Though company shares have marginally higher capital growth, the difference in risk is huge. It works this way. When risk is measured, you need to simply measure the variation of return versus capital growth (or loss) which statistics have shown to be +40% capital growth a year and a -40% in a week. This means that investing in shares can make you lose money in a short time. In real estate you don’t get that sort of variation in risk, hence it is considered a safer investment.
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Entering into a new commercial enterprise where you have no specialist knowledge covers a greater commitment compared to buying property, because the longer the learning curve takes place, the greater the capital involved. There is no difficult starting a real estate investment. The big time realtors of today started out buying a house to live in and so they saw that the value kept on increasing and the wealth that can be theirs, this is what started them to go into the real estate business.
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Other than that, you can borrow more when using property as security compared to using a share portfolio. This means that when you have properties, you can even support your new business venture from lenders who lends up to 90% of the value of your property as security. This shows that property investment is not only low risk; it is still remarkably a flexible investment. This adds value since it includes long-term capital growth, and positive cash flow. As long as you keep up the mortgage repayments, you have complete control over your property. If you are looking at a long time investment, you can renovate your real property. The risks are low on this.