STOCK MARKET OR REAL ESTATE

WHY REAL ESTATE IS A SOUND AND SAFER INVESTMENT IN CANADA

By Dino Nicosia, Broker of Record, Investpro Realty

Real estate ownership and investing in the stock market can bring wealth and riches and are both great long term investments. However a recent event in the stock market has proven how volatile and scary stocks can be. The stock market can fluctuate dramatically, exemplified by huge losses in October of 1987 (known as Black Monday) and the more recent meltdown of October, in 2008, where the TSX had lost about one-third of its value in a matter of days.

Real Estate owners are not shielded from the peaks and valleys of value swings, however Real Estate investment is unique from the stock market, because it is a tangible investment (you can see it and touch it) and you have some control on its viability, thus resulting in much less dramatic fluctuations and volatility. Another very unique aspect of Real Estate (not available with stocks) is that huge wealth can be created by using leverage; investing a small amount of cash to acquire a large real estate portfolio. eg. $100,000 down payment allows you to buy $1,000,000.00 property.

Real Estate is the best form of investment for the long term. No other investment vehicle can guarantee (if held long enough) that it will exceed or keep in line with inflation. In 1945 the average home in Canada was valued at $5,500, and sixty years later (year 2005) the average house price had jumped to $260,000; by far exceeding inflation.

Here are some of the other advantages in a long-term real estate investment that is not available with stocks:

• Cash flow and residual income
• Tax free profit on a sale of your residential home
• Equity also increases through mortgage principal pay down.

Can anyone afford not to invest in Real Estate?