The benefit to investing in property, rather than stocks, is that it is often considered low risk. It can be less volatile than other investments. Property has the potential to achieve substantial growth, whilst providing a passive income over the long-term.
Owning a property also comes with risks. Additional unforeseen costs can stem from maintenance or management fees – especially with residential property, as the landlord is responsible for repairs.
Investing in property requires a large amount of capital; it can take several years to realise returns. Liquidity risk can be a concern for investors, as it can take several months, or even years to sell a property. Unlike stocks and shares, the property must be sold as a whole, rather than a part of it, with additional legal fees to receive a return on the assets.
Investing in stocks & shares
Investing in stocks and shares allows investors to create a diverse portfolio – limiting risk by spreading assets across multiple sectors. Stocks can be bought and sold quickly, with the option to adapt the size of an investment over time. Whether an individual is seeking income, capital growth, or a combination, a portfolio can be adapted to meet changing requirements throughout various life stages.
The downside is that stocks are exposed to market, economic and inflationary risk. Volatility can be a concern for investors, and it is important to assess your investment time horizon and attitude to risk. An experienced investment manager can guide you throughout everchanging market conditions.
If you are looking to benefit from property, whilst having the flexibility of stocks, real estate investment trusts (REITs) could be considered. They provide the option to invest in real estate, whilst being bought and sold in a similar way to stocks and shares. The benefit to REITs is the ability to invest in property, without the large, initial injection of cash. Investors can maintain a diverse portfolio, without being limiting to one property.
Investments are a personal choice, and it is important to consider your objectives, risk tolerance, and investment time horizon.
Please note that EFG Harris Allday does not provide tax advice, any tax benefits will depend on your personal tax position and rules are subject to change. The value of investments can go down as well as up, and you may get back less than you invested. This article is not intended to be an offer or solicitation to buy or sell securities, nor does it constitute a personal recommendation.
* https://www.ons.gov.uk/peoplepopulationandcommunity/housing
** https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/april2022