Private Lending vs Stocks
Down to the Basics:
- What is Private Lending and why people invest in this?
- Purchasing Real Estate notes; earning Passive income without being an landlord
- What is the Stock Market and why people invest in this?
- Buying a small piece of a company within US or World Economy
- Multiple platforms to use with all having different ways to research companies; easy to get started
- Cyclical, earnings based on choosing the right stock
- Everyone knows the Stock Market as if you are investing in Value Companies, they have been established
- S&P Rate of Return last 3 Years: 50.44%
- S&P Rate of Return last 5 Years: 92.88%
- S&P Rate of Return last 10 Years: 13.6%
Pros and Cons:
- Private Lending (Pros)
- Guaranteed Returns every month
- Tied to an asset that is recorded with the county
- 1st Lien position secured to real estate
- Mail Box money monthly, payments are deposited to you
- Stock Market (Pros)
- Able to buy/start with a very small amount to build your portfolio, Compounding Interest
- Able to Earn Dividends
- Able to gain higher percentages on ROI with the right choice. Don’t have to sell the stock to take the loss unless needed
- Liquid; take the money out right away
- Able to fully research the companies and earnings with all of the tools out there
- Able to invest in sectors with ETS and Index Funds so not tied to one company but a fund
- Private Lending (Cons)
- There is a Floor and Ceiling in your return; set every month
- If borrower doesn’t make payments, would have to go through the Foreclosure process and rehab or sell as is once you have taken over the home
- Can be costly and money out of pocket if it goes that route
- Stock Market (Cons)
- If the wrong stock is chosen, you can lose the initial investment to $0
- Not guaranteed returns
- No Tangible Asset you are tied to if the company fails/goes bankrupt
