Investing in Rental Property vs Stocks: Which Is the Better Investment?

Real estate vs stocks can be an incredibly complex issue to tackle for investors. Both strategies are famous for creating a tonne of wealth, making it very difficult to decide which strategy to take. Luckily, our in-depth guide is here for you. Keep reading to learn all about real estate vs stock market investing.

Investing in Rental Property Vs Stocks

When it comes to making money, the choice of real estate vs stocks is one that dominates the mind of investors. 

Both investment strategies have exploded over the last few years, with record growth levels attracting more and more people to make passive income. 

You’ve likely heard many benefits of each strategy and are confused about which one is best for you. 

Do you want the dramatic soaring highs and lows of the stock market, or do you want the more reliable and long-term growth potential of real estate? 

This debate between real estate vs stocks is something that investors have explored for many years. If you’re unsure whether investing in rental property vs stocks is the right choice, this guide is for you! 

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Contents

Real Estate Vs Stocks
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Real Estate Vs Stocks



Real Estate Pros & Cons
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Real Estate Pros and Cons



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Stock Market Pros and Cons



Property or Shares - Factors to Consider
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Property or Shares: Factors to Consider



If you’re asking, “should I invest in real estate?” “Is investing in real estate worth it?, or “should I invest in stocks?” you’ve come to the right place. 

Here, you’ll find information on the basics behind property and shares, with all the benefits and risks behind property vs stocks investment. 

Keep reading to learn more. 

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What Are Your Goals?

Before starting this guide to real estate or stock market investmentyou must consider your personal goals and preferences before investing.  

Are you investing for a big retirement? Are you investing for your family’s financial future? Or do you just want more cash on the side? 

Whatever your goals, each will have a significant impact on what investment strategy you choose. 

Moreover, think exactly how you want to handle your investment. 

This means considering your risk tolerance, considering whether you are happy to wait for long-term growth, how much money you have available, and if you want a hands-on or hands-off investment. 

When choosing between real estate or stock market investment, it is crucial you consider these goals as each investment strategy is suited to different people. 

Real Estate vs Stocks: What’s Right for You?

Stocks vs Real Estate: What Has the Highest Returns

Now that you understand the basics of real estate investing vs stocks, it’s time to look at the return potential of both investment classes to help you decide between stocks or real estate. 

To do this, we will compare price growth in 2020/2021 and growth over the last five, 10, and 20 years to see which investment class offers the most significant growth potential. 

For comparison’s sake, we will be comparing the FTSE 100 Index and average UK property prices from official Land Registry data.  

The Financial Times Stock Exchange 100 is a share index of the 100 highest market capitalisation companies on the stock exchange. It’s a good comparison point as it is often used as a gauge to show how the top businesses are performing in the UK. 

Also, due to the way stock market prices fluctuate day-by-day, we have selected a “representative” day from each month/year to compare with property. 

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Real Estate vs Stock - 10 and 20 Year Growth Real Estate vs Stock - 10 and 20 Year Growth

Investing in Real Estate vs Stocks: 10- and 20-Year Growth Rates 

When comparing investing in stocks vs real estate, it is important to think long-term. 

For many investors looking at retirement, long-term growth potential over a 10 and 20-year period can be key as it demonstrates how strong the capital growth potential of an asset is. 

Between 2011 and 2021, the average UK property has increased in value by 54.79%.  

On the other hand, FTSE 100 Index prices over the same period increased by 19.01%. 

Looking back further still between 2001 and 2021, UK prices increased on average by around 175.30%. 

For the FTSE 100 Index, prices increased in the last 20 years by just 20.14%. 

It’s clear when it comes to long-term capital growth that real estate performs far better than the stock market. 

Investing in Stocks vs Shares Investing in Stocks vs Shares

It’s important to note, though, that many investors don’t use stocks for long-term capital growth the same as property.  

In fact, many investors choose to buy low and sell high at the opportune time and then often reinvest into another stock. 

While this can certainly be used to describe property investors, it’s essential to consider that huge growth can happen day by day in the stock market. 

Let’s take 2020 as an example.  

A stock market investor could have bought some stocks when the price dropped in March 2020 at £5,190. 

In just over four months, they could have sold the stocks for a 21.18% profit.  

This is why investment goals matter so much when deciding between property vs stocksIf you have the nerve to risk your investment and take the chance prices will rise again, you could opt for a stock. 

On the other hand, if you want a safety net and want a more secure and long-term investment, then property is the obvious choice. 

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Investing in Stocks versus Real Estate: The Risks

Like any investment, there is going to be risk involved when considering stocks versus real estate. 

The last 20 years have delivered some of the most uncertain economic times the UK has ever seen, with the 2008 banking crisis, Brexit, Covid-19, and more causing severe issues. 

With such economic frailties in the background, it’s important to try and find an investment strategy that delivers fewer risks out of stocks vs real estate. 

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Investment Stocks vs Investment Property Investment Stocks vs Investment Property

Real Estate vs Stock Market Returns

The final aspect we need to consider when comparing real estate vs stocks is the potential return on investment. 

