INVESTMENT IN STOCK EXCHANGE Vs REAL ESTATE
The most significant questions among the investor sector is determining whether they continue to invest in the stock market or in real estate, because both investment schemes have a key quality that is directly related to profitability. It is essential to take into consideration that both operations are historically successful, to understand this type of operation in a substantive way, in principle we start with the study of its behavior, since the two risk level indices of both operations are very different.
Investments in the stock market have shown high levels of profitability, but the level of risk in this type of operation is also high. It offers a wide variety of financial instruments in which to invest beyond the purchase of company shares, for which we will substantially mention, but not limited to, the risks to consider when investing in the Stock Market:
• Inflation risk. If inflation is higher than profitability on the stock market, the increase in prices produces a loss of purchasing power; that is, inflation ends with the profit or profits obtained in the stock market; However, historically, profitability remains above inflation levels. It is one of the most significant risks among investors, since if the inflation rate is higher than the investment return, the real return will be negative. In other words, inflation reduces the return that an investment generates, although historically stocks have remained ahead of inflation.
• Interest rate risk. It mainly infers on the securities that offer a fixed yield, such as bonds, before the fall in the interest rate below the yield of the title, the appreciation becomes, since it will offer an interest higher than that of the market; However, if the interest rate increases above the value of the interest on the bond, the bond will fall.
• Market risk. It corresponds to the variations in the stock market value, that is, the volatility in prices that impacts on all types of financial assets, corresponds to all the variables and circumstances that directly and indirectly influence the prices of companies. It is a risk that investors must take; that is, the probability of losing part of the purchase value of the shares, when the market experiences a decline, this is where the variability and volatility that the market faces come into play. To minimize this risk, it is very important to diversify the investment portfolio.
• Liquidity risk. It occurs when the shares are sold at a certain value and not finding a buyer to pay that value, forcing them to sell below the market price, this can happen in case there are no buyers for that value, and the lack of liquidity in the market forces you to sell at a lower price.
Investments in the stock market represent a fascinating world, it is a wide market with very diverse financial assets that allow an investment to be made at a certain risk profile, for those who seek greater profitability should bet on highly risky profiles, that is, the level of volatility is very high, but investing in the stock market is undoubtedly an excellent decision, but in a diversified way to offset the risk inherent in certain assets over a long-term horizon; you can have a high return, but assuming a high risk.
It should be noted that very few investors obtain sustained average returns over time above 30% per year, and many of them have long-term losses mainly caused by years of large stock market losses.
Now real estate investments are considered one of the best investment options since time immemorial, because real estate does not lose its value and is revalued over time, with which a value called capital gain is obtained, also, it can be obtain profits from the profitability of the property, such as long-term rent or hotel operation of projects under the condo-hotel model. Real estate investments can constitute a type of fixed income. Real estate investments are low risk, because historically they are not subjected to the variability and volatility that the Stock Market market faces.
Another positive aspect is the liquidity that investment in a property for vacation rentals can generate, a business scheme that has rebounded in the Riviera Maya, Mexico City and Baja California, due to the fact that it leaves considerable profit rates and high profitability , allows you to forget everything related to its maintenance and administration, to only see your investment grow, that does not mean that the owner must stop paying the costs of these, but a third party will take care of that, the investor only dedicates himself to receiving your return on investment. Investing in the Riviera Maya has several advantages, it is a privileged area that is surrounded by nature, jungle, beach, archaeological sites and more.
An important factor of good investments are those made at the right time, the Riviera Maya is at its best after the arrival of the pandemic, the recovery of the real estate and hotel sector, is due to the high influx of tourists from all sides , which naturally causes growth in the economy.
Currently, large hotel real estate projects such as “Wyndham Grand, Mayakaan Residences Riviera Maya” offer returns of more than 160% in just 8 years.
With the construction of the Mayan Train, said by the United Nations, economic growth will double on the route; likewise, it will imply an increase in the value of real estate and, consequently, the gain from real estate capital gains. The area will be a magnet for real estate development and will attract private investment.