KEEP YOUR MONEY IN THE BANK
INVEST IN REAL ESTATE
With it being a seller's market right now, buyers often consider keeping their money in the bank, preferring to hold cash, but is that the wise thing to do? I get it, it's a tough market right now, it may be nerve-wracking to deal with putting an offer on that home you have dreamt about and very likely deal with buyers fatigue. However, Investing in real estate may be more beneficial than you know in the long run. Yahoo! Finance makes a good point
“You need to look at money as a tool and use money to build wealth.”
To that end, money you put into a bank does not build you any wealth. An average interest-earning bank account will pay between 0.01% and 0.50% interest, which is less than the current rate of inflation, which was 6% in 2021, he said.
With that said, I recall a time I blogged about how Investing in real estate can benefit you by building appreciation over time. In fact, one of the best ways to build equity is having a larger down payment when you purchase your home. This, in return, puts more equity directly into your home.
Yahoo! Finance goes on to say that,
“Inflation outpaced what a savings account pays,” - “You are actually losing money by leaving it in a savings account.”
Now don't get me wrong, having liquid funds can be very beneficial for many reasons like an emergency fund, spending money, pet account, etc. Putting your money in just a savings account is also low risk. Basically, whether the market goes up or down, you can rely on your money still being there no matter what happens in the market. You can even say it would be smart to keep money in the bank for rainy days. In fact, keeping your money in the bank could be the best decision. There is another way of looking at it, however.
“When you deposit your hard-earned money in a bank, you are simply lending it to the bank so that they can utilize it for their purposes until you require it.”
Real Estate Grows in Value. Kakkar said from Yahoo! Finance
real estate investing provides you with safety and protection because it appreciates in value... "It is unlikely that the property’s value will deteriorate; instead it will either remain at its present value or increase in value.”
Let's consider Rental Income Potential, either in the present or the future. Back in late July 2021, I blogged about Tips When Buying Your First Investment Property. When we think of buying an investment property, it can be super exciting, and we don't always realize the tangible benefits of investing in real estate. With things like cash flow and appreciation over time, you can leverage your investment and diversify your portfolio. Of course, you want to always build some reserves and consider things like choosing your investment strategy, creating a support team, looking for suitable homes, doing your due diligence, etc.
So Keeping Money in the Bank or Invest in Real Estate? Yahoo! Finance says
“In general it is better to put your money into real estate,” said Daniel Chan, CTO of Marketplace Fairness. “The main pros for investing money in a real estate property are that you can make a profit off the investment, as the value of the property increases, and you can use the property to generate income in the form of rent.”
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