For real estate, return on investment can be calculated using rental yield. 

Here, you can work out how much return on investment you earn every month through rent. It essentially shows how real estate investment can pay for itself in the long run. 

It is calculated by dividing your yearly rental income by the original purchase price and multiplying by 100 for a percentage. 

Let’s use the average UK property as an example.  

According to Homelet, the average UK rental income per year will be around £11,952. 

This means the average rental yield in the UK is 4.66%. 

That means every year, you will see a 4.66% return on your investment just through rental income.  

Of course, rental yields in the UK can change drastically depending on the entry price and average rent. 

For instance, some cities like Manchester and Liverpool, which are widely considered two of the best areas to invest in property, can generate yields upwards of 8%. 

Investment Property Interior - Bedroom Investment Property Interior - Bedroom

Comparing return on investment to stocks, however, can be more difficult. 

In many circumstances, the comparison between real estate and stocks can be apples to oranges, with each seeing very different returns. 

For stocks, you can calculate return on investment by taking away the ending value of an investment by the initial entry cost and then dividing it by the initial entry cost. 

Most stock investors would deem a good annual return of investment to be around 10%. 

This can, of course, heavily differ depending on the year and can feature negative returns depending on what happens. 

For instance, the S&P 500 Stock Index entered negative territory twice in the past 10 years, with another year seeing a 0% return.  

The bottom line is that real estate vs stock market returns can both be very high. It is incredibly hard to directly compare return potential when investing in stocks vs real estate, and you should decide which option you opt for based on your risk tolerance. 

The Pros of Property Investment

So, should you invest in real estate? 

Many people wonder, is real estate investing worth it?” and there are plenty of reasons why you should consider property as the ultimate investment strategy. 

The Pros are: 

  • It’s a tangible asset 
  • It’s easy to get started 
  • The UK property market is performing well 
  • You have more control 
  • Can be completely hands-off and generate passive income 

One of the main advantages of property when considering the housing market vs stock market is the fact that property is a tangible asset.  

This means that unlike when investing in shares, UK investors who purchase an investment property benefit from owning something they can physically see and touch. 

For many people, this provides a sense of security as you can see where your money is going. 

Tangible assets are often considered the best type of investment for many reasons.  

One reason is the fact that tangible assets are seen as a ‘hedge’ against inflation.  

This means that when the cost of living increases, so do property market prices.  

This is beneficial for those who have invested in a rental property as it allows them to start earning a higher amount of rental income.  

With the stock market, however, inflation can negatively affect your investment.

Compared to investing in shares, UK property investment is relatively easy to get involved with as a beginner.  

There’s a lot of helpful information out there on all things related to property investment, allowing first-time investors to learn more about the industry and access property investment tips and advice before beginning their venture. 

A quick internet search and investors can access a range of information on everything from expected tax payments, interest rates, potential income gains, the best areas to invest in, and more.  

Once research has been done, investors can get started with their investment and often don’t necessarily need to seek professional advice. 

This is one of the biggest advantages of property vs shares for those who wish to immerse themselves in the investment and soak up more knowledge, as with stocks and shares, investors will normally hire a stockbroker to make all of the related decisions. 

For those hoping for the best investment returns, UK property investment may well be the answer.  

The property market in the UK is currently performing highly, with property price growth and increased rental demand seen across the country’s top cities. 

One of the main concerns for those choosing between investing in rental property vs stocks is whether or not they will make a significant return on investment.  

When owning a rental property, high rental yields are a big factor to look out for.  

If a property investment opportunity comes with high yields, you can expect to generate some significant returns. 

When you look at rental yields in the UK, you’ll find that a number of areas offer some lucrative buy to let options.  

Liverpool, for example, boasts a total of six postcodes that make the list of Totally Money’s best rental yield areas.  

Most notably, the L1 postcode offers rental yields of up to 10% – the highest in the UK! 

This means that property investors who purchase a rental property in this postcode can benefit from lucrative returns on a regular basis.  

Many other cities in the UK are also known to offer high yields, including other Northern cities like Manchester. 

Along with rental yields, capital growth is a key factor to keep in mind when deciding between stock market or rental property investments.  

If a property is based in an area with a slow-growing market, those who invest in it are likely to see low returns from capital growth, or no returns at all. 

Luckily, the UK property market has shown signs of strong growth over recent months, with predictions for even further rises in many key property hotspot areas. 

As a whole, the UK property market in 2020 was seen to have risen at its fastest rate since 2004.  

This growth has continued in 2021, with property prices in areas like Liverpool 18.09% higher than a year prior, as of March.  

Similar growth was seen in Manchester with a 16.23% growth over the same period. By 2025, the North West region is expected to have risen in value by 28.8% making investment potential some of the highest you will find in all of Europe. 

Those wondering ‘should I invest in real estate or stocks?’ need to think about the level of control they wish to have over their investment.  

When investing in a rental property, you’re given a much higher level of control and freedom than you would have if you purchased stocks and shares.  

