Real Estate vs. Stock Portfolio
Coming across this website and the Financial Independence subreddit, I've gotten an itch to increase my rental real estate portfolio to start generating residual income. My wife and I sat down together to look at our finances, and she thinks it's a bad idea.
Where we currently stand, we own a rental home and our primary residence outright, with no loan. Rental home is worth about 450k, generates about 2k/month in rental income. Primary residence is probably worth about 600k+.
Our stock/investment portfolio, including Roth IRAs and 401ks are worth about 600k. Of that, about 250k is in taxable accounts that we could withdraw if needed.
My wife's argument is by buying another rental property, we would be dipping into the 250k and we would be overweight in real estate vs. stocks if you don't count the 401ks and IRAs. She thinks it'd be more wise to have the 250k in our stock portfolio, so we're more diversified and also because it's more liquid.
Thoughts? Suggestions? Is she right?
Thanks!!!
Charles
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- Real Estate Broker
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#5 Coronavirus Conversation Contributor
- Real Estate Broker
- North Richland Hills, TX
How did your stocks contribute to the de-worsification of your portfolio today? I've dumped all my market-based investments for real estate and real estate lending for the following reasons:
1) Control - I'm in charge, not some crook on Wall St.
2) Stress - market volatility has no direct impact on me.
3) Leverage - can get more more on RE
4) tax advantages - where else can you depreciate an appreciating asset
5) cash flow
I'm not missing the stock market one bit!