There are many ways to start building a portfolio of valuable investments, but not everything is right for everyone. How a person wants to invest their money, how much they have, and what kind of rate of return they desire all matter.
Additionally, it is important for people who want to invest to focus on where their money is and how quickly they might need that money in an emergency. If they need quick access to their investment dollars, some strategies may not be right for them.
Many people focus on real estate and forex investing, but which one is right for you? Could both work? Here are pros and cons to consider before making an investment in either one.
What Does Forex Have To Offer?
Forex involves the purchasing of foreign currency, in much the same way a person would purchase stocks. Then the buyer waits for the value to rise, and resells the currency.
They make money on the difference between what they paid and what they sold it for. This can allow people to make a lot very quickly, and to buy and sell rapidly if they need the cash – but only if the value of a currency rises fast from what they paid when they purchased it.
The benefits of forex include:
- Not needing a lot of money up front to get started.
- Having a high level of liquidity for any money invested.
- A lot of conveniences, since forex can be done from any place with an internet connection.
But even though forex trading might sound like an easy way to make money, there are challenges that also have to be considered. Investors who overlook these risks can end up losing the money they invest quickly.
Are There Cautions With Forex Investing?
The risk of loss is the biggest caution when it comes to forex investing. Like stocks, this type of investment is not guaranteed in any way. There are also other risks, like:
- Purchasers can lose some or even all of their investment.
- There can be fraudulent transactions in this market.
- If the broker someone is using goes bankrupt it could mean they have no way to collect any money they would have otherwise made, and they may not even be able to get their initial investment back.
What is The Value of Real Estate Investment?
When most people talk about real estate investments, they're almost always referring to long-term investments rather than the flipping practices that have been popularized by television. Investing in real estate has generally been seen as safe because properties are more static than stocks, forex, and other types of investments.
Additionally, real property can be insured so there is a lower chance that there will be a loss if something goes wrong. Still, buying at the top end of the market has its risks, and people who buy real estate are not guaranteed a good income or a good investment. Some of the perks of buying real estate as an investment include:
- • A lasting value based on a tangible asset.
- • Flexibility to do different things with the asset (buy, rent, etc.).
- • Some control over the value, through repairs, improvements, and changes.
Is Property a Safe Investing Strategy?
While buying property can be a relatively safe investment strategy for most people, there are still concerns to be aware of. One of the main worries for real estate investors is liquidity.
Properties are not able to be turned back into cash quickly if money is needed, and not having a liquid asset can make it difficult for people who are trying to invest if their money is tight.
Other issues can occur, too, such as:
- Keeping properties attractive. Trends can change relatively quickly, and design plays a part in determining value and how sellable a property is.
- The ongoing costs of maintenance and repairs.
- Insurance and other requirements that new investors may not be aware of.
- Tenant risks for investors who purchase properties to rent them out.
So which should an investor get involved in when it comes to forex and real estate? There is no right or wrong answer to the issue, because both are sound strategies. It will generally come down to what the investor is specifically looking for, in order to get a strategy that meets their needs.