Where do I Invest? Real Estate or Stock Market?
Investing is a good habit and in fact some of the investments are tax saving too making it happen. Investment involves risk based upon the return expected. The more speculative the option you have selected, the more risk would be there. Real Estate and Stock Market are two highly speculative investments and not everyone can make money there. It is said that you have to be lucky and very calculative in case you want to make money out of them.
Real Estate Vs. Stock Market
It involves trading or investing in the real estate properties such as lands or houses or apartments. It is similar to stock trading in the sense that you purchase or own the property and wait for its value to grow. Once it fetches a good value it is sold with profits like stocks.
The Concept of stock market starts with the formation of the company. The corporate primarily are either private, public based on various parameters. Capital in the company are inserted in the form of shares and shares are also called stock which are dealt in the stock market through stock exchanges.
Stock market is a platform or a place where the shares of the public companies are traded on a regular basis.
The buy and sell process of shares in the stock market is called trading in the shares or stock. Shares to be traded in the stock/share market need to be listed or registered in the stock exchanges. Unlike currency market where there are only few products to trade with stock market is very wide from the products perspective. Stock exchanges have more than 10000 companies listed in which the person can participate for trading through stock exchange.
Stock Market is one of the biggest markets where the players such as brokers, sub brokers, Investors etc are regularly engaged in the buying and selling activities.
The following are the critical features of stock market trading:
• Each and every transaction (may be online) is deemed to have taken place on the floor of the stock exchange
• There are various types of transactions such as day trading, Futures and options (Derivatives), long term investment based transactions etc.
• The limit for buying and selling of the shares is fixed based on the margin amount deposited by the particular person with the particular Intermediary.
• The margin money is decided by the stock exchange based on the volatility of the shares and is collected and returned on a daily basis.
• All transactions done need to be settled on next day post which the margin is released and this activity happens on an ongoing basis
• On the day of settlement the buyer of the share receives and has to pay the money for the purchase of shares and the seller gets the money but has to deposit the shares
• Post commencement of the online trading, the shares are dealt in fungible form hence all transactions of the shares are routed through the Depository participants and all the money transactions are routed through authorized banks.
The difference between the real estate and stock market are listed as below:
1. Stock Market is more organized as compared to the real estate properties.
2. The value of transactions in the real estate is always high and also the stakes would be high too.
3. You have multiple buyers ready generally in the case of stocks but for the properties you sometimes need to wait for longer
4. Capital involved in properties is generally high hence the cost of carrying also becomes a bigger risk
5. Stocks trading provides for multiple products you can choose from such as derivatives or options or spot trading etc., where as they are limited for selling properties.
6. In case of stocks trading you may be facing the other buyers or strong players but in case of properties anti social elements are also found to be involved sometimes.