{"id":8095,"date":"2022-05-13T04:35:53","date_gmt":"2022-05-13T04:35:53","guid":{"rendered":"https:\/\/www.ashtonhawks.com\/?p=8095"},"modified":"2024-06-17T17:18:55","modified_gmt":"2024-06-17T17:18:55","slug":"real-estate-v-s-stocks-which-has-better-returns","status":"publish","type":"post","link":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/real-estate-v-s-stocks-which-has-better-returns\/","title":{"rendered":"Real Estate v.s. Stocks \u2013 Which has better returns?"},"content":{"rendered":"\n
\n
\n
\n
\n\n
\"skyscrapers-sunset\"<\/figure>\n\n<\/div>\n <\/div>\n <\/div>\n <\/section>\n\n\n
<\/div>\n\n\n\n
\n

Pandemic has destroyed the global economic environment for over three years. With the continuous rise in the number of people vaccinated globally, the economic environment is expected to recover very soon. This is a good opportunity for investors to evaluate their portfolios. Real Estate and Stocks both are mainstream investment tools for investors. But there are\u00a0some investors who are bearish on the property market, saying that it is not a good time to invest in properties while some even think that buying stocks is better. Is it really better to invest in real estate than in stocks? Without further ado, let me explain it to you!<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

There are some Hong Kong investors who never invest in local properties because the returns of investment are not attractive for them. Most buyers may apply for a mortgage to invest in property, the annual rental yield is calculated based on the full-paid property. Which means the return is probably higher than they predicted. Obviously, some investors ignore the appreciation return.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Is it better to invest in real estate than in stocks?<\/h3>\n

It cannot be denied that the threshold for buying stocks is relatively low and investors can enter the market with only a few thousand dollars. However, the stock market is easily affected by external factors, such as company prospects, market trends, industry prospects. Besides,\u00a0the stock market is fluctuating.\u00a0However, there are stock enthusiasts who say that if you buy a rising stock, the capital will be doubled. Even so, investors need to spend a lot of time and scheming which is not easy to buy stocks to get rich.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Investing in property is relatively stable<\/h3>\n

Although investing in real estate is not a 100% profitable deal, it still has a lower risk than buying leveraged stocks.\u00a0Briefly, the real estate market is relatively stable even in the bear market.\u00a0The overall decline in property prices will only fall by 10% to 30% which is not as leveraged as stocks. The investors will not lose everything. In addition, the property is a real asset and is less affected by inflation. It is not as easy to manipulate the property market as it is in the stock market.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Some people think that buying the property with leverage is a risky move.\u00a0However, the risk of investing in a property is limited in reality. As long as investors can still pay the loan on time when property prices fall, banks will not liquidate their positions.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Risk of stock market leverage is much higher<\/h3>\n

Investors with low capital may borrow money to buy stocks in an effort to create more wealth, while borrowing money to buy stocks is called \u201cfinancing.\u201d Once the stock price plummeted, the investor could not bear it. When the stock falls to a certain level, the\u00a0brokerage will require investors to re-deposit money, which is called \u201cmaintenance margin\u201d. If investors fail to deposit money in time, the stocks they originally held will be forced to sell.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Perhaps you still insist that stock market leverage is more profitable, but stocks generally have only two or three times leverage. Securities banks may provide a higher leverage, around five to six times, but at the same time with high interest. Investing in a property is completely different. Investors can choose to undertake a 90% mortgage and leverage 10 times. Also, investors can pay $200,000 down payment to invest in a property which is valued at $2 million<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Comparison of investing in real estate and buying stocks<\/h3>\n <\/div>\n\n\n\n
<\/div>\n\n\n\n
<\/td>Property investment\u00a0<\/strong><\/td>Buying Stocks<\/strong><\/td><\/tr>
Capital<\/td>More<\/td>Less<\/td><\/tr>
Risk<\/td>Lower and property will not be liquidated.<\/td>Higher and stock will be liquidated.<\/td><\/tr>
Nature<\/td>Stable<\/td>Fluctuated<\/td><\/tr>
Profit<\/td>Increased in small proportion<\/td>Increased in larger proportion<\/td><\/tr>
External factors<\/td>Less susceptible<\/td>Susceptible<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n

Property prices in Hong Kong are the most expensive in the world. It is not easy to invest property in Hong Kong. However, investing in the stock market is too volatile and time-consuming. What if you still want to invest in property? Investors may turn their attention to\u00a0overseas areas<\/a>. The property prices in some areas are not as high as imagined. For example, in Southeast Asia such as\u00a0Vietnam<\/a>,\u00a0Cambodia<\/a>,\u00a0Thailand<\/a>\u00a0and\u00a0Malaysia<\/a>. Their local property prices are about HK$2,000,000 or below, which is much cheaper than Hong Kong property. Since Southeast Asia is mostly a developing country, the appreciation potential of buildings is higher than that of Hong Kong.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Learn more:\u00a0Overseas Property Projects<\/a><\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

What is \u201cProperty Leverage\u201d?<\/h3>\n

Most people apply for a mortgage when they invest in a property. Some people have a bad feeling simply looking at the word \u201cLoan\u201d, that associated with \u201cDebt\u201d immediately. There are actually two different kinds of \u201cDebt\u201d, good and bad. If you just borrow money from the bank to buy items with no appreciation potential, it is called \u201cBad Debt\u201d. If you are buying items that have the potential for appreciation and can create wealth for you, it is called \u201cGood Debt\u201d. In addition to the rental return yield, investing in property also has an appreciation return. Therefore, borrowing from the bank to invest in property belongs to Good Debt as it can create wealth.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Speaking of Property Leverage, let\u2019s take a property valued at HKD 2 million as an example.\u00a0The investor will pay 40% of the down payment which cost $800,000. The rental income can be set off against bank contributions, and after three years the property is valued at $2.5 million and the property has appreciated by 25%. If the investor resells the property, based on the original principal of $800,000, the profit is over 62% and the return is quite high.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