Right from initial purchase, investors are offered total control of their investment, being able to research the best buy to let locations and select their property of choice. 

Many real estate investors who want to earn passive income with a hassle-free investment will choose to hire a property manager to take care of any landlord duties and the general upkeep of the property.  

However, those who don’t wish to use a property management company to find tenants and carry out landlord duties also have the choice of managing the property themselves. 

This can be a good option for those who have more free time on their hands, such as those who are retired or looking for an extra project to manage alongside their main career. 

Another area you have control over when investing in a rental property is when and how you plan to sell the property.  

Savvy investors will research the UK property market to find out the best possible time to consider exiting their investment.  

This would typically be when the property market is likely to be at its strongest. Investors have freedom over the amount they wish to sell the property for. 

Of course, it’s always recommended to seek a professional valuation or do thorough research before reaching a final listing price.  

If your property is listed too high above value, it may be more difficult to sell.  

Alternatively, if you go for a property price that’s too low, you could miss out on the chance to make larger returns on your investment. 

Perhaps one of the best benefits to real estate investment is the ability to have a completely hands-off investment while generating pure passive income. 

While many buy to let investors choose to become landlords, this isn’t a choice you need to make. 

Instead, you can use the services of a property management company.  

If you live away from your property, whether that be in another city or another country, it will be incredibly difficult to deal with the day-to-day needs of managing a property. 

Thankfully, through the services of a property management company, the company can deal with all landlord roles like finding tenants, dealing with their issues, and collecting rent. 

While they charge a fee for this service, it does mean you can simply sit back and relax while your property generates frequent passive income. 

Overall, if you’re wondering should you invest in real estate, there are plenty of reasons why you should. 

It’s a Tangible Asset

One of the main advantages of property when considering the housing market vs stock market is the fact that property is a tangible asset.  

This means that unlike when investing in shares, UK investors who purchase an investment property benefit from owning something they can physically see and touch. 

For many people, this provides a sense of security as you can see where your money is going. 

Tangible assets are often considered the best type of investment for many reasons.  

One reason is the fact that tangible assets are seen as a ‘hedge’ against inflation.  

This means that when the cost of living increases, so do property market prices.  

This is beneficial for those who have invested in a rental property as it allows them to start earning a higher amount of rental income.  

With the stock market, however, inflation can negatively affect your investment.

 It’s Easy to Get Into 

Compared to investing in shares, UK property investment is relatively easy to get involved with as a beginner.  

There’s a lot of helpful information out there on all things related to property investment, allowing first-time investors to learn more about the industry and access property investment tips and advice before beginning their venture. 

A quick internet search and investors can access a range of information on everything from expected tax payments, interest rates, potential income gains, the best areas to invest in, and more.  

Once research has been done, investors can get started with their investment and often don’t necessarily need to seek professional advice. 

This is one of the biggest advantages of property vs shares for those who wish to immerse themselves in the investment and soak up more knowledge, as with stocks and shares, investors will normally hire a stockbroker to make all of the related decisions. 

The UK Property Market Is Performing Well - Part I

For those hoping for the best investment returns, UK property investment may well be the answer.  

The property market in the UK is currently performing highly, with property price growth and increased rental demand seen across the country’s top cities. 

One of the main concerns for those choosing between investing in rental property vs stocks is whether or not they will make a significant return on investment.  

When owning a rental property, high rental yields are a big factor to look out for.  

If a property investment opportunity comes with high yields, you can expect to generate some significant returns. 

When you look at rental yields in the UK, you’ll find that a number of areas offer some lucrative buy to let options.  

Liverpool, for example, boasts a total of six postcodes that make the list of Totally Money’s best rental yield areas.  

Most notably, the L1 postcode offers rental yields of up to 10% – the highest in the UK! 

This means that property investors who purchase a rental property in this postcode can benefit from lucrative returns on a regular basis.  

The UK Property Market Is Performing Well - Part II

Many other cities in the UK are also known to offer high yields, including other Northern cities like Manchester. 

Along with rental yields, capital growth is a key factor to keep in mind when deciding between stock market or rental property investments.  

If a property is based in an area with a slow-growing market, those who invest in it are likely to see low returns from capital growth, or no returns at all. 

Luckily, the UK property market has shown signs of strong growth over recent months, with predictions for even further rises in many key property hotspot areas. 

As a whole, the UK property market in 2020 was seen to have risen at its fastest rate since 2004.  

This growth has continued in 2021, with property prices in areas like Liverpool 18.09% higher than a year prior, as of March.  

Similar growth was seen in Manchester with a 16.23% growth over the same period. By 2025, the North West region is expected to have risen in value by 28.8% making investment potential some of the highest you will find in all of Europe. 

You Have More Control

Those wondering ‘should I invest in real estate or stocks?’ need to think about the level of control they wish to have over their investment.  

When investing in a rental property, you’re given a much higher level of control and freedom than you would have if you purchased stocks and shares.  

Right from initial purchase, investors are offered total control of their investment, being able to research the best buy to let locations and select their property of choice. 

