In the first video, we will examine these three investment types to understand their unique characteristics and benefits. Let’s dive into why you might choose property as an investment over stocks or precious metals. Each investment type has its pros and cons, and understanding them can help you make better financial decisions.
Let’s compare the stock market versus property.
The stock market allows you to invest in companies like Apple, Tesla, NVIDIA, Microsoft, Coca-Cola, and PepsiCo. These companies have delivered great returns for many investors, including famous ones like Warren Buffett.
Stocks can have high returns: If chosen wisely, stocks can provide significant returns over the long term.
Stocks are liquid: Stocks are generally easy to buy and sell.
Stocks can be very volatile: The stock market can be unpredictable, with prices fluctuating frequently.
Let’s give an example. When it comes to Elon Musk’s companies, Tesla or SpaceX, you can be sure that Elon Musk will work tirelessly until the job is done. He is not just an ordinary businessman and is known for his dedication. But how many people do you know like him? I don’t know any. If you don’t know the owner, you should not invest in the company. That’s why 98% of companies go bankrupt in the first or second year. If you want to trade in the stock market, you need knowledge. Stocks are very complicated and require research to pick the right ones. My friend told me that he traded stocks through a paid broker, and when everything failed, he asked the broker what happened. The broker just lifted his arms up and down. The stock market can be unpredictable, with prices fluctuating frequently. There’s always the risk of losing your investment if a company performs poorly.
So, why consider property?
Property values tend to increase over time, often outpacing inflation.
Cash Flow through Rent: Properties can provide a steady monthly income. You can earn from rental income, property value appreciation, and potential tax advantages. Properties are physical assets that you can see and use. Just think about it—do you know how property works? Of course, you do. Do you know how the stock market works? Most likely, no.
But the most important part of why property is leverage. What is leverage?
Leverage is when you go to the bank and ask them to be a business partner, and they always say yes. For example, you tell the bank you are buying property for investment, and it costs 100,000 pounds. The bank says, “Okay, I will give you 75% of this, or 75,000 pounds.” Let me explain it a bit further.
Scenario:
- If you go to the bank and ask them to give you money to invest in their bank securities or shares, they will say 100% NO.
- If you go to the bank and ask them to give you money to invest in gold, they will say 100% NO.
- If you go to the bank and ask them to give you money to invest in property, they will say 100% YES.
This is what we call leverage. You don’t need 100% of the money and you invest them in something that you know how it works. It is Simple.
Let’s talk about gold:
Gold is a hedge against inflation and economic downturns. Gold has high liquidity: It is easier to sell quickly for cash but does not generate passive income. It is volatile in the short term, and you have storage and insurance costs to consider. Gold is often seen as a safe haven. While it doesn’t produce any income, it’s a good store of value, particularly in times of economic uncertainty. However, its price can also fluctuate, and it’s crucial to consider storage and security issues.
What we have learned from the video. Each investment option—stocks, property, and gold—has its unique advantages and disadvantages. Stocks offer high returns and liquidity but are volatile and require substantial knowledge. The property provides steady cash flow through rent and benefits from leverage, making it accessible and typically appreciating in value over time. Gold serves as a hedge against inflation and economic downturns, is highly liquid, but does not generate passive income and has storage costs.
Only property has a capital appreciation, cash flow every month, rent increases every year and leverage. This is WAY Property.