The UK is obsessed with property investing and the property market, but not the stock market.
The stock market is generally thought to be high risk, confusing and no place for the inexperienced.
But is that fair?
On the face of it, a preference for property seems obvious. The reasons I hear most often are that:
- Property is simple – You can kick a house, it’s real, it’s tangible and everybody understands property
- It’s low risk – A house isn’t going anywhere, is insured if it burns down and people will always need houses
- It’s a high return investment – Prices may go down in the short-term, but in the long-run they always go up by more than inflation
On the other hand, the stock market is often seen as being the complete opposite:
- It’s mysterious – You can’t touch a share, you don’t know what companies are really doing and shares go up and down with no rhyme or reason
- It’s high risk – It’s volatile, has frequent booms and crashes, can drop by 50% in a year or two, many companies go bust and you can lose all your money
- Returns are uncertain – We’re still below the peak from the year 2000 and stock markets can go nowhere for decades
But if you dig a little deeper, it turns out that these differences are not as real as they seem. Here are my 3 reasons why property investors should consider the stock market:
Reason 1 – Stock market investments are every bit as real as property investments
The stock market is not as mysterious as some people think. If you ignore the stock market, what do you actually have? You have investors, and you have businesses. Stock market investors are actually business investors, which in many ways is not that different to being a property investor.
You might want to try this: Drive down to your local Tesco. Can you kick it? Yes you can. If you decide to kick it then you will have kicked one of my investments, and that’s my point.
“Stocks and shares” are irrelevant; what matters are the individual businesses that you can invest in, and the price that you’re willing to pay.
You might also say that nobody really understands big business; they’re too complex and that’s probably true. But I think I have about as much…
