Rental property or stock market investment: which investment to choose at the end of 2024?

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Real estate and stock market investment are two major pillars of investment. Should we favor real estate or financial markets at the end of the year? Albert d’Anthoüard, deputy general manager of Nalo, helps you choose what best suits your objectives and your profile.

Rental real estate: the security of stone

Rental real estate is traditionally seen as a solid and secure investment. It represents a pillar of savings for the French, who trust it for its many advantages.

Stability: Real estate has a reputation for retaining its value, and even appreciating over time. Despite short-term fluctuations, especially in large cities, real estate benefits from constant demand. In 2024, this trend is expected to continue, particularly in attractive areas where rental demand remains strong.

Regularity: Rental real estate generates monthly income in the form of rent, which can supplement your income and strengthen your savings capacity. At a time when economic uncertainty persists, this stability is reassuring for many investors.

Leverage: Unlike other forms of investment, real estate allows you to benefit from leverage thanks to bank credit. It is possible to invest with a limited contribution and repay all or part of the loan with the rents received. In 2024, this leverage remains a key asset for investors, especially as these rates tend to fall again.

However, rental real estate is not without its drawbacks.

Charges and management : Owning a rental property takes time and can generate unforeseen costs (works, unpaid bills, rental vacancies). Rental management can also be time-consuming if it is not entrusted to an agency.

Taxation : Taxation on rental income remains heavy in France, with taxes that can weigh on the profitability of your investment, especially if you do not benefit from advantageous tax regimes such as the Pinel system or the LMNP (non-professional furnished rental company).

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Investing in the stock market: performance and volatility

Investing in the stock market represents an attractive alternative for those looking to diversify their wealth while seeking potentially higher returns in the long term. In 2024, financial markets continue to attract many investors, despite their volatility.

Attractive returns : Historically, stocks offer higher returns than real estate over the long term. According to the latest data from the IEIF, equity markets generated on average an annual return of almost 10% between 2008 and 2023, even taking into account periods of crisis.

Accessibility and diversification : Unlike the purchase of real estate, which often requires substantial capital, the stock market is accessible with modest amounts. In addition, the possibilities for diversification are endless: you can invest in various sectors, different geographic areas, or even innovative companies.

Liquidity : One of the main advantages of the Stock Market is the liquidity of your investments. While selling real estate can take time, funds invested in the financial markets can be mobilized quickly. This flexibility is an asset in the event of an urgent need for liquidity.

But the stock market also presents significant risks.

Market volatility : Stock markets are inherently volatile. If 2024 promises to be a year of recovery after recent economic turmoil, investors should prepare for possible corrections, particularly in a context of rising interest rates and persistent inflation.

Risk of capital loss : While the total loss of the value of real estate is rare, the stock market presents a real risk of capital loss, particularly in the event of poor investment choices or a stock market crash.

SCPIs: the ideal alternative for investing in real estate without constraints

If you are hesitating between rental real estate and the stock market, there is an alternative that deserves to be considered: SCPI (real estate investment companies). Often unknown to the general public, SCPIs allow you to invest in real estate without purchasing property directly. They collect funds from investors, acquire real estate, collect rents, and distribute the income in the form of dividends.

Investing in real estate from modest amounts : Unlike the purchase of real estate, which often requires significant capital, SCPIs are accessible with much lower amounts and no need to take out a loan.

Regular income without direct management : By investing in SCPIs, you receive regular income in the form of dividends, from the rents collected by the management company. You benefit from the advantages of rental real estate without having to worry about daily property management.

Interesting taxation : Depending on your situation, SCPIs can also benefit from advantageous taxation, particularly if you buy them within a life insurance contract. In fact, you will benefit from its tax advantage (taxation only on capital gains in particular).

SCPIs therefore represent an excellent solution for diversifying one’s assets, combining the stability of real estate with the flexibility of an accessible investment, and generating regular income without the constraints of rental management.

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So, rental real estate, stock market or SCPI? In 2024, rental real estate and the stock market continue to attract very different investor profiles. For those looking for stability and regular income, rental property remains a safe bet, despite management constraints. For more dynamic and risk-tolerant profiles, the stock market offers prospects of attractive returns, provided you accept its volatility.

Between these two worlds, SCPIs offer an ideal alternative. They allow you to invest in real estate without suffering the disadvantages of direct management and without resorting to debt. Whether you choose rental real estate, the stock market or SCPIs, the key in 2024 remains diversification to maximize your returns while limiting risks.