Many real estate investors who want to earn passive income with a hassle-free investment will choose to hire a property manager to take care of any landlord duties and the general upkeep of the property.  

However, those who don’t wish to use a property management company to find tenants and carry out landlord duties also have the choice of managing the property themselves. 

This can be a good option for those who have more free time on their hands, such as those who are retired or looking for an extra project to manage alongside their main career. 

Another area you have control over when investing in a rental property is when and how you plan to sell the property.  

Savvy investors will research the UK property market to find out the best possible time to consider exiting their investment.  

This would typically be when the property market is likely to be at its strongest. Investors have freedom over the amount they wish to sell the property for. 

Of course, it’s always recommended to seek a professional valuation or do thorough research before reaching a final listing price.  

If your property is listed too high above value, it may be more difficult to sell.  

Alternatively, if you go for a property price that’s too low, you could miss out on the chance to make larger returns on your investment. 

Hands-off Allowing You to Generate Passive Income

Perhaps one of the best benefits to real estate investment is the ability to have a completely hands-off investment while generating pure passive income. 

While many buy to let investors choose to become landlords, this isn’t a choice you need to make. 

Instead, you can use the services of a property management company.  

If you live away from your property, whether that be in another city or another country, it will be incredibly difficult to deal with the day-to-day needs of managing a property. 

Thankfully, through the services of a property management company, the company can deal with all landlord roles like finding tenants, dealing with their issues, and collecting rent. 

While they charge a fee for this service, it does mean you can simply sit back and relax while your property generates frequent passive income. 

Overall, if you’re wondering should you invest in real estate, there are plenty of reasons why you should. 

In 2021, all the latest market data is suggesting real estate investment is the best way to maximise returns.

Daniel Williams, RWinvest

The Cons of Property Investment

Many people ask, is real estate investing worth it?” and with so many benefits involved, it may be an obvious answer that real estate investment is a strong choice for investors. 

However, while property investment can be incredibly beneficial when done right, it doesn’t mean there are no potential drawbacks. 

The cons:  

  • Property could decrease in value 
  • Potential void periods 
  • Not as liquid as other investment classes  

While property investment can be a worthwhile venture and offer some of the best investment returns in the UK, there are some things to be aware of.  

One of the biggest downsides of investing in a rental property lies with property market fluctuations and the fact that your property is at risk of decreasing in value if you make the wrong investment. 

This is only likely if you purchase a property in an area with a declining market, which is why it’s so essential to carry out adequate market research. 

An example of where many investors go wrong with their property venture is by investing in London’s property market.  

While London would certainly be the first choice for many investors, particularly those from overseas, the reality is that the property market in London is not performing well in a number of postcodes.  

Two London postcodes appear in the Totally Money list of the worst buy to let postcodes in the UK due to their low rental yields. London, as a whole, is seeing property prices decline. 

From September 2018 – 2019, it was recorded that London house prices fell faster than anywhere else in the country.  

While some London boroughs such as Newham and Hillingdon have seen a level of growth, investors should be savvy enough to research and recognise the UK areas to invest in and the areas to avoid. 

As mentioned above, Liverpool and Manchester in the North West region are likely your best bet if you’re deciding whether to invest in property or shares and are seeking the best possible returns from buy to let.  

Here, property prices have a track record of growth and are expected to rise significantly over the coming years. 

If you’re not familiar with the term, void periods are when a rental property goes without a tenant for a certain length of time.  

When an investor encounters void periods, they’re losing income that they could otherwise be getting from rental payments. 

This is particularly problematic for those using a buy to let mortgage to pay for their investment, as you still need to keep up with mortgage payments even if you’re not making any money from the property. 

Like decreasing property prices, this can be avoided with the right market research. Void periods typically happen if an investor has purchased a property in an area with a low level of demand.  

Alternatively, this may happen if you purchase a property that is considered undesirable and doesn’t instantly attract tenants.  

Areas with low demand tend to be those with small populations of younger tenants. 

While other tenant groups like families or retirees do also seek out rental properties, young professionals and students make up the majority of the UK rental market. 

With this in mind, it comes as no surprise that cities like Manchester generate such high rental demand for investors, due to the city having one of the UK’s youngest populations 

Young professional and student tenants tend to favour a certain type of property. 

Properties that feature old and outdated designs, fixtures, and furnishings aren’t likely to bring in a lot of demand.  

Investors who hope to avoid losing income through void periods should aim to invest in a new build property with a modern and stylish design. 

As of late, with more people working from home due to the Covid-19 pandemic, demand has risen for rental properties with features like a balcony or garden and high-speed internet. 

Location also plays a big part in how much demand you attract.  

Those who purchase a property which is close to the city centre and transport connections are sure to bring in a lot of tenant interest. 

By following these guidelines and carrying out property research, you can avoid some of the possible downsides of property investment if you opt for property over shares. 

One of the more prominent risks of property investment is the asset class cannot be easily liquidated.  

This mean it can be incredibly difficult to cash in on a property quickly if an investment goes wrong. 

