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You’ve heard this before: Stocks, over time, outperform real estate.
There are many schools of thought on this but one common statistic that gets tossed around shows equities over the past several decades have returned an average upwards of 10% a year, while real estate is in the 4% ballpark. ...
1. Much more liquidity
2. Lower transaction costs
3. Less work
4. More diversification
5. Ability to invest in products you love
6. Easier to protect your investment in a downturn
7. Fewer taxes and fees
https://www.marketwatch.com/story/7-reasons-stocks-are-better-than-real-estate-2018-04-24
You can't sell a room/But to be fair, if the market should crash, you can't live in your stocks. Ultimately, there just numbers in millions of brains.
clambo saysYou can't sell a room/But to be fair, if the market should crash, you can't live in your stocks. Ultimately, there just numbers in millions of brains.
Of course, houses don't also pay dividends. You can rent a house but it's a bit of trouble and work.
To get the capital appreciation out of your house you must either 1. sell it 2. reverse mortgage it.
The capital appreciation stocks is superior, they are not taxed while you own them, while you pay property tax on the house that you didn't sell yet. If your stock pays dividends, you are taxed on this income of course.
I can make 25 free stock trades at Vanguard, thereafter $2 per trade. The sale of a house costs 6% or so and takes a long time.
You can sell a few shares of stock to raise cash. You can't sell a room/
But to be fair, if the market should crash, you can't live in your stocks. Ultimately, there just numbers in millions of brains.
If you borrow capital to buy a rental property how is this making you a great yield?
Even if you get a portfolio-margin account (with $200k+ initial capital some brokers would allow PM) with higher margin allowance, you'd be facing margin check every night if not every minute in real time!
Save up at least $25-50k first, then decide whether you want to put that in investment real estate or in a trading account that won't lock you up after only 4 pairs of round-trip trades in a week. The primary advantage of security trading is high liquidity, so prepare to take advantage of the high liquidity and get out if your entry point is wrong.
Although your 7 reasons are fine, you must factor in rising rental markets if we are going to have a genuine conversation about real estate vs stock market.
Everyone has to live somewhere.
A savvy investor is more likely to be discreet.
If your stock pays dividends, you are taxed on this income of course.
Everyone needs a place to live. Childless Hipsters, of which there are so many here in the Bay Area, can couch surf or double/triple up or flit from one rental to another. I was no Hipster but I lived like that myself back in the day, as did my partner.
It's more complicated with schoolagers. Moves are disruptive. That's the reason my partner and I bought our SJ home before we had schoolagers, for the stability. We want their situation to be based on our family dynamics, not the Landlord's whims. For that reason, a personal reason. But, not as an investment. Because it's not such a great investment except for the intangibles.
So many folks go ballistic rationalizing what a great investment their huge ill-liquid asset is, whether it is their Bay Area sh*t-shack or the solar roof on top of it. A savvy investor is more likely to be discreet.
https://www.marketwatch.com/story/7-reasons-stocks-are-better-than-real-estate-2018-04-24