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Smart Investing: Forex Vs Property

Vladimir's LST System

Everyone wants a sound investment plan to help them maintain a comfortable quality of life before and after retirement. However, these days it can be hard to figure out what to invest in. It seems like every time an investment looks good, the market crashes and everyone loses big. This is a problem for anyone looking for a sure thing to add a bit of income, but that's the risk of investing.

Today, two investment markets look very viable, but it's difficult to pick which one would be smarter. Forex trading is extremely popular, and the market moves as much as four trillion dollars daily. On the other side of the ring is property investment. You may think people must be crazy to invest in housing at this point, but now might be the best time to get a piece of the action due to low housing costs. Both markets have pros and cons that should be considered.

Property:

Pros

Property can still be a viable investment, but there are some serious concerns. One of the biggest downsides to property investment is the amount of capital required to get started. You won't be able to buy a house without first having tens of thousands of dollars. Once the house is bought, you are stuck with it until a buyer comes along. Because the investment is not liquid at all, you have to understand that you won't be seeing any money for a long time. Even if you manage to buy a house and get a buyer for it immediately, it will still take a month or more to realize the profit. These problems are compounded by unreliable renters making it so that you may have to pay the mortgage out of pocket at times.

Cons

The housing bubble burst had a serious impact on property investments. Many people lost everything when it happened, but for someone looking to get into the market now, it could be a good thing. The downside of the bubble is that there are now far more houses than people looking to buy. This means that any property that's bought will have to be held until the market recovers and people start looking again, which could take years. The upshot is that, due to the oversupply of property, housing prices are now lower than actual value, so a smart investor with enough capital to sit on a house for a few years stands to make a very respectable profit.

Forex:

Pros

The Forex trading market offers a lot of opportunity for a new investor. One of the biggest advantages of investing in the Forex market is that it doesn't take much money to get started. Many brokers will let you open an account with as little as $200-$250, and offer very high leverages so that you can take that small amount of capital and make large transactions. Another benefit is that you can trade Forex at any time of the day without any problems and from home. This makes it very convenient and easy to participate. Also, it's a lot more exciting than property investment. Foreign exchange rates change constantly, so you can always be playing the market to make money with multiple trades per day, rather than each trade taking months or even years like real estate.

Cons

Unfortunately, there are of course some downsides to Forex investment. The high leverages that help you make much larger profits also increase your losses by just as much if you misstep. You can easily lose everything in a single trade if you are heavily leveraged. Also, it isn't something you can just start doing immediately. You have to spend months practicing with demos before you start trading real money, or you will end up hurting. It is necessary to be extremely disciplined with Forex trading since spur of the moment decisions will almost always result in losses.

Final thoughts:

Since investing really comes down to how much money you can make, it is important to look at rates of return of property investment against Forex trading. It isn't possible to give an exact rate of return for housing since so much of it depends on the individual factors involved in the investment. However, property has a sad tendency to result in negative returns, and even if you are making money, it won't be very much due to all the costs involved. The Forex market, on the other hand, offers steady returns. While it is different for everyone, 5% returns is entirely attainable, and more than that is possible for smart investors.

Both investments can turn a nice profit. The quality of each largely depends on the person doing the investing. If you are patient and have enough capital to sit on a house for months or even years while constantly spending money on it, then you might be able to make a tidy sum when the market recovers. However, if you have a smaller amount of capital and want to see your money working immediately, then Forex trading is a much better choice.

Vladimir's LST System

Source by Andrew Roy

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