Stock market or real estate investment
Investing in Real Estate or the Stock Market Benefits of a stock market investment:- Highly liquid- Many different investment alternatives- Low transaction costs- Professional money management possibleCosts of Stock Market investment:- Very risky- Don’t know much about the stock market- Value can decline rapidly- Can only sell the shares and not live in them Benefits of a Real estate investment:- Tax benefits (deduction of mortgage interest and property taxes)- Increased ownership in property builds equity- If the property decreases in value, then you still have a place to live- No federal or state income taxes on property owned and occupied for 2 of the last 5 years ($500,00 if married or $250,00 if single)Costs of a Real Estate investment:- Large initial cash outflow- Loan origination fees can be high- Not a liquid investment In the above tables you will find what I believe the to be the benefits and costs of either purchasing a home or investing in the stock market. For the purposes of this assignment, I decided to look at whether I would be better off investing my $50,000 bonus in the stock market or purchasing a new home in Fairfield, Connecticut. ... I believe that as an active trader I can earn approximately 11% annually, on my stock picks over a 5-year period. ... My assumptions for the stock market investment are as follows: Stock Market Assumptions: - Invest in several different stocks that would yield me an 11% annual return, with this market its going to take active management on my part - Pay income taxes on $50,000 bonus and invest the rest, I’m in the 28% tax bracket for federal taxes and the Connecticut tax rate is 4.