When comparing stocks vs real estate, when things go wrong on the stock market, you can quickly sell your assets and cut your losses. 

For property, though, it may take months for you to sell your property, all while being stuck with mortgage payments if the property isn’t currently generating money. 

Again, this is why research is so vital so you can avoid making a bad investment. As long as you invest in a high-performing area that is predicted to see property market growth, you should have a successful property investment venture. 

Your Property Could Decrease in Value

While property investment can be a worthwhile venture and offer some of the best investment returns in the UK, there are some things to be aware of.  

One of the biggest downsides of investing in a rental property lies with property market fluctuations and the fact that your property is at risk of decreasing in value if you make the wrong investment. 

This is only likely if you purchase a property in an area with a declining market, which is why it’s so essential to carry out adequate market research. 

An example of where many investors go wrong with their property venture is by investing in London’s property market.  

While London would certainly be the first choice for many investors, particularly those from overseas, the reality is that the property market in London is not performing well in a number of postcodes.  

Two London postcodes appear in the Totally Money list of the worst buy to let postcodes in the UK due to their low rental yields. London, as a whole, is seeing property prices decline. 

From September 2018 – 2019, it was recorded that London house prices fell faster than anywhere else in the country.  

While some London boroughs such as Newham and Hillingdon have seen a level of growth, investors should be savvy enough to research and recognise the UK areas to invest in and the areas to avoid. 

As mentioned above, Liverpool and Manchester in the North West region are likely your best bet if you’re deciding whether to invest in property or shares and are seeking the best possible returns from buy to let.  

Here, property prices have a track record of growth and are expected to rise significantly over the coming years. 

You Could Suffer Void Periods

If you’re not familiar with the term, void periods are when a rental property goes without a tenant for a certain length of time.  

When an investor encounters void periods, they’re losing income that they could otherwise be getting from rental payments. 

This is particularly problematic for those using a buy to let mortgage to pay for their investment, as you still need to keep up with mortgage payments even if you’re not making any money from the property. 

Like decreasing property prices, this can be avoided with the right market research. Void periods typically happen if an investor has purchased a property in an area with a low level of demand.  

Alternatively, this may happen if you purchase a property that is considered undesirable and doesn’t instantly attract tenants.  

Areas with low demand tend to be those with small populations of younger tenants. 

While other tenant groups like families or retirees do also seek out rental properties, young professionals and students make up the majority of the UK rental market. 

With this in mind, it comes as no surprise that cities like Manchester generate such high rental demand for investors, due to the city having one of the UK’s youngest populations 

Young professional and student tenants tend to favour a certain type of property. 

Properties that feature old and outdated designs, fixtures, and furnishings aren’t likely to bring in a lot of demand.  

Investors who hope to avoid losing income through void periods should aim to invest in a new build property with a modern and stylish design. 

As of late, with more people working from home due to the Covid-19 pandemic, demand has risen for rental properties with features like a balcony or garden and high-speed internet. 

Location also plays a big part in how much demand you attract.  

Those who purchase a property which is close to the city centre and transport connections are sure to bring in a lot of tenant interest. 

By following these guidelines and carrying out property research, you can avoid some of the possible downsides of property investment if you opt for property over shares. 

Not Liquid

One of the more prominent risks of property investment is the asset class cannot be easily liquidated.  

This mean it can be incredibly difficult to cash in on a property quickly if an investment goes wrong. 

When comparing stocks vs real estate, when things go wrong on the stock market, you can quickly sell your assets and cut your losses. 

For property, though, it may take months for you to sell your property, all while being stuck with mortgage payments if the property isn’t currently generating money. 

Again, this is why research is so vital so you can avoid making a bad investment. As long as you invest in a high-performing area that is predicted to see property market growth, you should have a successful property investment venture. 

The Pros of Investing in Stocks and Shares  The Pros of Investing in Stocks and Shares 

The Pros of Investing in Stocks and Shares 

You may be wondering, “should I invest in stocks?” and the truth is the stock market can be incredibly fruitful.  

With billionaires like Warren Buffet making a lot of their cash through stocks and shares, it’s clear that if done right, the stock market can be fantastic for investing. 

The pros: 

  • Hands-off investment 
  • Easily diversify 
  • Can be more affordable than property 
  • More liquid than property 

It’s a Hands-Off Investment 

Through the use of the services of a stockbroker, investing in stocks can be an incredibly hands-off investment experience.  

This allows investors to be able to make returns alongside their usual day to day commitments such as their full-time job. 

It’s important to note, though, that many stock market investors have started to go solo and not use the help of an expert. 

This is when stock market investing becomes incredibly hands-on. Not only do you have to identify the stocks you want to buy, but you will also need to constantly monitor the market to keep on top of any crashes that may occur. 

If you do decide to go down this route, it’s important to keep in mind that if you’re considering the stock market vs real estate, you should still take time to research the market and gain some first-hand knowledge. 

It’s advised that anyone looking for information on which share to buy and how to invest in shares in the UK should seek out some professional advice before getting started.  

This way, you’ll get a better idea of the best investment portfolio for your needs.  

