Investing in Property vs. Investing in a Portfolio

10 May 2021 By Oliver Maher
Oliver Maher

Oliver Maher is a director at United Advisers Marine. Disclaimer: UA/BFMI is a member of Nexus Global and an appointed Representative of Blacktower Financial Management (International) Limited (BFMI). BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC). UA/BFMI are not tax advisers and clients should always seek independent tax advice for their individual circumstances. +34 871 115 928;

When deciding whether to invest in property or a portfolio, there's no simple answer. Both offer risks and advantages, so finding the better option depends on many factors, including your financial means, personality, and comfort. 

Buying Property

Owning property provides a sense of stability while offering a passive revenue stream if you rent it. But there are important considerations and pitfalls to understand. 

Generally, with rising inflation, we see a rise in house prices and sometimes a higher margin of profit over the years. This allows for stable income that increases as you reap the rewards - without having to think too much about it. The hard work that goes into reconstruction, managing tenants, and tending to the property can be a rewarding way for cash flow to come in. 

But owning and running a property requires maintenance and management; from renovations and repairs to acquiring and overseeing tenants to navigating house laws and homeowner associations - it may well become a full-time job. 

Acquiring property requires a large sum of money to begin and involves work. As much as we'd like to think a down payment means a steady flow ofincome that increases with time, that isn't a given. You need to budget for the work that needs to be done or the fees associated with mortgage changes, associations, etc. If the property sits empty, you lose money. There are various hoops when purchasing property- and you're in for the long game if you want to sell.

Portfolio Investment

If you're looking into a portfolio investment, it could be a great option for accumulating diversified income. Perhaps the best part of this is the level of returns you can gain with very little effort. Research indicates that portfolio investment has the greatest potential to increase profits annually- the longer you hold on

to these investments, the more chance ofincreasingyour cash flow. Reinvestment is also a great way to continue this cycle.

With this investment, it's much easier to release your assets. If you need to sell, you can do so without encountering any lengthy processes.

Without enough research, it's difficult to decipher a company's true figures and to gauge if your investment would be lucrative. Seeking professional help from a regulated, qualified financial adviser can help minimize risks. The varying nature of this type ofinvestment may attimes be off-putting. Play the long game and be aware of warning signs.

Both options have pros and cons. Time spent maintaining the property may outweigh the cost ofinvestingin it. With an investment portfolio, you can sit back and have the cash flow coming in with minimal time and effort on your part.

This article originally ran in the May 2021 issue of Dockwalk.


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