Real Estate or Index Funds?

[Michael Street]

Hi All, I have a simple question with a not so simple answer. Do we invest in index funds (Vanguard) or do we get into real estate? 'Ye Ole Wall 'o text to follow: We have ZERO debt, no mortgage, no car payments, student loans, NADA Debt. We do not even have a credit card. We make approximately 150K year We have 6 months of cash, liquid We have full funded our private IRA's for 13 years now We have fully funded work simple IRA's for 10 years now (we get a 3% match but we fully fund it the rest of the way) We have approximately 465k in all 3 IRA's at present We are currently banking 2k-4k each month (could increase to 6k if pushed) so we have some cash to work with We plan to stop working in 10 years My wife will gain access to her State Pension in 8 years but not draw on it until we retire We have no kids We are already F.I., mostly... We do not have the "Gap" covered. 55 to 59 1/2. So we are looking to cover the gap. real estate or funds? With regards to real-estate... We are currently running through Coach (Chad) Carson's real estate class and I have read his book Retire Early with Real Estate ( a good book from my position). We are currently going through all of Paula Pant's podcasts and the FI podcasts. Some concerns have popped up. If we move forward with real estate then it will be buy 1 house, pay it off, buy another house and pay it off and so on until we get to age 55 after which, house buying will stop and we'll focus on paying off the last house. We have no intention of using leverage to purchase additional houses while still in debt on others. Also with houses, we may have equity but it does us no good for income unless we sell the house to gain access to the value of the equity. I realize there is rental income but with 4 houses (estimated) that would only be approximately 2k in income after operational costs, assuming a 4k gross from the 4 houses. Not exactly an impressive amount per month. On the flip side, if we drop 30K in an index fund that "currently" indicates a 10+% average over a 10 year period of time and put 3k+/- per month in it, by the time 10 years has lapsed we would have a significant amount of funds that are effectively liquid and not tied into an amount of equity that we would have to leverage or sell to gain access to. At this point no decision has been made. We are trying to educate ourselves as much as we can before putting our free cash into something. It could be index funds or real estate or something that we are not aware of at this time. The end result is to have monthly cash for 55 to 59.5 without debt or tapping into IRA's early. I am asking questions here because this group and community has a lot of knowledge in real estate and stocks. I hope that I have given enough information for some informed opinions that can be presented so that my wife and I can make a decision and move forward. Thanks in advance, Michael Greenville, SC

[Arn Cenedella]

There is no answer to your query.

It's all guesswork. It's just opinion. Everybody has one!

No one can predict future - anyone who says they can has way too big an ego.

Personally, I am probably 60% real estate 40% stock market.

Is my nest egg optimized? I have no idea - ask me in 10 to 15 years.

In my experience, the most important thing to create financial security is to invest the money not spend it. The not spending it the investing of it is more important that what you invest in.

Just my opinion.

You are in a good position - diversify don't go for the grand slam keep hitting base hits and all will work out.