You could even find that after research and advice, investing in stocks and shares isn’t the right option for you. 

The Ability to Easily Diversify Your Portfolio  The Ability to Easily Diversify Your Portfolio 

The Ability to Easily Diversify Your Portfolio 

All good investors should understand the importance of a diverse portfolio, especially when comparing the stock market vs real estate. 

Diversification is essential whatever investment strategy you take, as it ensures you’re spreading your risk across different avenues.  

If you don’t have a lot of money available when you begin investing, it can be easier to build a diverse portfolio when you invest in stocks in the UK. 

This is because unlike property which tends to be higher priced, it’s possible to begin investing in stocks with less money than you would typically need to purchase a rental property.  

However, it’s important to keep in mind that you’re not likely to see a significant return on your investment through stock investment in the UK without taking more risk with your money. 

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The Summit

Stylish Baltic Triangle Living

Liverpool Prices from £139,950

Assured 7% NET Rental Yields

15-20% Below Market Value

Invest From £35,000

ELEMENT - The Quarter

North West's First Eco-Development

Liverpool Prices from £74,950

8% NET Rental Return

300m Away From New £1bn Royal Hospital

10% Deposit

Off Market Manchester Apartments

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5.5% NET Rental Return

10% Deposit Required

The Cons of Investing in Stocks and Shares

While there are plenty of good reasons to answer the question “should I invest in stocks?” it can also be incredibly risky. 

While there are thousands of success stories on the stock market, there are also a million failures. 

The cons: 

  • High risk and more volatile 
  • Can take a while to see returns 
  • Can be emotionally-driven 
It’s High Risk and More Volatile  It’s High Risk and More Volatile 

It’s High Risk and More Volatile 

The tricky thing with stock investment in the UK is that while taking more risk and investing larger amounts of money is often the recipe to success, you also risk losing everything.  

Stocks and shares are known to be the riskiest asset class out there, which is important to consider when comparing investing in rental property vs stocks.  

Stock prices can rise and fall at a moments notice, with stock prices changing minute-to-minute and day-to-day. 

This volatility can be incredibly difficult to manage, and will often require strong guts to stay in your investment if a crash does occur. 

This is why property investment is relatively low risk compared to the stock market. 

If you’re not prepared to lose all of your money, then investing in stocks and shares may not be right for you.  

With property, you’ll have much better peace of mind that your money should be safe, and you have the potential to make returns on your investment without the added risk. 

Interior of RWinvest investment property Interior of RWinvest investment property

It Can Take a While to See Returns 

Stocks and shares are more ideally suited to those looking for long-term investment options in the UK.  

While property investment can definitely also be considered a long-term investment, it can take a long time before you see a return on your investment with stocks. 

When comparing investing in rental property vs stocks, this is one of the biggest cons of stocks and shares to keep in mind.  

With buy to let investment, you’re able to see returns through both rental income and capital growth further down the line.  

Say you purchased a rental property today which was completed, in high demand, and attracted a tenant quickly.  

You would be able to start generating rental returns right away, with higher returns on an investment with a strong rental yield. 

Then, after years of making rental income, you could find that the property market has experienced a sudden rise which is well above usual growth rates.  

This would allow you to then sell your property for a much higher amount than you initially purchased it for, generating significant capital growth returns. 

With stocks and shares investments, on the other hand, year-on-year stock market fluctuations mean that it’s usually wise to keep your money tied up for longer periods.  

This is, of course, a problem for those who aren’t comfortable with not having access to any return on investment for this length of time. 

Merchant's Wharf - Exterior Merchant's Wharf - Exterior

Can Be Emotionally Driven 

One of the main factors behind failure in the stock market is the emotionally driven nature of the investment. 

What we mean by this is if stocks fall or rise, you may let your emotions take over and dictate what you do. 

This could either be selling early, or overestimating the stock rises and selling too late, which can both dramatically impact your investment success. 

To succeed with stocks, you need to remain calm and collected, which can obviously be difficult if you have a large amount of money placed into a company. 

Whether you decide to invest in real estate or stocks, it is vital you match the investment strategy to your goals. 

This is why you need the right temperament if you want to invest in the stock market. If you don’t like risks, it is best to avoid placing too much money into stocks and shares. 

Investing in Property or Shares: Key Factors to Consider

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Investing in Real Estate vs Stocks - Frequently Asked Questions

So, is rental property a better investment than stocks?  

There are pros and cons to both real estate and stocks. In order to decide whether investing in rental property vs stocks is best for you, you need to do your research and think about your personal goals and requirements.  

For instance, if you don’t want to risk losing your money, then property is the best investment to make. 

While it is possible to make a lot of money by investing in stocks, property is a stable and tangible asset that can offer some of the best investment returns UK investors can make.  

If you do decide that you’d rather invest in shares, be sure to seek out the advice of a trusted financial advisor who is experienced in personal finance matters and can walk you through your options. 

If you have a budget of £100k, real estate is your best option.  

Many property investment opportunities in the UK are highly affordable and offer fantastic returns.  

