Should I invest in stock or real estate?



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I am just brainstorming here whether to invest money in stock, real estate, or both? Should I buy some property for cash and be safe? Wait until mortgage crisis ends and real estate prices go up? Should I get a foreclosed property? Or should I invest in stock online? I could put my money towards some IPO (initial public offering)? Or buy some stock that is already stable and gives a good stable return on investment?



I could buy stock and watch the market price grow right? But how liquid is it? Has anyone invested their money before? I was thinking of using online stock trading like E-Trade, or Scottrade.com or something like that. Stocks online should be just as good of a tool as actually going in person to stock brokers office and talk with him face-to-face. Price of a stock is what concerns me though. I am not sure how can I determine whether the price of stock is at market price, or is it overpriced or under priced?



I haven't gotten a degree in finance at a university, but I do have some understanding about stock market. The following is what I have learned when I was taking financing classes at a local community college.



1. Common Stock is ownership of business, the shares that a distributed among the owners of a corporation or a company.

2. Preferred Stocks are not like common stock, they are special types of stock that most of the time pay out high dividends that investors later use to buy more stock :-) I wonder if you could trade online this preferred stock?

3. Bonds – I have never fully understood what this is but I remember there are various kinds of bonds: corporate bonds, municipal bonds, savings bonds, U.S. government treasuries, etc.I think there a lot of various kinds of these securities for sale out there.

4. Money Markets are markets where they trade money? :-) I know that these are highly liquid funds that were created to protect your purchasing power ($PPP). In economic terms, purchasing power is simply - how many hamburgers can you buy for your dollar? For example, in 1960 you could buy far more hamburgers than you can now. Money markets are highly liquid, thus a lot of investors consider them to be cash equivalent, but still, its not like you have cash in your hands.

5. Real estate investment trusts (REITs) are special type of company designation that allows no taxation at the company level provided more than 90% of earnings are paid out to the shareholders. The assets are often invested in a variety of real estate projects and properties.I copied this one from somewhere, really have no idea what these real estate investment trusts are, but you can look at pretty real estate here. :-)

6. Mutual funds are a bunch of stock put together in a portfolio. Investors consider them very low interest on return investments and so they are popular among investors that have no experience or investors that are really scared of investing.

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How to Invest in Stock - and actually do the research



There five documents that you as investor should worry about



when you search for investment opportunities. You need to



know the quality of a stock that you are going to trade on online



stock trading website or at a brokers office.





1. The 10K - this is the annual filing with the Securities and Exchange Commission (SEC) and is probably the single most important research document available to investors about a company.I wish they could just give away 10K worth of stocks and futures. Futures are cool things too, you can earn money on them somehow too!

2. 10Q's are the same forms as 10K's except they are filed at the end of each quarter of a business cycle.

3. Proxy statement will help you learn more about Board of Directors, managers, CEO's and other officials who probably own more stock of the company than the rest of the guys, and make huge salaries!

4. When you pick a company that you want to invest in, or buy stocks of - make sure you read their annual report first. Not only make sure to read it, but makes sure you understand how to read it. Look what CEO's and CFO's say about company's future and economic performance. It will be very smart of you to look at what Warren Buffett has to say about it :-)

5. Morningstar, Value Line, S&P, and Moody’s and others provide statistical reports in chronological order . Read those.



How to Invest in Stock - The Three Financial Statements that you need to understand and read

There are three financial statements you will want to understand :



1. The income statement

2. Th balance sheet

3. The cash flow statement



Other than what was stated above - I don't know what to do. Please comment, let me know what's going on in the world of finance.



It is a good idea you own one home first before you start investing in another property to earn money. Financing and mortgage I think is one of the most evil things created in the finance and real estate industry. Buy houses for cash, and buy house by owners as you can avoid paying fees and commissions.



Once you own your first home, you will probably want to get another house. It is a great opportunity to make some money and have along-term investment. Because housing market is in shit right now, it is a good time to cash in on foreclosed properties. Don't let the economy scare you. Be confident in what you are doing because real estate prices will bounce back today or tomorrow, it doesn't really matter as long as you can get a good deal.



Although financing isn't that easy like it used to be, you still can get a mortgage if you don't have the cash for it obviously. Interest rates have been dropping to promote the economic bounce-back, and there is a lot of expectation that it will continue dropping. Since foreclosure rates are going up, the supply of houses increases and drives housing prices down.

Finance Smart!

Once you decide to invest your money in real estate, your first objective is to figure out to finance foreclosed property that you put your eye on. The problem here is not like with any other business. You can't buy a house and expect to resell it at a higher rate right away.



Make sure you know your clear goal and expectations from the property. Answer these two following questions first:



1. Do I want to keep this property as a long-term investment and rent it out?

2. Do I want to flip this property and make some cash fast?





In the second case, get an adjustable interest rate mortgage, find your buyer, and sell your house fast! The reason you want to get adjustable interest mortgage rate is that for a long-term investment it will create a lot of problems (like what we are experiencing with our real estate market now). But if you are confident that you will flip the property fast and find the buyer, do it before mortgage adjusts! Make sure you pay only interest, because then the buyer will be responsible for it when the buyer buys house from you.



For longer-term real estate investments, fixed mortgages are better because they allow you to plan your cash flow accordingly and get by when things are tougher.



***I really have no idea which one to go with best, just try to look around for the best deal



When you buy your property and plan to subsidize your mortgage with rent money, make sure you don't spend a lot of money on remodeling because tenants will mess it up anyways. If you have a rush to pay off your mortgage go ahead and pay it off. But really there is no point to stress about your mortgage, because your tenants are paying most of it and so you won't have to worry about making those payments. If you are an aggressive investor, go ahead and pay your mortgage off and then enjoy rent money. If you have a rental property, make sure you are also leveraging all of the tax benefits of depreciation and expenses.

Do it yourself where you can, and save yourself some bucks!





When you made your real estate deal, you may have made $20,000.00 dollars but paid an attorney $2,000; $7,000 to a contractor for remodeling and fixing; your real estate agent took $6,000; your attorney took $3,000, etc etc. and you end up not making anything or even loosing!





Take a look at this property here:



Remodeled Suburban Home in Toronto for resale



When you end up buying your real estate property, improvements can really add some value to your property and benefit you in many ways. New cabinets, landscaping, tiling, furnishings, etc. are among and part of interior design additions that will help your property gain some value. Hire contractor only if you need it. if NOT - DO IT YOURSELF!!!



You can change locks, plant plants, painting, etc. are things that you could probably do yourself. But don't be stupid! If you don't know how to do sheet rock - DON'T DO IT! You will waste time and money yourself, and then you will end up hiring a professional again. It will be quiet astonishing to see how much you can save by doing things yourself. If you really feel like you are helpless in this stuff, make sure you budget the right amount and do not go over. Real estate is tricky, don't get caught in your own mess.

One last thing - Know your market!

Sometimes it may feel that you are on top of things, but later you will find out that real estate is extremely competitive and difficult to survive in. A lot of guys out there have in this business far longer than you have, and they can squeeze you out of business just with a snap of fingers - watch out! Do price research, look up classifieds, property listings in your area, estimates, projections, you can save a lot money doing this. The more you know, the better deal you can negotiate. Knowledge prevents you form under-pricing or overpricing - so do your research!



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