Property v stocks: Which is the better investment for you?

Investing some of your money can be a useful way to build the wealth you need to achieve your long-term goals, be they to retire early or pay for your child’s wedding.

Yet, with so many options available, deciding where to invest might feel daunting.

Property investment is a popular choice for many people. Indeed, research published by FTAdviser has revealed that a third of UK adults aspire to become a buy-to-let landlord.

However, there is generally less awareness and understanding of stock market investments. According to a survey by The Investment Association and Opinium, almost one in five Brits have never heard of a Stocks and Shares ISA.

While putting your money in bricks and mortar may feel like a safe and familiar choice, you could be missing a trick if you don’t consider investing in the stock market. The private bank, Brown Shipley has revealed that 35% of affluent UK adults attribute their success to investing in the markets rather than property. 

So, keep reading to learn about the relative pros and cons of investing in both property and stocks.

Property investment: The pros and cons

Property investment involves buying real estate to either sell at a profit or generate an income by renting it (“buy-to-let”) – or both.

Pros	Cons
A tangible asset – Putting your money in a physical asset may provide a sense of security and reassurance, especially if you’re new to investing.	High upfront costs – These could include a mortgage deposit or the full purchase price, Stamp Duty Land Tax on properties valued above certain thresholds (plus an additional surcharge for buy-to-let), legal fees, and survey costs.
Regular income – You could generate a consistent rental income that might help you pay off the mortgage (if you have one) and fund your lifestyle.	Management demands – Such as property maintenance, regulatory compliance, and communicating with tenants. If you don’t want to commit the time and effort required, you can pay for professional management, but this may eat into your profits.
Capital appreciation – Property typically increases in value over time, making it a potentially valuable long-term investment.	Ongoing costs – If you rent your property, you’ll likely need to complete maintenance and repairs periodically. There will also be insurance and taxes to pay each year.
Stability – Property tends to be less volatile than other types of investment, making it an attractive prospect for those seeking security.	Low liquidity – It takes time to sell a property, which could be problematic if you need to recoup your investment capital at short notice.
	Market vulnerability – The value of your property could fluctuate. If prices dip, you may end up selling at a loss, or if you have a mortgage, there is a risk of negative equity – when the market value of your property falls below the outstanding mortgage balance. Moreover, rental demand could drop, resulting in periods when you have no paying tenants.
	Tax implications – You’ll likely pay Income Tax on rental income and Capital Gains Tax on any profit you make when you sell your property.

Stock market investment: The pros and cons

Investing in the stock market means buying shares in publicly traded companies with the aim of either growing their value over time or generating an income (dividends) – or both.

Pros	Cons
Potential for high returns – Long-term investing allows your returns to be reinvested and potentially generate further earnings over time – this is known as compounding. According to Business Insider, the S&P 500 (which tracks the performance of the leading 500 companies listed on US stock exchanges) has gained 10.5% on average each year since it was introduced in 1957.	Market risk – Stock prices can go up or down depending on factors such as global political and economic events and company performance. So, it’s important to align your investments with your tolerance for risk.
Flexibility – There is a huge range of stock market investments to choose from across different asset classes, geographical regions, and sectors. As such, you can easily align your portfolio with your values and financial goals while diversifying your investments to balance risk.	Emotional stress – Navigating the wealth of choices available, not to mention confusing technical jargon, can be overwhelming for beginners. Moreover, short-term fluctuations and periods of volatility could be stressful, especially if you’re still learning how the markets work.
Low entry costs – Unlike property, you can start investing in the stock market with any amount of money you choose.	Fees and charges – These may include brokerage fees, platform fees, Stamp Duty Reserve Tax, fund management fees, and other costs.
Passive income – Dividend-paying shares could generate an income. Dividends are calculated as a portion of a company’s profit and are usually paid to shareholders quarterly.	Dividends aren’t guaranteed – Companies may choose to stop paying dividends during tough economic times or periods of poor performance.
Tax-efficient options – If you invest in a Stocks and Shares ISA, you won’t pay Income Tax or Capital Gains Tax on any dividends or profits you make, provided that your contributions remain under £20,000 in a single tax year (2025/26).
High liquidity – If you need to access some of the wealth you have invested in the stock market, you can do so quickly and easily by selling your shares.

 

Which investment is right for you?

As you can see, there are pros and cons to both property and the stock market when it comes to investing your wealth.

To decide which investment is right for you, it might be helpful to consider:

• Your tolerance for risk
• Your financial goals and time horizon
• How much capital you have to invest now and in the future.

You might benefit from financial advice which could help you explore these factors and understand the different investment options available.

For example, if you’d like to put some of your money in the stock market but feel overwhelmed by choice, our financial planners can provide the ongoing expertise, guidance, and support you need to invest with confidence.

Get in touch

To find out more about how our financial planners in Bristol can help you build an investment portfolio that supports your goals, please get in touch.

Email helpme@aspirellp.co.uk or call 0117 9303510.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

The Financial Conduct Authority does not regulate buy-to-let (pure) and commercial mortgages.