Net worth preference?

Question

Hey all,

What would you rather have your net worth in real estate or stocks?

Bill B. · Answer

If you have $2 million in stocks you should be able to bring in at least $10k/mo in income. About $5,500 of that would be tax free because of depreciation. That amount would go up every year with rent increases. You could borrow $1.5million at any time, tax free, at very low rates that would also lower your taxes.

If you have $2 million in stocks you’ll have to start selling starting day 1 for money to live on and paying taxes. The real estate portfolio could last 200 years over several generations. You’d hope for 50-100 years out of the stock portfolio, ASSUMING each generation took the time to study the stock market or took lower returns and picked very generic whole stock market funds. (And the US did fall in to a Japan type stagnation.)

It’ s a rarely talked about benefit of real estate. I spent the first 15 years of my life saving money like crazy and putting in to retirement accounts and the stock market. But I feared the day I would have to start withdrawing money to live on. Nobody wants to hope they die before they run out of money. But that’s what you’re doing with a value base investment like stocks rather than income based like real estate. I love that I will never have to withdraw any of that money, it’s like a soft blanket that helps me sleep. But in the end it was a waste of time and effort that would have let me retire many many years earlier than 42 I achieved with real estate.

Reed Rickenbach · Answer

Just guessing you may get biased answers here.

If it's $100M (more than I'd ever need) I suppose I'd rather have it in index ETFs for the lack of hassle. Although I imagine after a while I'd pull some out and buy RE cause I can't help myself. If we're talking trying to GROW a net worth from a low amount, RE all day every day.

Brad S. · Answer

Easy

Real estate, since you then own a useful physical asset, composed of an aggregation of individual physical assets (wood, copper, metals, etc), which has value beyond monetary. RE also is less likely to be as easily manipulated and currently has the most benefits.

Stocks are a promise governed mainly by outside forces, with no real intrinsic value, and can be highly manipulated with rights subject to changing overnight with little control. I suppose if I had enough stock certificates I could wallpaper my bathroom or use it for insulation though.

Matt Engle · Answer

Easily in Real Estate. I would much rather own real property than be 3rd or 4th in line on equity in a company that I have almost no control over.

Erin Azar · Answer

Real Estate all day long. I have been an investor in the stock market since I was 21, and while I was faithful to investing....I always felt it was imaginary money. I did not touch it, spend it, enjoy it....I only see it on my statements and my accounts. This physical detachment from my money and the real folks that manage it, brings me no joy. Contrary to my Real Estate, where I work on it, dream of it, see it, feel pride in it.....and most importantly, I feel that I control it and not some risk-taking financial investor that has short term career motives. Love Real Estate!

Basit Siddiqi · Answer

My ideal composition is50% Real Estate25% Stocks25% Private notesNothing ever needs to be all or nothing.

Scott Johnson · Answer

Hmmmm... Paper confetti or a hard asset... 🤔

Ned Carey · Answer

@Marc Globensky it depends on your time frame, investment goals and risk tolerance. Real estate is a way to potentailly get higher returns and grow faster.

Bob S. · Answer

RE 100%

David M. · Answer

@Marc Globensky

my quick 2cents:  Real estate maybe for growth and diversification, but definitely stocks or other more passive investment incomes for less headache and freedom of wealth.  Lets face it, if you are in or stay in real estate investing, you potentially end up 'swapping until you drop' because most can't or won't face the tax consequences (e.g. deferred capital gains and depreciation).  While there are ways to address this, its still limited and you can't access the cash directly.

Net worth preference?

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