Property Investment Vs. Stocks, Bonds, & Mutual Funds

Property investment and the stock market provide profitable opportunities.
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Property investment, as well as stock and bond markets, presents unique opportunities for investors around the world. Though both offer substantial profit possibilities and risks, these two investment options have more differences than similarities. Understanding the difference between property investment and stocks, bonds and mutual funds is vital to becoming a well-rounded investor.

Property Investment

Property investment has to do with the purchase and sale — or rental — of real property, including houses, land, offices and industrial buildings. Real estate investors focus on low-volume, high-profit investments, with investors in the most lucrative markets often making an entire year's earnings on as little as two or three sales. Property investment is a sales-driven industry; effective marketing can be a key to success.

Stocks and Bonds

Stocks and bonds are issued by publicly traded companies and government entities for the purpose of raising money from the public. Both stocks and bonds present short-term and long-term profit opportunities for investors, and each investment carries its own unique advantages and risks.

Mutual funds are pools of investors' money that is invested by an experienced fund manager according to the risk tolerances, time-horizons and investment objectives of fund members. Mutual funds are portfolios consisting of stocks, bonds, other mutual funds or any combination of the three.

Real Estate Options

Property investors have a number of options for generating profit. A popular way to earn money in real estate is to purchase a house, renovate it and sell it at a higher price. The same can be done to commercial real estate. Other investors may purchase a property and rent it out, retaining ownership and bringing in monthly profits. Purchasing land can be a profitable, long-term investment. Landowners who wait until local property values rise can reap significant profits if the timing is right.

Stock and Bond Options

Shares of stock can be bought and held for the long term for gradual capital appreciation. Many investors placed their money in once unknown start-ups such as Nike and Microsoft and reaped considerable profits years later, for example. Day traders often look for short-term plays -- stocks that will appreciate in value quickly, regardless of their long-term performance.

Investors can hold bonds until maturity, collecting the full amount of interest payments over the life of the bond, or, if prevailing bond interest rates decline, they can sell bonds early for quick -- but smaller -- profits.

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