At some point in time, everyone will decide whether or not to invest. Then they will have to decide where to invest, then how much, then once all choices are made they will need to figure out how. What does it mean to invest? The stereotypical definition of investing is to take a portion of money and put it in the stock market and just hope for the best. However, the true definition of investing is placing money into an account or place where it will stay safe and or grow. The most common types of investments are the stock market, 401(k)’s, real estate, and bank accounts. The only tuff part about each choice is that it is up to the investor to decide which is the best investment option. However, evidence will show how real estate is the best choice over them all. 

The stock market is seen as the biggest investment option thanks in part to the media for constantly spilling out information from Wall Street by surrounding society around the letters, arrows, and numbers that almost everyone hardly understands. Along with media, movies, like The Wolf of Wall Street, Boiler Room, and Wall Street: Money Never Sleeps also show the stereotypical, luxurious, get-rich-quick, fast, and buzzing lifestyle of being involved in the stock market. People like Warren Buffett, who have made millions off of the stock market, help fuel the fire for the rest of society to invest in the stock market and want to get-rich-quick. The next most common, but few understand how they work, are 401(k) accounts. A 401 (k) account is a retirement plan that allows employees of a company to save and invest for their own retirement on a tax deferred basis. These investments are deducted from the salary of the investor. 401(k)s are run through a company so that no liability or responsibilities are on investors, brokers, or banks. They are on of the safest ways to invest. The next most common investment choice is real estate. Real estate investing ranges from bonds, trusts, leases, etc. A bond is an investment in a company’s construction, development, or growth that they will pay back to you in time once that bond has reaches maturity. A trust is property that is transferred to a trustee, which holds it as security for a loan between a borrower and lender, the property still remains with the borrower. Leases are the legal renting of property to a borrower for a fixed price to be payed on specified pay dates. Real estate investing is one of the broadest if not the broadest investment choices, there are so many different ways to invest in real estate from buildings, to land, apartments, warehouses, etc. The last most popular form of investing is through banks. Banks have many different accounts for investing such as savings accounts, CD accounts, money market accounts, IRA’s, and Brokerage accounts. These are created and made so that there aren’t any charges  or fees of withdraws, transfers, or deposits, to and from the stock market or the account holder. However out of al the investment choices, real estate is the best decision in today’s economy.

A stock is a share of a particular company or corporation. Stocks are forever changing in the growing values. The average annual rate of return for stocks in the United States, between 1970 to 2016 was just over ten percent. With a stock, you receive ownership in a company. So, when economic times are good, your share will grow. However, during times of economic troubles, you may see diminishing funds as the earnings of the company drop. You can protect your stock from downside risk by shorting them or by buying inverse ETF’s. Shorting a stock is when an investor borrows shares and immediately sells them, hoping he or she can scoop them up later at a lower price, return them to the lender and pocket the difference. But shorting is much riskier than buying stocks, or what's known as taking a long position. Inverse ETFs are an exchange-traded funds constructed by using various derivatives for the purpose of profiting from a decline in the value of an underlying benchmark. They are more complicated but if performed right can lead to larger stock growth. Stocks are liquid, meaning that you can easily buy a share and sell it. They allow an investor to have more freedom to focus on their life; they are simple, you find an investor, whether that’s yourself or somebody else is up to you, open an account, invest in a share, and sit and wait, let it grow, then when the timing is right, sell it and reinvest or keeping your earnings. You do not have to only invest in stocks of companies within the United States, you are able to invest in any country’s company’s stocks that is in the stock market. Stocks have little to no fees to them. The only fees with stocks are paying your investor a dividend of your stock earnings or paying them in cash. 

The best times to invest in stocks are when the market is an a bear market and about to spike up into a bull market. A bear market is when sales are falling. A bull market are when sales are rising. The most active times, times when the market is growing at the highest rates, are Thanksgiving and Christmas, or late fall to early winter. These are the times in which the most money is spent by consumers. This is how a share can grow. It is best to invest in stocks of companies or products that you or society commonly uses or buys, like electricity, gas, television, cell phones, etc. This way every time you pay a bill or buy a product, you will get a return. Stocks are one of the best choices for future investments, or long-term investments.

An investment that does not require any luck is a 401k account. The account is run through an employer and is taken out of the employe’s salary. The max amount that can be put into the account annually is eighteen thousand. If over 50, employees can put in an additional six thousand into their 401k account. When an amount is invested into an employe’s account and then withdrawn when the employee retires, the amount made is non-taxed. For most employees, the dollar contribution limits are high enough to allow for adequate levels of income deferral. However, the dollar contribution limits imposed on 401k plans can be a handicap for employees who earn several hundred thousand dollars a year. An employee who earns seven-hundred fifty-thousand in 2017 can only include the first two-hundred seventy-thousand of income when computing the maximum possible contributions to a 401k plan. 401k plans will continue to play a major role in the retirement planning industry for years to come. 

