Real Estate vs Equities?
With high volatility in the equities markets and residential real estate prices continuing to climb, many investors are wondering where they should put their investment dollars. The age old question of whether to invest in the markets or in real estate is once again at the forefront. Today stock markets are seeing somewhat of a down draft especially in the commodity driven Canadian market. Real estate on the other hand has seen continuous growth over the last decade and some are wondering if there’s a bubble, and when will it burst.
Since equities are driven by world markets and global demand, the ability to hedge market volatility is becoming increasingly difficult. On the other hand, residential real estate has been increasing steadily and some are wondering if a market correction is on the horizon.
Historically, volatility in real estate and equities can both be overcome by a long term strategy of buy and hold. In the equities market buying quality stocks that offer a dividend are a good bet that will provide some income for those with a buy and hold strategy.
For investors in the real estate market, the rent paid is the dividend, providing the income they are looking for in an investment.
Some of the investors that I have had the opportunity to discuss residential real estate investment strategy with feel, as one of the largest cities in Canada and a major centre on the world stage, Toronto prices will continue to grow in value over the long term. One strategy investors consider is to target high income earners who, for one reason or another chose to lease a home rather than buy. Although the cost to the investor is high, the future potential of these types of investment properties is also high.
Other investors prefer to look to the 905 for more affordable investment properties. These types of properties are attractive from a rental price point and provide investors with a larger pool of potential tenants to choose from. This strategy is more attractive to shorter term investment and those looking to build a portfolio of real estate. Investment is growing in places like Mississauga, Milton, Burlington and Guelph to name a few, due in part, to the affordability of housing and the larger pool of potential renters.
Regardless of the strategy that you choose for your investments it is a good idea to speak with your accountant or financial planner to discuss opportunities and/or barriers to any of the investments that you decide to make. A good professional with expertise in tax, mortgage etc..., can be an advantage to help you meet your investment goals.