With a £100k budget, you could split your funds across different properties and build a diverse portfolio. 

Stocks, on the other hand, have a much higher level of risk.  

While investing £100k into the stock market can be lucrative, it can also cause you to lose everything you invest.  

If the money you plan to invest is important to you, such as your savings, then property is a better choice when deciding between real estate or stocks.

The year 2020 was a very uncertain time for the economy.  

Back in March 2020, the Covid-19 crisis was officially announced as a pandemic, and many countries around the world went into lockdown, wreaking havoc on businesses both large and small.  

During this time, a lot of investors were fearful that their ventures would be negatively affected by the resulting recession of the coronavirus pandemic.  

But how did investments in rental property vs stocks compare during this time? 

On March 12th, the stock market experienced a crash.  

The Dow Jones saw stock and share prices drop by 10%, which was the highest fall since the stock market crash of 1987. 

Following this period of stock market volatility, many investors started investing in rental property instead of stocks.  

With property being a more physical and tangible asset than the stock market, many people prefer property when it comes to investing in a rental property vs stock market investment. 

While the UK property market did experience a downturn in activity and a lull in property prices, as of October, UK property prices rose by 5.8% which was the highest annual growth rate seen in four years. 

This shows that in times of economic trouble, investing in a rental property is a strong option compared to the stock market.  

For those looking to invest during a recession and wondering if they should invest in real estate or stocks, it’s evident that real estate investments are more of a reliable asset. 

Both real estate investing and stock investing come with their own taxes that investors will need to pay.  

Property taxes include stamp duty tax, income tax for rental income, and capital gains tax upon sale of the property.  

With a stocks and shares investment, you also need to pay capital gains tax and income tax if your profits go over a certain amount. 

All people investing in a rental property or stocks will need to pay capital gains tax upon sale of their asset, with the exception being for those who hold funds in a stocks and shares ISA. 

Those investing in a stocks and shares ISA are able to make a tax-free investment, although potential cash flow can be limited with this type of investment. 

So, is there any way for either property investors or those pursuing stock investing to make tax savings, and are there any tax benefits for investors to be aware of?  

For the 2020/21 tax year, investors can make £12,300 in capital gains before capital gains tax is required. This applies to both rental properties and shares. 

One tax benefit which was introduced in 2020 is the stamp duty land tax holiday, which launched in July and is set to last until June 2021.  

While the stamp duty tax holiday doesn’t allow completely tax-free buy to let investments, it lets property investors save up to £15,000 depending on the price of the property. 

For those who are interested in the property market but want to know how to invest in shares and stocks instead of buying property, property shares are a popular option.  

To invest in property shares is to buy stocks and shares in a property-focused company such as a real estate investment trust. 

This way, the investor is still involved in the property market in some way without actually investing in property itself.  

Those who buy shares in property do so for the same reasons that many investors invest in stocks and shares instead of property.  

However, if you’re keen to get involved with the property market as an investor, purchasing a buy to let property is often the better choice as this offers you more lucrative returns when done right, and more control of your investment choices. 

In times of economic uncertainty in the UK, the property market has remained resilient compared to the stock market.  

Property prices in the UK are rising significantly following Brexit in January 2019, and are only expected to grow stronger over time. 

Due to the high level that the UK property market is currently performing at, the market is attracting interest from those overseas.  

By investing in British bricks and mortar, you give yourself the chance to make large returns through both regular rental payments and capital gains while owning a valuable asset. 

If you’re asking is it a good time to invest in real estate, and is real estate a good investment right now, then yes, it is an excellent time to invest in real estate. 

House prices are set to rise by 21.1% by 2025 according to Savills, with house prices already seeing huge growth in 2020 and 2021. Rental income is also set to increase by 17% in the UK, making it the ideal time to invest to capitalise on the future growth potential of the country. 

Is it Better to Invest in Real Estate or Stocks?

So, is rental property a better investment than stocks?  

There are pros and cons to both real estate and stocks. In order to decide whether investing in rental property vs stocks is best for you, you need to do your research and think about your personal goals and requirements.  

For instance, if you don’t want to risk losing your money, then property is the best investment to make. 

While it is possible to make a lot of money by investing in stocks, property is a stable and tangible asset that can offer some of the best investment returns UK investors can make.  

If you do decide that you’d rather invest in shares, be sure to seek out the advice of a trusted financial advisor who is experienced in personal finance matters and can walk you through your options. 

I Have a Budget of £100k, Should I Invest in Real Estate or Stocks?

If you have a budget of £100k, real estate is your best option.  

Many property investment opportunities in the UK are highly affordable and offer fantastic returns.  

With a £100k budget, you could split your funds across different properties and build a diverse portfolio. 

Stocks, on the other hand, have a much higher level of risk.  

While investing £100k into the stock market can be lucrative, it can also cause you to lose everything you invest.  

If the money you plan to invest is important to you, such as your savings, then property is a better choice when deciding between real estate or stocks.

What’s the Best Asset to Invest in During a Recession - Rental Property or Stocks?

