Real Estate versus Stock Market Returns

Thinking of stocks vs. real estate investing? Here are why you should venture into real estate before stocks. 

Stocks versus Real Estate Investing: Why Choose Real Estate

When individuals embark on their investment journey, many options may flood their minds regarding where to allocate their earnings and hard-earned savings.

Despite the challenges posed by the ongoing pandemic, the spectrum of investment choices remains expansive.

Many Filipinos actively explore investment opportunities amid employment uncertainties and impediments to generating additional income.

The pivotal decision they grapple with is determining the most suitable asset for their investment. This article aims to enlighten why prioritizing real estate over stocks could be prudent for investors. 

Real Estate versus Stock Market: What Best Suits You?

Amidst the dynamic landscape of real estate versus stock market returns, the resilience and stability of real estate investments stand out. Despite the volatility experienced by the stock market, the real estate sector has demonstrated a more robust performance over time.

This stability is particularly evident in rental properties, which provide a steady income stream, shielding investors from the rapid fluctuations in stock prices.

One crucial aspect to consider when comparing these two asset classes is the impact of taxes. Capital gains taxes and property taxes play a significant role in influencing the overall returns on investment.

Real estate properties often enjoys favorable tax treatment, with potential deductions and exemptions, providing investors with a more tax-efficient strategy than the stock market.

Furthermore, the tangible nature of real estate assets, especially residential real estate, adds another layer of security to an investment portfolio. Unlike stocks, which represent ownership in a company and are subject to market sentiments and speculation, real estate is a physical asset with intrinsic value.

Although not entirely immune to economic shifts, the real estate market tends to be more resilient, offering a tangible asset that investors can touch and feel.

What’s my Goal in Investing?

Investing is a way toincrease the amount of money you have or generate income. From the definition, capital growth is expected in every investment decision. Remember that your main goal here is not just owning but earning something.  

In any investment type, you usually buy it at a lower price and then sell it at a premium, which is your profit.

Both in real estate and stocks, the individual does not dictate how much something should be sold. It needs the sentiments and demand of an entire market. So, what makes real estate better than stocks?

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What is a Stock/ Stock Market?

What is a stock | Photo by

A stock represents ownership in a company or corporation. As a stock investor, you have a proportionate claim on the company’s assets – what it owns, and earnings – what it generates in profits. Another term for stocks is share or company’s equity.

Stock market investment and ownership implies that a shareholder (stock investor) owns a portion of the company equal to the number of shares held as a proportion of its total outstanding shares. Unlike real estate, stock owners can sell stocks immediately, if the environment is positive.

What is Real Estate?

Real estate is the land, including any permanent improvements made or attached to the land, whether natural or man-made, including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property.

It differs from personal property or assets not permanently attached to the land. These include cars, jewelry, furniture, and other machines. 

Suggested Read: How to Make Money from Real Estate in the Philippines?

In real estate, there are five main categories. These are commercial property, residential, industrial, and raw land for a particular use. With its many types, there are various ways to earn from real estate and investment property.

Many investors prefer real estate investment over stock markets especially pre-selling properties for purposes of flipping houses, and buying rental homes. There are certain areas in the country that even offer tax advantages. But how viable is real estate as an investment compared to stocks?

Stocks versus Real Estate Investing

Stocks and real estate are two different kinds of investment vehicles. At the end of the day, putting your money on either is still a personal choice. It will still depend on your personal goal, financial condition, risk tolerance, and investment style.  

Here are some considerations to help you decide which investment to venture into. Since you are investing and your primary goal is to gain from that investment, an assurance of a high return on your investment is undoubtedly one of the significant considerations. 

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How to Earn Returns in Stocks Investing?

Capital Gains

In owning stocks, you can make money in two ways. The first is through capital gain or appreciation. If the company you bought stock from performs well, the stock price may rise. If your revenue is more than the money you put in, that is called a positive return.

On the other hand, if you get less, then it is called a negative return. 


The second way to make money in stocks is through dividends. Through this, the company pays out some of the profits to stockholders. A dividend is paid per unit share of stock. Suppose you own 10 shares in a company.

If that company pays an annual cash dividend of 500 pesos per share, you will receive 5,000 pesos yearly. Dividends may be paid or issued in various forms, such as additional stocks, cash, or any other form. 

Stocks are a well-known investment choice that can give high returns. But did you know that real estate could give you just as much or even more? Real estate can also be considered an alternative to stocks with more advantages.  

For one, it offers lower risks and can give better and more satisfying returns. Plus, it can also provide greater diversification.

Because of good value appreciation, it is considered distinctive as an asset. Also, it can be a viable source of passive income. 

How to Earn Returns in Purchasing Property?

Traditional real estate investment can be broken down into two categories: commercial and residential properties. Commercial properties refer to apartments, office buildings, and strip malls.

On the other hand, residential properties refer to your house and lots and rental property. As an investment strategy, one’s initial investment can be on a pre-selling property to manage risk tolerance.

This can then be used for flipping homes that you buy to resell for profit. Or work with a property management for rental income. In either of these categories, there are guaranteed returns or earnings. 

Investing in real estate has many advantages compared to investing in stocks. Some of them are the following: 

A. Real Estate Offers Reliable Cash Flow

A cash flow is positive when there is more income than expenses. The more cash flow a property has, the better the return and the more income the real estate investor earns.

In essence, cash flow in the housing market is what you get after deducting all expenses, such as mortgage interest, maintenance costs, and economic recessions, from your property’s income.

Cash flows from real estate are more reliable because real estate values do not fluctuate as much as stocks. This way, real estate investors can look forward and aim to own a property that can make money and deliver positive cash flow.  

B. Real Estate Appreciates in Value

Every investment goal aims for a positive return on investment (ROI). This assurance is particularly evident for real estate investors when considering the appreciation of real estate prices and potential capital gains tax upon deciding to sell the property in the future.

With real estate, profit is not just an expectation; it’s a guarantee, as property values consistently appreciate over time, ensuring the property will sell for more than its initial purchase price. This is way a lot of prospective investors invest money in real estate more than other forms of asset types.

You can also earn from rental properties, and in the event you have a change of heart mid-stream, then the property can be your primary residence while the property appreciates over time.

C. Real Estate Provides A Higher Return Because Of Positive Leverage 

People tend to overlook real estate investing because of the preconceived notion that you must have disposable money to buy a property. But real estate can be leveraged, which is the most important advantage of real estate investing.  

Leveraging is when you borrow capital to purchase a house, lot property, condo, or any real estate investment you want. That means even you can take this opportunity to leverage or loan money from the bank and buy a home.  

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As an investor, investment decisions will still depend on your choice of monetary vehicle. However, suppose you want to build your wealth faster. In that case, you may want to invest in real estate and stocks to diversify your portfolio.

While the stock market offers the allure of high liquidity and potential rapid gains, the real estate market provides a more strategic and long-term investment approach.

Real estate investments are well-suited for those seeking stability, consistent cash flow, and the potential for appreciation over time.

Investing in real estate before stocks are rooted in the robustness of real estate investments, the favorable tax implications, and the tangible nature of the assets involved.

By prioritizing real estate, investors can establish a foundation of stability in their portfolios, setting the stage for a well-rounded and resilient investment strategy.

If you do not have any real estate investment now, worry not. The best place to start investing is in the Philippines’ most trusted and biggest real estate developer, Camella.

Here, surely you can never go wrong with your investment. Start by checking out our catalog of houses and lots for sale. Alternatively, you may also look through our property locations around the country. 

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