When you want to increase your financial wealth, it’s important to begin investing to ensure you can earn a passive income. Many people consider the different opportunities that are available to determine how they can make the most money without a lot of risks. There are a few reasons why real estate investment is a good option compared to investing in a stock market.

Easy to Understand

 For the average person, real estate is a lot easier to understand when it comes to investing. The concept of buying a house to rent it out is simple and can be a lot less complicated compared to investing in mutual funds. You can also feel more in control of your money with an asset that is tangible.

 For the middle class, real estate can be a more comfortable investment because of their exposure to it. They understand the importance of owning a home, which can allow them to sleep better at night. 

Tax Advantages

 One of the main reasons many people prefer to invest in real Estate because it comes with a lot of tax deductions. You can obtain tax advantages up to $1 million of debt, as well as a variety of tax breaks when you decide to sell the property. This can make it easier to avoid capital gains when you earn $250,000 and file as a single individual. 

 There are also tax breaks available if the properties you own experience depreciation at any time. You even have tax advantages available when it comes to the wear and tear that occurs to your property. Stock investors don’t have these same types of tax breaks each year with the money they invest.

Less Risk

 Most financial experts agree that there’s a lot less risk that comes with investing in real Estate compared to investing in the stock market. It’s a safer way of increasing your net worth and doesn’t require that you use as much money. You can put 20 percent down on an investment property and finances the rest of the house. 

 When it comes to investing in stocks while using debt, it comes with a lot of risks and is only for those who are considered to be experienced traders. There are also too many variables involved when comparing real Estate investing to stock investing when determining which option has better returns. The effects of interest rate fluctuations are known to balance out over time and allow real estate investments to have just as much potential as stock market investments with a lot less risk involved. In many cases, there’s even more profit to be made with real Estate.

Real Estate isn’t Affected by Inflation.

 When you invest your money in the stock market, you have to take inflation into account as the dollar loses four percent of its value every year. With real estate, your money goes a lot further because the value of the investment property you own is likely to increase over time. Real estate prices have a history of outpacing inflation to ensure they’re less of a risk, and you can still grow your financial wealth with the more properties you own.

Real Estate Offers Stronger Return Potential

 There’s a lot of leverage with real Estate because you can use a lot of financing. It’s considered to be irresponsible to finance your investments in the stock market, but with real Estate, it’s normal. Small returns can be amplified. Not only do your real estate investments go up in value, but you can also rent out the properties to earn more passive income. 

Less Fraud

 Real Estate has a lot less risk of fraud compared to stock investments because you have the ability to show up at the property and do a background check before you own it. With stocks, you put a lot of your trust in the auditors and management.

 Understanding why real Estate is a good investment can allow you to learn how to make the best decisions for your financial net worth to ensure you can grow your wealth over time. It can give you the confidence to find your first real estate property to own and have peace of mind with where you put your money.

For more information on real estate investment, go to scottandlisahomes.com. Or call us today at 720.902.8109 and we’ll be happy to answer any questions you have to help you achieve the most success in this process!