Two investments, two character types
An investment apartment is a tangible asset: there is an address, a tenant, a contract and sometimes a sense of psychological security. The capital market, on the other hand, offers indirect ownership of companies, bonds and indices, usually in a more liquid and dispersed form.
The correct comparison is not just who has yielded more in the past. You need to understand what suits the investor: does he want leverage, is he ready to deal with maintenance and tenants, and what is the level of liquidity he needs.
Leverage, tax and costs
Real estate is sometimes purchased through a mortgage. Leverage can increase yield when the price of the property rises, but also increase risk when interest rates rise, the rent is impaired or there is a period without a tenant.
In the capital market, it is possible to start with lower amounts, sell part of the investment, and spread between countries and industries. However, the volatility is more visible, and it requires behavioral discipline.
How do you decide?
Before making a decision, you should build a personal table: equity, investment horizon, need for liquidity, tax, purchase costs, management fees, operational risk and monthly flow.
For many families the answer is not an apartment or the capital market, but a combination. Diversification between asset classes can reduce dependence on just one scenario.