The year 2020 was a very uncertain time for the economy.  

Back in March 2020, the Covid-19 crisis was officially announced as a pandemic, and many countries around the world went into lockdown, wreaking havoc on businesses both large and small.  

During this time, a lot of investors were fearful that their ventures would be negatively affected by the resulting recession of the coronavirus pandemic.  

But how did investments in rental property vs stocks compare during this time? 

On March 12th, the stock market experienced a crash.  

The Dow Jones saw stock and share prices drop by 10%, which was the highest fall since the stock market crash of 1987. 

Following this period of stock market volatility, many investors started investing in rental property instead of stocks.  

With property being a more physical and tangible asset than the stock market, many people prefer property when it comes to investing in a rental property vs stock market investment. 

While the UK property market did experience a downturn in activity and a lull in property prices, as of October, UK property prices rose by 5.8% which was the highest annual growth rate seen in four years. 

This shows that in times of economic trouble, investing in a rental property is a strong option compared to the stock market.  

For those looking to invest during a recession and wondering if they should invest in real estate or stocks, it’s evident that real estate investments are more of a reliable asset. 

Are There Any Tax Differences Between Real Estate vs Stocks?

Both real estate investing and stock investing come with their own taxes that investors will need to pay.  

Property taxes include stamp duty tax, income tax for rental income, and capital gains tax upon sale of the property.  

With a stocks and shares investment, you also need to pay capital gains tax and income tax if your profits go over a certain amount. 

All people investing in a rental property or stocks will need to pay capital gains tax upon sale of their asset, with the exception being for those who hold funds in a stocks and shares ISA. 

Those investing in a stocks and shares ISA are able to make a tax-free investment, although potential cash flow can be limited with this type of investment. 

So, is there any way for either property investors or those pursuing stock investing to make tax savings, and are there any tax benefits for investors to be aware of?  

For the 2020/21 tax year, investors can make £12,300 in capital gains before capital gains tax is required. This applies to both rental properties and shares. 

One tax benefit which was introduced in 2020 is the stamp duty land tax holiday, which launched in July and is set to last until June 2021.  

While the stamp duty tax holiday doesn’t allow completely tax-free buy to let investments, it lets property investors save up to £15,000 depending on the price of the property. 

What Are Property Shares? Are They a Good Investment?

For those who are interested in the property market but want to know how to invest in shares and stocks instead of buying property, property shares are a popular option.  

To invest in property shares is to buy stocks and shares in a property-focused company such as a real estate investment trust. 

This way, the investor is still involved in the property market in some way without actually investing in property itself.  

Those who buy shares in property do so for the same reasons that many investors invest in stocks and shares instead of property.  

However, if you’re keen to get involved with the property market as an investor, purchasing a buy to let property is often the better choice as this offers you more lucrative returns when done right, and more control of your investment choices. 

I’m an Overseas Investor, Should I Invest in Property or Shares in the UK?

In times of economic uncertainty in the UK, the property market has remained resilient compared to the stock market.  

Property prices in the UK are rising significantly following Brexit in January 2019, and are only expected to grow stronger over time. 

Due to the high level that the UK property market is currently performing at, the market is attracting interest from those overseas.  

By investing in British bricks and mortar, you give yourself the chance to make large returns through both regular rental payments and capital gains while owning a valuable asset. 

Is Real Estate a Good Investment Right Now?

If you’re asking is it a good time to invest in real estate, and is real estate a good investment right now, then yes, it is an excellent time to invest in real estate. 

House prices are set to rise by 21.1% by 2025 according to Savills, with house prices already seeing huge growth in 2020 and 2021. Rental income is also set to increase by 17% in the UK, making it the ideal time to invest to capitalise on the future growth potential of the country. 

Investing in Rental Property Vs Stocks: Things To Keep in Mind

Now that we’ve reached the end of our guide, if you’re still unsure about what to choose between stock market vs rental property, take a look at this summary of the key points to take away. 

  • Property investment stands out against stocks and shares investments as investors can generate two types of return with less volatility and risk involved. 
  • The property market is predicted to grow in value in several areas, such as the North West, securing higher capital growth returns for investors. 
  • While investing in stocks and shares can offer a lot of potential, it also comes with a lot of risks. Investors can lose all of their money from investing in stocks, so it’s important to be cautious. 
  • Property investment is ideal for those who want to take more control of their venture, unlike stocks and shares, which are more hands-off. 
  • The downsides of property investment, such as possible void periods and declining market values, are easy to overcome if you carry out the right level of research. 

Interested in Investing Money in Property?

We hope you’ve enjoyed our guide to real estate vs stock market investment. 

If you were wondering, “Should I invest in real estate” or “is investing in real estate worth it?” hopefully you have had your questions answered. 

If you’ve read our tips on stocks vs property in the UK and feel it’s time to invest in property and begin your buy to let journey, get in touch with RWinvest.  

We have a wide range of rental property investment opportunities with high yields, strong growth potential, and stylish, modern designs.  

Ready to get started? Contact us today for more information.