Stock Market vs. Real Estate

June 11th, 2019

Which is the better investment – the stock market or real estate? There are arguments for both sides. But when you have a limited amount of money to invest, as most people do, your decision carries more weight. Your stock broker (the one who gets the commissions) will undoubtedly advise you to invest in the stock market. But before you sign over all your money, consider real estate investing and all the ways it benefits you compared to the stock market. When you need to choose between the two, we believe that the wise choice is to invest in real estate first. Real estate investing pays out in so many more ways than the stock market.


Leverage Financing

Real estate is the only investment vehicle that enables you to buy an asset worth five times the initial cash investment. With certain financing, you can buy a property with as little as $16,000 or just 20% down. You can’t do that with stocks. In the stock market, you pay exactly what the stock is worth at that instant you buy it. Then you have to hope that the stock goes up in order to make any money. In real estate, it’s even possible to make money the day you buy, if you get it for less than its appraised value.


Always Valuable

Real estate is always valuable on some level; even when the real estate market drops, your real estate investment is always going to be worth something. However, with stocks it’s a different story. Stock prices can drop to zero, and they do so. In the stock market, it’s possible to lose every penny you’ve invested. With real estate, your investment property is always valuable. It can never ever go to zero.


Cash Flow

Buy and hold real estate like turnkey rental properties offer continual cash flow. Every month your rental tenant pays rent that’s money in the bank. With stocks, there’s no continual cash flow unless you happen to find a stock that pays dividends. Even so, it’s highly unlikely you’ll find a stock that pays you up to 15% returns like real estate investments can.


Tangible Asset

Investment real estate is a tangible asset. It’s something you can touch and feel and see. Stocks are just an asset on paper. You don’t actually own anything except a share of a nameless, faceless company that you have nothing to do with; no connection with.


More Control Over Your Investment

Real estate is a tangible asset. You can control and improve your real estate holdings. You can make improvements to the property on a structural level or a cosmetic level. You can make it physically more valuable by adding to it or improving upon it. You have complete control over your investment. With stocks, you have no control over your investment. The value of the stock is based on public opinion. If public opinion sways in one direction or another, the value of your portfolio goes up or down accordingly. With stocks, your financial net worth is essentially in the hands of whim and fate.


More Ways to Make Money


Real estate provides you with multiple ways to make and save money. You can make money from rental income, save money on taxes with deductions, make money on appreciation, make money with earned equity and more. Stocks don’t offer you any way to make money unless you get rid of them by selling them. Sure, you might have a stock or two that pays dividends, but that’s a pittance compared to the money that you can earn from real estate investments.


One Investment For a Lifetime

With real estate, you invest in buy and hold property and it pays you about a 15% return over a lifetime. That’s passive income that doesn’t require more work after you’ve done your original due diligence. With the stock market, you expend time and energy again and again to find stocks that you think will increase over time. Even if you’re “successful,” you don’t make anything unless you sell, at which point you have to pay capital gains tax plus spend more time and energy to find yet another good investment.


Tax Advantages

With real estate you get to write off related expenses like repairs, maintenance, marketing, property management and interest, among other things. You can use those write-offs to offset your taxes from your real estate rental income and your W-2 earnings. There are no write offs with stocks. All you get is more taxes to pay both when you earn dividends from your stocks and when you sell your stocks.

You can certainly invest in both the stock market and in real estate. But you can expect to get far greater returns from your real estate investments, as you can see



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