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Rule #1 - Do not lose money! Rule #2 - Never forget rule number 1! ( by: Warren Buffet )For comments or questions please email: : admin@equityresearch.com |
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Should I Invest in Real Estate or the Stock Market?Warren Buffet thought about investing in real estate, but decided that it was a lot more work than buying securities. To invest in real estate, you need to pick out the home, know how to deal with contractors and fixing things up. It is a lot more work than buying a security. Why should you invest in real estate when you can find great securities to buy?LeverageReal estate has one big advantage and that is leverage. Who is going to lend you $350,000.00 to put into the stock market? The answer is nobody. On the other hand, real estate can be purchased with little to no money down. You can own a larger asset without using your own money. That is leverage.Donald TrumpDonald Trump came from a family with money. He has increased his wealth greatly and is a great money manager. However, what most people do not realize is that Donald Trump would have been even wealthier just by sticking his money into some S&P 500 index funds. And, by doing so, it would be a ton less work than managing lots of real estate development projects.Developer SuccessThe good news is that small business real estate developers are one of the most profitable and easy way s to make good money. It has been shows that most people can develop a piece of property and make money at it. The success rate is very high compared to other businesses you might go into.ResultsReal estate can make you a millionaire and so can the stock market. However, the stock market is a better investment than real estate for those that are good at it. If your ability is high in the stock market that should be your bread and butter. If you aren't that great of a stock investor stick to real estate. Real estate is easier and less risky. We all have just seen a real estate bubble, but that certainly isn't the norm. Most of the time real estate will get returns of around 5-6% per year. If you account for the mortgage to get the home, then you are not making any money unless you rent out the home and things go well. That's what makes real estate a lot of work. Compare that to the stock market. The stock market averages 8-12% returns, on average, and there is no mortgage to pay, no tenants, and nothing to fix up. If you have a long time on your hands, purchase a few homes and rent them out. In addition, invest in the stock market. If you do this, you will end up doing quite well. A combination of the two is a great way to diversity for a regular investor. |
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