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5 Reasons Why I Invest in Stocks, Not Properties

When I started my very first full-time job after graduated in 2014, it felt so good to have my own income. As a saver since young, I am looking forward to saving more money and build my wealth on the go. The thing is, I know I have to invest my money in order to build my wealth effectively. But which investment should I make? Properties or stocks? Why invest in stocks?

(Sorry lah I only know these 2 investment options when I was 20 something)

My Story Before I Invest in Stocks

Due to family background and surroundings, I was too afraid to explore in stock investing as no one is talking about it. So my brain told me property investing is the only way. Because of that, I kept on saving my money so I can afford the initial payment of my first property.

After 2 years and 8 months of working in Malacca, I took the opportunity to work in Singapore after getting a recommendation from my friend who worked in Singapore. By having 3 folds of income, I managed to save money 3 times faster.

After few months in Singapore, finally I have enough savings to buy a house in Malacca. Yay!

During property hunting, it made me realize that it is not easy to find a suitable property. Initially, I was looking for resale houses, but there are a lot of concerns such as the location, house condition, and neighbors. Some are on sale with unreasonable prices. It was really tough.

In the end, I managed to buy a new house, thanks to my mom for helping me queuing during the registration day. But after all the hard works, I don’t intend to make it an investment. I will keep it as my own residence because it is a freehold house in a good location.

Property Investing is Not For Me

With that past experience, I knew that I will not choose the path of property investing. So stock investing is the only option for me.

With several months of searching and reading, I slowly ventured into the world of investing. Index Fund, Exchange-traded Fund (ETF), Unit Trust, Mutual Funds, Real Estate Investment Trust (REIT). It is a big realization for me to discover that they are all different kinds of stock investments.

This can be so related to Ash Ketchum who dream of becoming the Pokemon master. When he ventured into the world of Pokemon, he then started to know different kinds of Pokemon such as Pikachu, Bulbasaur, Charmander, Squirtle, and Pidgeotto!

Other than finding all kinds of Pokemon, I mean stock investments, I also found that investing in stocks has a lot of advantages compared to property investing. With those advantages, it is decided, finalized, and concluded that stock investing is for me and I will never look back (for now).

Here are the 5 reasons why I choose to invest in stocks.

1) Easy to Start

Pressing an "Easy" button to start invest in stocks

To invest in a property, you need to have enough money to pay its initial payment, which is usually 10% of the house price (there are affordable housing schemes in Malaysia which does not need 10%).

For example, you found a good property in a good location which is on sale for RM400,000. 10% of its total price will be RM40,000.

Luckily you got the early bird deal from the housing developer, which gives you a discount of RM10,000. So you only need to pay RM30,000.

Unfortunately, I forgot to tell you about the expenses of stamp duty and lawyer fees as well, which cost around RM10,000. So you still need RM40,000. *Giggle*

What about stock investment? In Bursa Malaysia, the individual company shares are usually sold in lots (equal to 100 units). So if you are interested to buy a company share that costs RM1 per share, you only need to pay RM100 for 1 lot of shares. Even you include the brokerage fee, it will be around RM110.

My friend, that is almost 400 times cheaper than a property! Even when you only have as little money as RM1,000, you can still invest in the Stock Market. But this is not viable in property investment.

2) Able to Diversify

As we can buy one company share with as low as RM100, it allows us to diversify our investment.

Why we need to diversify?” you asked?

As they said,

Do not put all your eggs in one basket. It means we should diversify our investment to reduce risk, that's why I invest in stocks.

Yes! Read the quote in the above image again. It means that we should not put all our money into one single investment.

As buying a company share doesn’t require much money, we have the advantage to diversify our hard-earned money.

While for property investment, even when you managed to buy a property, you might not be able to buy the second property in such a short time.

3) Less Effort Needed

Crossing off an item "Nothing" on the to-do list

I’m a lazy person, and that’s why I invest in stocks.

Wait what? I thought stock investment needs a lot of efforts as well?

Well, you are right. Stock investing does require time and effort to do research and analysis. But after you bought some stocks, the only thing left to do is to review the companies you bought once in a while.

If I compared it to property investing, I have experienced the hardship and the frustration of finding a good property to buy/invest. It does not matter whether you are interested to buy a second-hand house or a new project. We can’t deny that a lot of homework and research is needed before we decide to buy a property.

After all, once you decide to buy it, it will be a few ten thousand burnt for that property. You wouldn’t want to feel like throwing your hard-earned money into the sea right?

After you successfully bought one property, your work isn’t done yet. You need to furnish your house, find a tenant, deal with a tenant, and maintain the tenancy. True, property investment can be a lucrative investment if you did it right. But most of the time, people often did not see the effort needed to secure that passive income.

4) Easy to Cash Out

In life, emergency happens.

Sometimes we do not have enough emergency funds to cover the unexpected expenses, so we need to liquidate our assets. Unfortunately, you can’t sell a property for cash in such a short time because of its low liquidity nature.

By the way, liquidity means how fast we can turn our asset into cash, and low liquidity means it is difficult to be sold into cash.

If you have stocks as assets, you can sell them off within a few minutes as long as the market is open. And brokerage firms usually will take 2 to 4 days to deposit cash into your account.

Of course, there are some cases when your stock is illiquid, such as stocks with very low trading volumes, or the company you invest in suspend their trading activity in Bursa Malaysia. But most of the time, you will able to liquidate your stocks in a few days.

5) High Growth Potential

The 5th reason why I invest in stocks,  is its high growth potential.

Allegedly, stock investing has proven to outperform other investments, including real estate in terms of return of investment.

It is true though because I did experience the potential of its high return.

With just one year of investing, I had the opportunity to see my portfolio grows more than 16% in just one month, not one year. It is breathtaking to see such a result when I was just started investing.

While this seems like the ultimate reason why we should invest in stocks, it is actually a double edge sword.

Investing in stocks can help you to grow your money amazingly fast, but it can also make your money worth dive horribly fast. This is due to the volatility in the market that you can’t be avoided. As the stock market is full of speculators, the volatility can help to grow your money fast and lose your money fast at the same time.


5 Reasons Why I Invest in Stocks, Not Properties

In summary, these are the 5 reasons why I chose to invest in stocks:

  1. Easy to Start – You don’t need much money to start investing.
  2. Able to Diversify – You can diversify your investment by buying different stocks.
  3. Less Effort Needed – After research and analysis, all you need to do is to review your stocks once a while.
  4. Easy to Cash Out – As long as the market is open, you can sell your stocks within a few days.
  5. High Growth Potential – It is proven that the return of stock investment is higher than property investment.

While I side on stock investment, I also want to point out several drawbacks of stock investment compared with property investment:

  • Stock investment is very risky compared with property investment, due to the high volatility of the stock price in the market.
  • As it is easy to cash out, you may panic sell your stocks in losses during the market crisis. This probably won’t happen in property investing.
  • You can easily get influenced by all the news, rumors, analysts, and “gurus” that divert your investment decisions.

I am a believer of everything has its pros and cons. Some of my friends still insist to save their money for property investment, and I am fine with that.

At the end of the day, it doesn’t matter what type of investment you will choose. As long as the investment is the one you prefer and comfortable with, and it generates returns for you, then go ahead!

I wish you all the best in your investing journey and hope we will meet at the stage of financial independence.

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