(From Investing OFW. Article by Cristina Marteja.)
Investing in the stock market versus investing in the real estate has its own pros and cons. Each person who would like to invest their hard-earned money must carefully choose which investment vehicle suits them best, especially for beginners and first-timers like me.
I’m sure you don’t want to end up seeing your investments deteriorate or worst, disappear into thin air. First of all, you should not even think of investing if you don’t have your regular income, be it from a full-time job or a business. Whether you are investing in stocks or real estate, you’re definitely going to need a steady income.
Before I move(d) here to Singapore with my husband, I’ve spent my entire professional career in the Philippines working for two of the country’s biggest real estate companies, namely DMCI Homes, Inc. and Moldex Realty.
But after reflecting on the things that I value and my financial goals, I decided to invest in the Philippines stock market. Just to clarify, this decision doesn’t in any way signify that investing in the real estate is a bad idea. Let me tell you why I came up with this decision:
Investing in real estate promises amazing returns of investment and passive income. I am not talking about real estate properties that you bought for your own family’s use but those properties that you decided to buy to make them money-making machines.
As Bo Sanchez once said, a real estate property will only be considered as an investment only if that specific property is bringing money into your pocket. If you are using it for your family’s residence, then it’s not considered an investment unless you sell it. I will not go into details on how you can make money from real estate because there are plenty of ways and one article is not enough to discuss them all. Here are some of the ways where you can turn a property into a money-making machine:
Buying a property and selling it at a higher price
Renting or leasing the property to create passive income
I decided not to invest yet in a real estate property simply because currently I only rely on my monthly salary as my primary and regular source of income. I will strictly need this regular income if I am paying the property on an installment basis. Once I miss a monthly amortization, a penalty will be imposed on my account.
And if ever I lose my job and I cannot find alternative sources of income to support my monthly amortization, this can lead to the foreclosure of the property and the losing the possibility of refund. Remember that there’s a Maceda Law which governs refund on real estate property investment.
For those who are interested in buying a real estate property, it wouldn’t hurt to do some research on the refund policy of the property developer, unless you are sure that you can finish the 10-year amortization payment whatever happen. As I am a foreign worker here in Singapore, my security of tenure is very weak with the continuous effort from its government to moderate the foreigners working here. If ever my husband and I will become a permanent resident of Singapore or any other 1st world country, I will seriously consider getting our dream house real soon.
Investing in the stock market also requires you to commit on a long-term basis. But the upside with choosing to invest in stocks is that you will not be penalized if you skip your monthly investments. You decide how much, how often and when you buy stocks. You can buy stocks on a monthly basis or on a tri-monthly basis. It’s all up to you because it is just like a piggy bank but it offers a way to maximizing the earning potential of each penny you save.
However, bear in mind that self-discipline is a key ingredient for success in the stock market as you will not be obliged to consistently invest. I personally thank Bo Sanchez because as a Truly Rich Club member, he makes it a habit to constantly remind us of to regularly invest small amount of money into our citisec account.
At the end of the day, what’s important is you ARE investing your money. Make money work for you so time will come when you no longer have to work for money.