Do you prioritize real estate over stocks?

Question

Do any of you invest in the stock market (i.e. S&P 500) *and* real estate properties at the same time?

If so, why and how do you prioritize both? (Do you invest a percentage of your cash flow into each?)

Clearly the downside is each portfolio will not grow / compound as quickly due to lack of total focus.

On the other hand / upside, if one does well  it can feed the other and if both do well that’s even better.

My motivation for asking is because I am already 100% invested in stock market as I am just learning about REI.

Nathan Gesner · Answer

I do not invest in stocks at all. Can they be a good investment? Absolutely. But you have zero control over it. I think real estate has far more tangible benefits and can produce better wealth and income than stocks for most investors.

Yuuj V. · Answer

I invest in both as well. However, full disclaimer, my ROTH IRA and 401K are strict indexes and mutual funds. For my brokerage account, I have individual stock REITs and a few indexes. The returns are no where near what a house could return, but then again, its no where near as stressful. I have stopped investing in stocks for a while due to my immediate focus of a cash dump for a house.

REITs and Rentals.

SP 500 Index is never a bad choice.

I personally like to keep 30/70 stocks to cash. No particular reason.

Mark Costa · Answer

@JD Martin I am talking about passively investing in index funds like the S&P 500... just "buy and hold the market" is what I do as well.

It doesn't take any thinking or smarts aside from consistently buying. :)

JD Martin · Answer

Are you talking about individual stocks or mutual fund type investments? I don't really do individual stocks any more. I toyed with it for a while but figured out pretty quick:

1. I don't have the stomach for the ride on individual stocks,

2. I'm nowhere near knowledgeable enough to beat the market unless I just get lucky, and I don't consider luck a strategy,

3. I have less flexibility with stocks than I do real estate.

So I do invest in things such as index funds but I prefer real estate. I just feel that I know it better and have better control over the outcome than with stocks. There are ways I can manipulate the input to achieve a more desired output with real estate - I can fix up a house, add to it, rent it out, lease to own, sell it outright, borrow against it, etc. There's no good way for me to influence the inputs on stocks.

Joe Villeneuve · Answer

I invest in RE to grow my seed money quickly, and to take the returns in the form of cash, so I can move forward even faster.

I take the profits, and use some of it to invest in stocks...but I treat the stock market like a bank account.  Since the stock market is so how unstable, I prefer to invest there conservatively.

Mark Costa · Answer

Thanks @Nathan G. - I actually came across that article in my initial research. Here's one more article that seems to favor stocks over real estate.

Just want to make my intentions clear: I'm not trying to stir debate on whether index funds are 'better' than real estate investing. I think you can make a case for either depending on your experience and interest.

My question is more about whether anyone here prioritizes both and what that looks like.

Nathan Gesner · Answer

@Mark Costa check out this article for a simplified overview of the benefits.

Mark Costa · Answer

@Joe Villeneuve may I ask you to describe what "investing in both" looks like for you? How do you decide when to invest in which and what does that look like. Sounds like stocks are an afterthought for you compared to REI but I'd love to get a clearer picture of what the allocation / timing looks like for you.

@Nathan G. I'm actually coming at it from the other side. Passive investing in stocks is all I 'know' and I'm just educating myself now in real estate.

Giovanni Luna · Answer

Joe,

What has been your return on REI?

Joe Villeneuve · Answer

I invest in both.  If I had a choice, and I do, I choose REI.

Do you prioritize real estate over stocks?

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