Home Property Property vs. Stocks: The Investment Debate Settled 

Property vs. Stocks: The Investment Debate Settled 


Anyone considering a career or sideline in property needs to know what they’re getting into before they apply for a mortgage. PAT testing is our forte and something you’ll need to become familiar with if you’re going to rent out properties privately or commercially. That’s just one technical requirement that property investors need to be aware of. There are, as you’d expect, many more. 

On top of this, you need to understand the nuances of financing property projects, ongoing costs and, perhaps most importantly, the money you stand to make. Every property has its own financial implications and potential, so it pays to assess the market before you make any commitments. 

In fact, the financial decisions start long before you search the latest property listings on Right Move. Property has historically been considered a prudent investment vehicle for people with the available capital. However, it’s not suitable or, indeed, viable for everyone. Moreover, it’s not the only way to invest spare capital. Property is tangible, which is why it’s often seen as the best investment option for people without experience in finance. That may have been true once upon a time but, today, investing in financial instruments, such as stocks, is easier than it’s ever been thanks to the internet. 

The Internet Opens Up the Stock Market 

Any adult with some spare cash can go online and use a brokerage to invest in a variety of instruments, including stocks, bonds, commodities and futures. There’s also a wealth of information on how to invest, tips on potentially profitable stocks, news updates and technical tools. Basically, the door to investing has been flung wide open by the internet and its bevvy of online brokerage sites. Therefore, instead of seeing property as the only way to invest, you now have a choice. This begs the question, should you invest in property or financial instruments? 

For the sake of argument, we’re going to focus on the stock market as it’s the most common financial instrument retail customers invest in. Of all the ways to invest in stocks, the S&P 500 is one of the most popular. This financial index tracks the performance of 500 public companies in the US. As such, you’re able to have an interest in multiple companies through a single investment. In addition to being popular, the S&P 500 has a positive track record. The S&P 500 futures chart shows that a continuous investment since 1998 yields a return of 7.6%. If you look at the five years from 2018 to 2023, the index has returned 48.10% to investors. 

That’s a healthy return, but how does it compare to the property market? As we’ve said, each property has its own potential depending on its type, location, condition and the local economy. Property figures from SDL Auctions show that the average rental yield for UK landlords was 4.75% in 2023. Looking at specific regions, the average yield in Edinburgh topped 9.89% in 2023, while Birmingham and London were 6.81% and 6.57%, respectively. In this regard, property and stocks are similar in terms of earning potential. 

How Much Volatility Can You Handle? 

Another factor to consider is volatility. Stocks are more volatile than property, which is why you can have years where yields rise and fall significantly. In contrast, even though issues such as mortgage rates and inflation can affect property prices, the swings are less severe. This is perhaps the most important thing to consider if you’re looking to invest. Someone who is prepared to play the long-game and ride the stock market’s swings might want to consider a product such as the S&P 500. 

Someone who wants a steady ride that might not return as much of a profit could be better suited to property investments. Of course, no investment is guaranteed to provide a positive yield. However, when you review the figures, properties and the stock market have both shown they have plenty of potential. So, if you’re in a position to make investments, you have two great options, and it mainly comes down to personal preference as to whether you put money into property or stocks. 


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