What if only rental returns were considered?\u00a0Again, taking a property of HKD 2\u00a0million as an example. The owner borrowed 60% of the down payment which cost $1.2 million. Assuming the interest rate is 4%, the payment term is calculated as 20 years and the monthly payment is about $8,700. If the rental income is more than $8,600, excluding miscellaneous expenses, the owner will spend an extra $100 per month. Looking at the cash flow calculation alone, there is no return at all.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

That\u2019s why investors are willing to apply property leverage! At the same time, it is explained that investing in property does not only look at the rental return while the appreciation return is also the income of the investor. If investors intend to buy overseas properties, they should invest in areas with high potential for appreciation. If you are not familiar with the overseas property market, you are welcome to contact\u00a0overseas property agents<\/a>. They are more closely aligned with local realities and can carefully analyze the return on investment and property appreciation for you.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Taboos for Property Investment<\/h3>\n

Real estate generally has a good return on investment , as it can generate ongoing passive income, however, you may need to bear the risk too.\u00a0While pursuing\u00a0higher\u00a0returns, investors should make decisions carefully. They have to consider various factors and plan for the worst.\u00a0Some may invest wrong\u00a0in properties because they committed the following taboos.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Taboo 1: Lack of research<\/h3>\n

The Asia Financial Crisis in 1997 caused\u00a0many investors\u00a0to lose a huge amount of money in\u00a0property investment.\u00a0They are still unconfident in the property market and are worried about repeating the same mistakes. The investment mentality is very important, just like the investors who have lost terribly recently are all chasing the market in 2018. It is utmost important to observe the market reaction, especially\u00a0when investing in\u00a0property. You have to get extra attention when everyone foresees a good property market, while when the market atmosphere is calm,\u00a0it may be a perfect time to enter the market\u00a0when no one dares to invest in the property.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Taboo 2: Excessive leverage<\/h3>\n

The most feared thing for property leverage is\u00a0overestimation on their\u00a0loan capacity. The worst case is you cannot even pass the stress test after applying for a mortgage, you are then forced\u00a0to forfeit the down payment given.\u00a0Never underestimate the stress test, as it is not a must for everyone to apply successfully for a mortgage!<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Taboo 3: Without making any comparison <\/h3>\n

In recent years,\u00a0it is often said\u00a0that\u00a0properties in\u00a0Hong Kong Island, near the subway or with invincible seaview have higher return on investment. However, developers may have\u00a0over gauged the future property value\u00a0to make it more appealing, indeed, when investing in a property, you are suggested to make more comparisons and evaluation on your own.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

It is true that investing in property has a relatively stable return. Although the entry fee is higher, the return earned is often higher than expected. Investing in real estate is different from buying stocks. Nonetheless, they can also be leveraged for investment, but it can make investors lose their money in minutes. And even if property prices fall, as long as investors can continue to make contributions, banks will not liquidate their positions. If you plan to invest in a property, don\u2019t just follow the market trend.\u00a0Generally, not everyone can make a profit in property investment. Whether to\u00a0invest in properties or buy stocks, there is no 100% guaranteed\u00a0yield in investment, so investors must do good in risk management.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

If you have plans to invest in overseas properties, but you are not familiar with the overseas property market. Ashton Hawks is founded by a group of senior property investment experts which provides professional real estate consulting services to investors who intend to invest in overseas properties. At the same time, Ashton Hawks will formulate a diversified real estate investment portfolio for reference in order to provide customers with the latest property information to help customers seize every opportunity.<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n

Ashton Hawks also conducts regular property investment seminars which allow clients to keep abreast of market overview, real estate trends and legislative changes. Looking for professional investment property advice? Welcome to leave your contact information and let Ashton Hawks answer your questions!<\/p>\n<\/div><\/div>\n\n\n\n

<\/div>\n\n\n\n
\n
\n
Disclaimer:The information, text, photos contained herein are provided solely for the convenience of interested parties and no warranty or representation as to their accuracy, correctness or completeness is made by Ashton Hawks or the sellers, none of whom shall have any liability or obligation with respect thereto. These offerings are made subject to contract, correction of errors, omissions, prior sales, change of price or terms or withdrawal from the market without notice. Information provided is for reference only and does not constitute all or any part of a contract. Ashton Hawks and its representatives work exclusively in relation to properties outside Hong Kong and are not required to be nor are licensed under the Estate Agents Ordinance (Cap. 511 of the Laws of Hong Kong) to deal with properties situated in Hong Kong. Digital illustrations are indicative only. *Rental yield is projected by the agency and not guaranteed by the developer.<\/em><\/div>\n<\/div>\n
\n
\n
<\/div>\n<\/div>\n<\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

Property investment\u00a0 Buying Stocks Capital More Less Risk Lower and property will not be liquidated. Higher and stock will be liquidated. Nature Stable Fluctuated Profit Increased in small proportion Increased in larger proportion External factors Less susceptible Susceptible<\/p>\n","protected":false},"author":1,"featured_media":8097,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":["post-8095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/posts\/8095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/comments?post=8095"}],"version-history":[{"count":0,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/posts\/8095\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/media\/8097"}],"wp:attachment":[{"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/media?parent=8095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/categories?post=8095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/devwp02.visibleone.io\/ashtonhawks\/wp-json\/wp\/v2\/tags?post=8095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}