Is it better to invest in real estate or the stock market?

6 Replies

This is response to @mark ferguson's post on "Is it better to invest in real estate or the stock market. 

I believe in diversifying your investments and not putting all your eggs in one basket. I don't think it is healthy having 90% of your net worth tied into real estate, just as it not healthy to have 90% all tied up in stocks. I like to see my investments diversified from a holistic approach and see them in 4 parts: S-Corporations, Equities, Cash and Real Estate. My equity (stock market) positions are usually in the low to mid 20%, but i have less exposure to the equities sector today. Whether it is real estate or stocks, I like to keep my powder dry and like to make large investments when there is blood in the streets in the equities market like February 2002, and March 2009 or Atlanta's real estate market in 2012 when equities and real estate prices were trading hands at 1996 prices.  

There will be times when the stock market will out perform the real estate market and when real estate will out perform stocks. What we have seen in 2007-2009 financial crisis was a extremely rare situation where both the real estate and stock market crashed together. There is obviously great advantages of real estate in terms of leverage and tax benefits that has already been discussed, but the great advantage for stocks and cash is its immediate liquidity for great buying opportunities when they present themselves. 

One should invest and concentrate their resources in an area that they are most knowledgeable in whether it be your own business, stocks, or real estate. I have been investing in the equities market for more than 15 years, so I have built up my knowledge base and experience to comfortably invest in this sector with confidence.

@James Park

I can respect your theory.  I wise person ( my CPA ) once told me to only invest in what you know.  If you know everything about the above 4 you mentioned then great.  

I used to only do real estate until one day I was presented with an opportunity to invest in commodities.  I didnt know anything about it and when it was explained to me it sounded and seemed like a great alternative investment.  My wife and I only had but $20,000 to our name and we contemplated pulling out the $10,000 available from the credit card to throw in ( good thing we didnt ).   

Everything was going smooth for the first 4 months, a nice 14% ROI every month until BAM!!!!!!!!!!!!!!!!!!!! supposedly one of the money managers from some off shore account was jacking with all the funds and the whole thing got shut down: TRANSLATION - sorry suckers but all your money is not gone and there is nothing you can do about it.I wonder if thats what truly happened.

With that all being said, if the only thing someone knows about is RE investing then only invest in Real Estate. 

Good luck

Originally posted by @Curt Davis:

 . 

With that all being said, if the only thing someone knows about is RE investing then only invest in Real Estate. 

Good luck

Amen brother. 

Well the obvious is stocks are liquid and real estate is not. Not to the extent stocks are.  In the end I cannot say which is better but diversity is always good. For me my stock profits fund my real estate. My buy and hold rentals I view as a REIT paying me a monthly dividend.

RE because discounted purchase and leverage.

Thanks for explaining it nicely. I think investing in real estate or stock is one's personal choice. Though both the things have their pros and cons. If a person has proper understanding of the stock market then Stock investments are really a good option to take. 

WO really trying i do well in RE.   Actually trying in the stock market i alwys SUCK..........lol.

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