Better investment: Real Estate or Stocks?

This is a moderately interesting article over at Forbes about whether investing in stocks is better, or real estate.

The short answer: Housing beats stocks short term (over the last 6 years). Stocks beat housing long term (over the last 25 years).

Real Estate Vs. Stocks chart

5 thoughts on “Better investment: Real Estate or Stocks?

  1. Obvious difference is the leverage you get with real estate.

    Not sure why I have such a bad reaction to real estate — is it because I missed out on that boom?

  2. I’m not sure what you mean by leverage. The main benefit they cite is that, unlike stocks, owning a home replaces an expense you’d have by not owning one – rent. The main disadvantage being that a home isn’t at all liquid. In your case, the option of picking up and moving to China for 6 months wouldn’t have been nearly as painless, if even financially possible, if you were a homeowner.

    I don’t like the idea of buying anything for that kind of money. Or, put another way, I don’t like the idea of owing someone a lot of money for something. There is something liberating about not owing anyone anything. Although, I’m sure there’s also a good feeling one gets from having a piece of property they can call their own.

  3. The leverage I meant is the fact that you can invest borrowed money — you can do this with stalks by buying on margin, but your interest rates (along with the amount you can borrow) aren’t as good.

    For instance, I think my sister’s downpayment was around 60k for a 350k house — I doubt many brokerages would lend you that much to invest.

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  5. Real estate investment trust (reit); much better for growing investment, but also about as risky as real estate. always look for that investment component in a relatively “safe” category with a cash investment tied to it.

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