Should You Invest in Real Estate or Stocks?

Today we're talking about the pros and cons of investing in real estate versus investing in stocks. Which one is for you? We talk about things like capital requirements, tax advantages, volatility, appreciation.

Pros of the Stock Market:
1) It's a lot more liquid. When you're investing in stocks, you can get your money in and out within 3 business days usually - which is how long transactions take to settle.

2) You can transact on it every day if you want. For you investing junkies out there, it's really fun to buy and pick individual stocks, it's almost a fun hobby if you will, versus with real estate, unless you're a real estate magnate, it's going to be hard to invest in 100 different properties in a single day, versus if you're buying stocks on say, Robinhood, and you want to buy 100 different stocks in a day, you can.

3) It's less time consuming or less work
If you own a property, you'll likely have to hire a property manager, or manage it yourself. With stocks, you can literally buy ETFs or Index Funds that track the market and set it and forget it.

4) It's way easier to get into if you don't have capital.

Cons of Investing in Stock Market:

1) It can be much more volatile....
2) If you're overactive, you could do poorly in the market
The temptation to make a bunch of trades is always going to be there which makes it tough.

3) Its not super tax advantageous. You have to pay taxes on stocks in terms of short term and long term capital gains - which can vary anywhere from 0 to 15% to 37% based on your income bracket.

Pros of Real Estate:
1) Real estate is a great investment because you can get to intimately know the market really well, especially if you've grown up or have lived in your area for quite some time. In that way, the first pro is that if you know the market well, you can use this knowledge to gain an edge over outsiders.

2) Real Estate is typically less volatile. Real estate home prices tend to appreciate 3-4% a year.

3) is that you can literally live in your investment, which is a fun added feature, but there's no way you can live inside your Robinhood trading account.

4) owning real estate right now is better than ever with the average rate of a 30 year fixed mortgage being at all time lows, and by signing onto a mortgage, you get these tax advantages with the low rates.

5) owning real estate typically produces good cash flow if you have an investment property.

Cons of Real Estate:
1) It's hard to get into, requires a lot of capital → it takes a long time to build up enough money to put a down payment on

2) It's not a guaranteed return, you can get a rental property or a property yourself and something could end up happening to it, like a natural disaster, or a fire, or the foundation ends up failing after a few years of owning it.

3) It's much more hands on, which can be a bad thing. If you like a passive investment, real estate is not it unless you can hire a bunch of people to help you make it more passive.

4) It ties you down. Unlike stocks, where you can be wherever you are and your investment is growing, with real estate - you GENERALLY have to be close to your investment, in terms of proximity.

▶️ My name is Humphrey Yang, I've built multiple businesses and am passionate about Personal Finance. If you're trying to build a solid foundation of financial literacy, learn to invest, or become financially free - then I'm here for you! This channel cover topics like getting out of debt, managing money, building credit, multiple income sources, passive income, etc.

Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!

0:00 Start Here
0:34 Current State of Affairs
1:53 Pros of Stocks
3:50 Cons of Stocks
4:47 Pros of Real Estate
7:14 Cons of Real Estate
8:47 What To Hold for Wealth? Stocks? RE? Both?

[humphrey]

What do you guys think of this video? More comparison videos in the future, or something different!? I always love hearing from you so let me know here, trying to make videos you guys wanna see 🙌

[dannywalters]

Great video, I have dabbled into Real Estates more than a few times, won't say I've been so lucky and I think you were more biased towards Real Estates! Personally, I think stocks are "better". Major con however is that it needs your time, which is easily countered by working with/through an expert. Made my first million earlier this year through one. Another advantage is that you need relatively lesser capital to go into stocks than real estate. Lastly, can you do the job of a Landlord? Can stocks call you by 12am about a broken pipe?

[LilyClark-gq]

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274, 800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

[Sheikxlove]

I think one of the main reasons why I never rent out real estate is because I believe in being an ethical landlord which is providing affordable housing and being understanding of disasters within a tenant's life. I dont think its ethical for landlords to buy property to charge the tenant an absurd amount of rent so the tenant can pay the interest and mortgage and the property taxes while not getting any of the benefits. I would have to buy the property outright to at least lower the rent because of the lack of interest.

[ryanboswell]

this channel has already helped me so much regarding my financial literacy!@

[Andrew-ecqd]

Both are great. I love how passive investing in dividend stocks truly is

[shinniex]

I’m a little late to the game but I wished you talked about leverage in your argument for real estate. Especially if someone were to buy it as an investment property rather than their primary home. I’m a real estate investor mostly but I also dabble in stocks and by far real estate will win in the end for me due to this rule of leverage.

[clootscalhoun]

Humphrey, I love that the food you envision as the epitome of massive wealth is bananas.

[myrle-vg]

We Are in Unchartered Financial Waters! every day we encounter challenges that have become the new standard. Although we previously perceived it as a crisis, we now acknowledge it as the new normal and must adapt accordingly. Given the current economic difficulties that the country is experiencing in 2024, how can we enhance our earnings during this period of adjustment? I cannot let my $680, 000 savings vanish after putting in so much effort to accumulate them.

[josephjones]

Generally, stocks is where you make your money your money and real estate is where you keep your keep your money; unless you are active or a professional. If you are a high earner, you should use real estate to buy stocks and buy stocks using real estate 😀.

[suazdiablo]

It's safe to say I merited the huge success I achieved these past weeks from trading bitcoin after a woeful adventure trading stocks in 2020

[masiahmad]

Awesome Humphrey, what i have learned from this video is to have patience and start investing before it is too late, Great!

[truediva]

I don't want to be rich. I want to be comfortable. I want to financial stress-free.

[claudiuhvuu]

I was just wondering about this for the past few weeks! I have a small handful of friends in their early 20s investing in real estate and I always wondered why over the stock market?? Personally the benefits of being able to trade from ANYWHERE & the lower barrier of entry are the biggest reasons why I’m not even considering real estate (at least for now in my 20s). Great stuff 🙂

[Chris-kqix]

Thanks for the video! I appreciate you taking the time, good sir!

[viperdiaper]

why not combined the two and invest in a REIT!

[bentriulzi]

I personally am a stocks (select individual stocks specifically Apple, Amazon, and Walmart) type of guy. The majority of my investment portfolio are stock index funds. I keep cash in a Money Market personally. Real Estate is not for me, at this point in my life. On an unrelated note... would be great to see a video about books and resources that you recommend... ie Bogleheads Guide etc. Keep up the great content! Cheers

[christiankoehler]

I don't know if it is just me, but I feel more contemporary with my investing even though I am younger. I feel that newer options, crypto, more aggressive day trading, etc, are easier to learn and follow others, but in the long run they can see diminishing returns compared to longer holdings. This is why personally I like real estate and long-term holdings.
Nothing on day-trading or owning crypto (I do) but just my personal thoughts.

[jolietia]

If you sell stocks in order to buy others, is that considered applicable to short term gains tax?

[Shounen_Mania]

If you actually do the due diligence necessary for stock investing, it can be more time consuming than you claim. Real estate is only less volatile because there's not a daily ticker on an exchange showing it's price or it would be volatile.