Stocks vs Plots

Hyderabad: 23 Dec 2022: 1. Stocks can be purchased with less amount in few thousands while plots require lacs and millions. Minimum amount is required to buy stocks while plots require a big amount.
2. Stocks can be purchased or sold in portions while plots can be sold as a whole, in most cases you can not sale a plot by dividing in to portions where you can buy/sell stocks of same company in whatever quantity you want. You can keep some stocks and sale some of the same stocks, you can even buy them back, plots can not be sold into portions either you have to sale them as a whole or you have to keep them as a whole.
3. Source of income stream from the plots is usually only one that is capital gain, you can only gain income once their price appreciates, in case of stocks you can gain through three sources, from price appreciation, dividends and bonus shares.
4. Capital gain/price appreciation in plots require a significant amount of time, price to earning ratio, P/E ratio, is a metric used to measure in how many years you can gain all the amount back in profits which you have actually invested in principal, P/E ratio of plots or real estate business as a whole in Pakistan is around 15 which means it takes around 15 years to take an amount equal to actual investment or 100% profit in return in the property business, mind that is also for plots or property at a very lucrative posh locations, if you buy a plot on peripheral areas the time required would be significantly more, even is some areas price depreciates too. However, the P/E ratio of stock market is around 5 which means on average you can get 100% profits in 5 years. If your stock selection is good it further downs to 2 or 3 years, means you can double your amount in 2 to 3 years. Similarly if you buy a good stock at massively oversold/discounted position as the situation of market now a days P/E ratio further downs to below 2.
5. Plots require physical care, look after security measures, exhaustive research on documentation to avoid frauds, land grabbing and various hassles etc, stocks require none as PSX as a regulator works to ensure no fraudulent company gets registered, even those who have shady business practices are listed into "Black List" section so investor might know that stocks of a specific company are shady.
6. Stocks are highly liquid it means investment in stocks can be retrieved into cash within hours, which can be obtained in your bank account within a day or two, no matter the situation of market is poor or good. Investment in plot is non liquid, even for best of the best plots it takes weeks to get cash back and if the plot is not so good or the property market is down the investment gets stuck for years, even at times of need while having plot at best location you can not get cash against it swiftly while you can readily sell your stocks in few minutes and obtain cash in few hours in your account.
Bottom line stocks are cheap, can be sold/purchased in portions, give you multiple income streams, have good P/E ratio, are hassle free and highly liquid which makes them a better investment avenue than plots

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