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Thanks to the rise in the number of people who can now reasonably afford to invest in additional sources of income other than them being simply employed, a lot of individuals are now exploring the potential of investing. This may include real estate, shares, real estate investment trusts (REITs) and others.
Investing in real estate has traditionally been considered a safe option since it involves the outright purchase of a tangible asset in the form of land, a building or a unit within a bigger property. If the property, whether it be an apartment complex, a villa or commercial building, gets successfully tenanted, then this would mean steady rental income in the years to come – enough to cover mortgage payments, if any. However, engaging in the real estate business also means paying taxes, service charges and a whole host of fees, a lot of documentation work depending on the size of the property, and paying for the services of a property manager.
Buying stocks or company shares in publicly listed companies is something not everyone is familiar with, though more people are catching up on the trend as the search for passive or residual income sources continues. People who have done extensive research and who actively invest in stocks are aware of the pitfalls of the stock market, and the cycles of change that affect the value of the shares they hold. Expert players know when to buy, when to hold, and when to sell. Hence, it is always better to learn as much as you can before investing. Safer bets usually include high value, high quality stocks in companies.
REITs are a relatively more recent option whereby a person can buy shares into companies that invest in real estate in the form of rental income or through mortgages. To put it simply, REITs are securities that sell on major exchanges just like stocks. They are easy to buy and sell like publicly traded company shares, and are also easy to liquidate unlike real estate.
• Real estate can guarantee a steady income in a stable market
• People who invest in stocks must know when to buy, hold, sell
• REITs easy to buy/sell like shares, easy to liquidate unlike realty
Source: Claire Dangalan, Special to Properties
The writer is a freelancer