Stock Investing vs. Real Estate Investing

One of the most common questions people ask is what type of investment should they go with?

They have some money in their savings account and they hear all this news about the stock market, and stocks going through the roof, or they hear about how real estate helps to build generational wealth and can lead to generations of financial stability.

Each have their pros and cons.

So which route to go?

The issue with stocks

Stocks may seem like a safe bet. There’s always talk about people such as Warren Buffet who say to invest in certain types of stocks and returns are nearly guaranteed. Simply holding your funds in some indexes will yield a certain percentage return over the lifetime of your investment.

That’s true in a sense, but it all depends on where you are when you will need to cash out your investment. Are you within the average or above it? Or are you cashing out during a financial recession and downturn?

Owning a stock technically means you own a portion of the company, but you have little to no control over the day-to-day operations unless you accumulate enough shares of a company to enact control.

Passive income, in the form of dividends, is a double-edged sword. Companies that pay out decent dividends (1%-4%), usually don't go up as much as growth stocks that don't pay any dividends, but the potential for high returns is there.

There’s also a high variance with stocks.

They can shift quarterly, depending on how their earnings call goes, or a recession could happen and it could take years to recover.

Tip:

Diversifying your interest across multiple asset classes is a tried and true method. With all of the options at your disposal, it's more important than ever to make sure you fully understand the investment you are considering.

Multifamily Real Estate investing

This is a much more stable and steady growth vehicle for you and your family to consider.

Everyone will always need a place to live, which means the passive income from rentals can be fairly consistent, even in a declining market.

Real estate works in almost a reverse fashion to stocks, where your margins can only increase as a mortgage is paid down or a property appreciates in value, while you can consistently raise the rent on properties, often alongside inflation.

That means real estate is always working for you and growing at the same time. It can weather recessions much smoother than stock markets, which can go into free fall with their prices.

The key is investing in a sponsor your trust, with a track records of investment in various economic cycles.

Connect with us today to learn more.