Stock Market vs Real Estate: Which Will 10X Your Money?

Chris hosts a debate about whether stock investing or real estate is the faster path to wealth. He's joined by experts from The Motley Fool and BiggerPockets who dive into tax advantages, cash flow potential, long-term returns, and wealth-building strategies associated with each investment path to help you make informed decisions.

Jason Moser and Matt Argersinger are analysts at The Motley Fool, a financial services company that provides free and premium investment guidance to millions of investors.
Scott Trench is CEO and President and Dave Meyer is VP of Market Intelligence at BiggerPockets, the world's largest online network of real estate investors.

Resources Mentioned

Full Show Notes
00:00 Introduction
00:52 Defining Stock Investing Vs. Real Estate Investing
02:30 The Case For Stock Investing
05:24 Why You Should Invest In Real Estate First
06:34 Barriers To Entry For Stocks vs. Real Estate
09:11 Getting Returns on Stocks vs. Real Estate
12:05 Volatility: How Much Risk Is Involved?
14:18 How To Diversify In Real Estate
17:23 Forced Selling in Real Estate vs. Stocks
20:04 Leveraging Real Estate Investment Trusts
22:21 Value Add Investing in Real Estate
23:45 Time Investment: Managing Stock vs. Real Estate Portfolios
30:50 Can You Leverage The Stock Market For Higher Return?
33:03 Liquidity in Stock Market vs. Real Estate
35:30 Tax Advantages of Investing in Stocks vs. Real Estate
38:00 Closing Arguments for Real Estate vs. Stocks
39:97 Diversifying Your Investment Portfolio With Both Stocks and Real Estate

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All the Hacks:

Chris Hutchins:

[CameronFussner]

The fact that there is already an excessive amount of demand awaiting its absorption, despite how everyone is frightened and calling the crash, is another reason why it is less likely to occur that way. 2008 saw no one, at least not the broad public, making this forecast, as I'll explain below. The ownership rate was noted to have peaked in 2004 in the other comment. Having previously peaked in the second quarter of 2020, we are currently at the median level. Between 2008 and 2012, it dropped by 3%, and by the second quarter of 2020, it had dropped from 68 to 65.

[EthanWalter-wnmk]

One of real estate's biggest advantages is the ability to use leverage, which can multiply your returns. For example, with a down payment of 20%, you're controlling an asset worth five times your initial investment. If property values increase significantly, this leverage can result in outsized gains. However, leverage also amplifies losses, and interest rates can impact your profitability.

[Cynthia-mmcv]

I’m 35 and I have about $250k liquid in savings which I plan to put towards becoming a homeowner but based on the current high prices on real estate, do you suggest I hold from buying or do stocks for now?

[justlikeasoldier]

I am 22 years old, lost my dad about half a year ago and I am going to receive some money soon. Would it be smart to grow my money in stocks for a few years while I am in college and then invest in rental properties afterwards, or should I go for real estate investing first?

[LifestyleUnlimitedUSA]

Stocks are totally passive. Real estate no.
Holding stocks cost you nothing. Owning real estate the only sure thing are the expenses. The real estate income is not guaranteed the expenses yes.
Overall stocks are better because they are liquid. Selling real estate at market value can be a lengthy process and a huge headache.

[Duttonmuffins]

I'm an amateur with a portfolio of 370k and I've got some real estate holdings too, but it's hard for me to build confidence. I want to invest another 70k over a one month span, but I want to be strategic about doing it so I can grow more and not stay stagnant. Any stock suggestions?

[alphabeta]

36:00 RE is less volatile, but illiquid
41:30 Defer taxes using stocks
42:30 RE vs stocks conclusion

[NoRegertsHere]

Stocks. Only reason RE makes sense is because of leverage. If someone has a house they live in and available equity, using the leverage that RE provides but the investment quality of stocks, it’s not even close.

Even without leverage or a smaller amount of leverage, over 20 years, stocks are a no brainer. Wish I knew this before investing in property instead of stocks

[ildefonsovilar]

I'm on 5:26, and I pause the video to come write this. Investing in the US, stock market is the best type of investing. Better than real estate, better than bonds, better than anything out there. When you take into consideration everything, how effortless it is to buy stocks, how much bs do you have to put up when owning rentals, and so much more.. buying stocks beats everything. Now, I'm back to the video, and I can't wait to watch this! Maybe it'll change my opinion? Hmmm...

[cgonsalves]

Great debate guys! I was hoping there would've been some discussion about fractional investing in real estate and how it compares to traditional real estate investing.

[mikeflair]

Here is my analysis: A surrogate for real estate is VNQ, Vanguard REIT USA market based. Compare to VTI, Vanguard Total Index, a surrogate for the USA stock market. Over the last 5 years, VTI is up 17x compared to VNQ. Over the life of the fund, VTI outperforms VNQ by 4x. I am discounting buying and renting out individual real estate, that is real work. IMO, the USA Stock Market = TINA.

[RB-jeyj]

Stay away from Real Estate it's a bunch of work and takes a lot of money! Taxes, Insurance, maintenance, non paying renters, big ticket items roofs, heating and cooling system, plumbing and the list goes on and on! Stocks have never ever called me for replacing or repairs! SCHD pays me every quarter and JEPQ pays me monthly! VGT growth is insane and I yet to hear one call for help! Sold all my properties and replaced them for SCHD/VGT/ JEPQ and VOO!

[maiadazz]

Biggest lesson i learnt in 2023 in the stock market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.

[therock]

Need knowledge in both and ability to participate in both

[bluecollarbullionballer]

I love the stock msrket so thats my bias.I focus on CEFS, CLOS, MLPS and REITS for real estate exposure.Also sell OTM options.Just do what excites you and thats the best for you.
Happy investing/stacking.

[highflyingstone]

The better part of stock investment is that you can make partial transactions. Nobody would know when is peak and when is trough but most of investors can sense that when is overbought and when is oversold. According to your own valuation guidelines and stick to it, you can actively adjust your exposure and get decent returns.

[richard]

I invested equal amounts in stocks/real estate in 2009. The real estate produced good cash flow and appreciation for 15 years. The stocks have given good liquidity to use. Now 15 years later the total wealth creation is about equal to the work associated with the real estate is 100x or more. The sleepless nights from stocks was much much higher. I’m currently selling off my real estate and there are some ways to minimize taxes through Charitable Trusts. Both have been excellent over time

[michaelsang]

I’ve regretted every property I’ve sold. You don’t have to sell your property to cash out. Just refinance tax free. I refinanced 4 of my properties back in 2021 3.65% 30 yrs fix. Over $1 million tax free. I still have the assets. I’ve made money in real estate and lost it in the stock market. The lesson, I stick to what I know. With all this high frequency trading, market insider; with the stock market I feel like a sucker.

[isiah]

Missed the 401k company match under the barrier to entry or returns topic 👀

[ThisGuyRocksLikeCrazy]

The real estate guy keeps mentioning about using leverage in real estate investment, however, he doesn't provide any info regarding the cost of using leverage, AKA, interest, especially when rates are high. Stock guys didn't say anything about using leverage when trading stocks either. You can basically simulate a stock portfolio using options and adjust the leverage amount based on your risk tolerance and market conditions for a tiny amount of fees compared to what you have to do using real estate.