All other investing options aside, no other investment option has the most choices as real estate. Real estate includes bonds, trusts, leases, etc. Real estate, unlike most investment options, is physical, it is not just numbers going up and down and ‘swirling’ in circles, it is calculable. All numbers can be figured by simple input equations. It is simple to understand and one of the easiest ways to get into investing. For many decades, investing in real estate has generated consistent wealth and long term appreciation for millions of people and depending on the location of your real estate, you can enjoy sizable returns on your investment. There are two main types of real estate, commercial and residential. While other types exist, such as mobile home parks, strip malls, apartment buildings, office buildings, store fronts and single-family homes, they generally fall into those two categories. Some people flip homes instead. ‘Home-flippers’ search for distressed properties, refurbish them and sell them for a profit at a higher price than what the property was originally bought for. There are tons of benefits to investing in real estate, including depreciation, tax deductions, and finally, you can sell the property through what is know as a 1031 exchange, this allows for a seller to not have to pay taxes on the money maid off of the property sold, as long as you reinvest the profit into another property. However, like all investments, real estate also has its drawbacks. Real estate is not liquid, meaning that money put into a property cannot simply be pulled out. Usually,  investors hold onto the property for several years till the property reaches its potential. When closing a sell on a property, many taxes and fees are include that can end up being thousands of dollars. Further more, real estate prices have a tendency to fluctuate. Generally, prices increase, but there are times when prices could go down or stay the same. However, none-of-the-less, real estate has the best outcome for the time that it takes to receive a profit.

The final form of investment options is bank accounts. Bank accounts are one of the simplest forms of investing and the safest. All accounts through a bank are looked over and managed by the bank. All an investor has to do is just put the money in the account and understand the basics and let the financial advisor of the bank notify them of any changes. The different types of accounts that can be created through banks are savings accounts, CD accounts, money market accounts, IRA’s, and Brokerage accounts. Each are safe in that the amount that is invested will not be lost, there is only a gain. Savings accounts are the most common bank account for investing and are the most liquid of the investing accounts. Liquidity is how often you are able to withdraw or transfer money from an account. Savings accounts, however have the lowest interest rate and are usually quarterly to semi annual. CD accounts, or Certificate of Deposit account, are made for high profits, are meant to be added on to over time, have high interest rates that are more frequent than a savings account, but only last a certain amount of time depending on the interest rate; the higher the interest rate the shorter the time for the account to be active and vice versa. Money market accounts are a dynamic way to save money. These accounts are only suited for people who are financially established and that have experience with investing. These accounts also have a higher interest rate than a savings account but only occur as often as a savings account. Individual Retirement Accounts, or IRA for short, are accounts with interest rates that are the same as a savings account and they are tax-differed, meaning that when you close the account, withdraw money from it, etc., the account holder does not get taxed for the money made or the money in the account. The last of the popular accounts, Brokerage accounts are accounts used for investing money into a brokerage firm specifically for the stock market. Always remember that a bank’s job is to keep your money safe, thats why they exist.

Through all the different investment choices, real estate is the best choice. Real estate has the best return for the time that it takes to receive it. The investor is in complete control of their money. In control, you are able to make improvements, cut costs, raise rents, find better tenants, and market accordingly. The investor can leverage other people’s money towards their price for profit. Leverage in a rising market is a wonderful thing. Even if real estate only tracks inflation over the long run, a 3% increase on a property where you put 20% down is a 15% cash-on-cash return. In five years you will have more than doubled your equity at this rate. Real estate is tax advantageous as long as the money made is reinvested. Real estate is a tangible asset, you can physically touch it and change it. It is easy to calculate the profit. It can be as local or as far away from the investor as they want. If you’ve made a good decision to buy in an economically strong region, you will be safer from economic downturn. Big time cities such as New York City, Hong Kong, Singapore, London, Paris, and San Francisco fall the least, recover the soonest and gain the most profit. Government will be on your side to make sure you not only get generous mortgage interest tax deductions and tax free profits, and bailouts if you can’t pay your mortgage. The government also go after banks to force them to extend loan modifications towards bad and good creditors. If you do not have the funds available to buy a property in physical real estate, take a look at Realty Shares, one of the largest real estate crowdsourcing companies today. Real estate is a key component to a diversified portfolio. If you study the asset allocation mix of college endowment funds and high net worth individuals, you’ll see real estate weightings of anywhere between ten percent to twenty fiver percent. Real estate crowdsourcing also allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. Always be alert for the market on the rise and on the fall, because it could help determine your profit or loss. Real estate is always around you, and everything around you is an opportunity to invest.
