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Investing in Property versus investing in the Stock Market

Posted by Remilekun Lilian Durodola on February 8, 2021
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First, for you to have landed on this page, you are thinking of long-term investment options and a way of creating wealth and extra-income for yourself hence, I would like to say well done! You are on the right path to your financial independence.

Investment in either property or the stock market all has its pros and cons if you’d agree with me. But one eventually pays off more than the other. An investor’s preference is dependent on his/her goals.

The stock market offers high dividends and returns but takes a lot of risks, amongst other disadvantages. While investing in properties guarantees stability and has much higher returns with little or no risk at all. But here are some factors to critically assess before deciding which of these long-lived investment options you’ll opt for.

  1. Return on Investment:  investing in the stock market makes more sense especially when it’s company stocks other than independent investment. It can yield up to 5% dividend and the highest-paid dividends tend to have lower appreciation. On the other hand, in the case of rental properties, there is a constant cash flow and the value of property always appreciates. 
  2. Asset control/Risk: to a large extent you can control your investment in real estate. Even when there is a recession in the real estate market, all the investor needs to do is to lay low and wait till the market booms again then you can sell. Stock investment is more at risk when the economy is in recession or inflation in the market. This will immediately affect the value of a stock. The only major risk an investor should watch out for in real estate is that it requires a lot of research. Do your research well because it requires a lot of money. 
  3. Tax Advantages: the tax (LUC) being paid on properties reduces over time. As rental properties structure depreciates over the years, the tax paid also decreases and, for pensioners in Lagos, the state government has exempted them from paying taxes over their landed properties https://lagosstate.gov.ng/blog/2020/08/05/lasg-reviews-land-use-charge-rates/.        This doesn’t stop the renovation and refinancing of the structure but places the investor at a receiving end as he/she pays lesser tax dues on already acquired properties. For company stock, taxes will continuously be deducted, for every profit made on your stock. 
  4. Retirement Plan: if you’re thinking of a great retirement plan, real estate is sure the best option. Either as a rental property or one who deals with commercial or residential properties, it is certainly a good way to make a passive income for life. Stock will require a very huge sum and a longer time to give you the same value of constant income and lesser risk as real estate, as your retirement option. 

Both property and stock can be good investment options, but your choice should be tailored to suit your goals and meet your needs. However, if wealth creation is your radar, then investing in real estate is unavoidable. 

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