Real Estate vs. Stocks: Which Will Make You MORE Money? w/The Motley Fool

Episode #955
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Which will make you richer: real estate vs. stocks? We brought the fine folks from "The Motley Fool" (‪@MotleyFool‬ ) on the podcast to get into a serious debate over which asset makes you more money, which is easier to invest in, and which saves you the most in taxes. We’ll go head-to-head against "The Motley Fool's" Jason Moser and Matt Argersinger to finally answer the age-old question: Should you invest in stocks, real estate, or both?
For this debate, we had to bring out the big guns. That’s why Dave Meyer and BiggerPockets CEO Scott Trench will be on team real estate for this debate, as Chris Hutchins from "All the Hacks" moderates to ensure things stay fair. Although we’d love to admit that we crushed this debate, there are some moments when the stock investors will surprise you, showing that real estate may not be for everyone and how stocks beat real estate in numerous ways. But that doesn’t answer the question, “Does real estate make you richer?” Don’t worry; we’ll get into all that in this debate.
Stick around as we get into the topics you care about most: building wealth, barriers to entry, volatility and risk, diversification, REITs vs. rentals, leverage and liquidity, time commitments, tax advantages, and more. If you’re itching to park your cash in an investment, hear out the debate BEFORE you make a move!
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Real Estate Podcast 639 - Passive Income (Without the Properties!) by Investing in REITs w/Matt Argersinger:
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00:00 Intro
02:20 Stocks vs. Real Estate Investing
04:08 Building Wealth
08:43 Barriers to Entry
14:50 Volatility and Risk
20:41 Diversification
23:42 REITs (Real Estate Investment Trusts) vs. Rentals
32:57 Time Commitments
35:53 Leverage and Liquidity
41:12 Tax Advantages
43:54 Closing Arguments

[@OmniCloud987]

This is actually super informative and a good versus. I ultimately want to be invested in both, but here in NJ it’s very hard to break into real estate after the pandemic tax as I like to call it 😅. So until I’m ready stocks have been my only option.

[@poonekar]

You could invest in remote markets with low median prices and high CoC. I live in the Bay Area but have rental properties as far away as Georgia.

[@leosouiher81]

I was waiting for this. Scott did not push back enough against the Reits guy. Let's see this one.

[@KAIXOmusic]

Volatility is actually an advantage of stocks over real estate. When markets decline, you can effectively buy back time when prices go down and widen your margin of return. Real estate continues to appreciate so you are constantly having to buy in at a higher price. Not to mention time is always escaping you while you struggle to save for a downpayment or work your way up the income ladder. With volatility comes opportunity

[@tamwilfred]

Real estate can be a lucrative investment in certain areas, but its returns can also barely match a well-diversified index fund like the S&P 500. One growing concern is the trend of treating real estate as a purely speculative commodity. This focus on short-term gains, coupled with rising interest rates and exorbitant homeowner's insurance costs in states like California and Florida, raises questions about the future of real estate's historical high returns. When you factor in the ongoing costs of property taxes, insurance, and maintenance, achieving significant profits becomes even more challenging. In essence, real estate may require a more cautious and long-term approach compared to the past.

[@ronwilliamsii8259]

This was a fantastic conversation. Thanks for the crossover and informative discussion/debate!

[@aaronmurphy8796]

Being a landlord requires some of your time sure but so does working a job for 20-40 years because you have to wait to built Up index funds to get out of a w-2

[@claudiovallone9217]

The problem imo when comparing is that one is passive and the other active. 2 different things

[@tamwilfred]

While real estate can be a lucrative investment, it requires significant capital, extensive knowledge, and a fair amount of luck to be successful. Challenges include: Rising Home Insurance Rates: Securing affordable home insurance can be difficult in some areas, adding to the ongoing costs. Tenant Risks: Dealing with bad tenants, vacancies, and potential property damage can significantly impact your cash flow. Limited Geographical Reach: Real estate investment is often tied to a specific location, limiting diversification and potentially exposing you to local market fluctuations. Uncertain Appreciation: Past performance, particularly double-digit appreciation, is not a guarantee of future returns. The real estate market can be cyclical, and future appreciation may be more modest. At the beginning of my wealth-building journey, I feel more comfortable with stocks. Also, I feel like its less risker than real estate if I can only afford one right now.

[@claudiovallone9217]

@@tamwilfred i have experience with real estate and it is A LOT OF WORK. Cannot compare with stocks

[@tamwilfred]

@claudiovallone9217 thanks for the input. Not sure if you deal with areas where home insurers pulled out or they increased rates. How profitable is real estate in this new environment?

[@edwindenman5524]

28:15 real estate has brought up tax advantages but there’s also ways to invest in stocks with tax advantages

[@roselineakol146]

Thank youverymuch. Very informative

[@Andys_Auto]

I've been a fan of BP since day one but this is a REALLY good episode here!

[@poonekar]

I have invested in stocks for 24 years and rental properties for 20 years. I now have 2/3rds of my net worth in RE mostly because of peace of mind (less volatility and more cash flow) and 1/3rd in stocks because of the high rate of return on liquidity and diversification. I am teaching my teenage kids everything I know starting with investing their side hustle income in stocks because of the lower barrier to entry.

[@SkyOceanBleu]

Which one did you find to have produced a higher return for you?

[@poonekar]

@@SkyOceanBleu Before taxes stocks, after tax benefits real estate. But having both is great because each year is different and together they reduce variance in the combined net worth growth.

[@SkyOceanBleu]

@@poonekar thanks for sharing!

[@kvn032]

I am a real estate guy buy also have stocks... Right now it's 20% of my equity.. the reason I entered sticks is that millionaires are in real estate but billionaires own stocks...

[@peterparker2068]

Billionaires own companies.

[@samuelmoijueh2030]

You should definitely prioritize one over another

[@ajnad5050]

The real value in investing in real estate vs stocks is taxes. You have lot of flexibility with real estate. If you take advantage of it, you can have more assets compared to investing in stocks.

[@sexcess]

100% of a stock portfolio could be tax-deferred or tax-exempt if you use IRAs for all of your equity investing.

[@Da_manndom]

I disagree there are ways to avoid or not pay any taxes on stock!

[@JulioSilva-mt4rw]

Very nice comparing apples to oranges 😂😂😂

[@christophertorres2367]

Well as Scott said in the beginning it's good to have BOTH this non-sense debate Real Estate vs Stocks is bull crap. We should have both no matter what anyone says lol.

[@freedomworks3976]

So true 👍 ❤

[@freedomworks3976]

Stock market is the superior investment because it is zero work and zero risk. ❤

[@chaoyishih8324]

Too many bones, no blood

[@MercenaryMuse]

Both markets have become dominated by sociopaths with no sense of the human impact if their actions. Enjoy making money either way, and the karma of participating in bubble investments that send thousands of people into homelessness every month.

[@claudiovallone9217]

Cuba anda perfecto con el socialismo no? 😂