It is always an interesting feeling when you start to invest. You feel as though you are becoming a grown-up but at the same time, you feel a little uneasy about what the future holds. Two of the most well-known ways to invest and build wealth are real estate investing and investing in the stock market. So, if you were a young person and had $10,000, what should you invest in? Let’s take a look.
Real Estate Investing- If you have access to the VA Loan program (prior/current military) then buying a home is a lot more attainable. The VA loan is a program that waves the need for a down payment. Instead of having to save for 4-7 years, you can jump right into buying a home. However, most of your $10,000 may be used for closing costs. Is your home an asset or a liability? That depends on how you use it. If you generate income from your home, it is an asset. If not, it is a liability. I personally rent out 2 rooms for $800 each, so I consider my home an asset. But you can also grow and sell fruits and vegetables, start a business, sell bamboo, open a hair salon or barbershop, etc. If you can generate supplemental income from your home, it is an asset. If you buy your home and do not generate income, it could drain a lot of money. Maintenance costs, taxes, and insurance all come into play. When looking for a home, look for places with multiple master suites or an in-law addition. These will help you supplement your income.
Stock Market Investing- The stock market has something for everyone. Your $10,000 can go a long way in the stock market. One of the issues is that you will need to have SOMEWHAT of a clue as to what you are doing. It will take research in order to invest wisely. I recommend that you do your own research. You will build your own style of investing, and now is a perfect time to start. The best thing about the stock market is that once the money is invested, it is truly passive. With real estate, you will have to keep putting in work to maintain it. One of the cons of stock market investing is that you will still need to live somewhere. The money that you invest in the stock market will have to be on top of your housing costs. The stock market can also make you feel like a fool. You can lose money really quickly if you try to be a trader (short term) as opposed to an investor (long term). If you go into the stock market knowing you can make 6-8% a year, you are golden. If you think you can beat that, “many have tried, most have failed”. Nowadays, the stock market has a very low barrier to entry. I am a huge proponent of apps like STASH and CASH APP. They allow you to invest small amounts of money into huge stocks. In my opinion, this is the best way for young investors to start. Start by buying $5 a week of your favorite stocks and earn a few dividends. Your interest will then be piqued. Then read some books and learn what all the terms mean. Eventually, you will grow into a certain style, like growth or value. This is when things really become interesting.
So the final verdict? The choice really up to you. If you can pull it off, I would aim to do both eventually. They both require time and money in order to produce decent returns. There is no “free lunch” in investing. I personally started with real estate. I love the rental income coming in every month. This income allows me to invest in stocks. But you could do the reverse. Buy stocks, and with the dividend income, pay for a home. It is all a matter of choice. Whatever you choose, read a book, consult a mentor, and do it the right way. Take your time, evaluate the pros and cons, and make an educated guess. In the end, investing is not a guarantee. You need to have the strength of character to stick with your decision.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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