Real Estate Versus Stock, Introduction
With the world's stock markets in disarray and the real estate bubble bursting around the country, a lot of people are wondering what is the best investment today.
In spite of all the apparent chaos, there has been no fundamental shift in our economy that would cause historical investing wisdom to change.
Buy low and sell high is still valid.
Buying low does not mean at the absolute bottom of the market but rather near the bottom when the fundamentals of the investment are favorable for you.
Your mattress has never been and will never be a good place to put your money.
By far the most common form of individual investing in the United States is stock.
Over half of the US population owns stock either directly or indirectly through mutual funds or retirement accounts.
Today, employer sponsored retirement accounts drive stock purchases by making stock ownership easy and automatic.
To balance risk and return, many investors diversify among different stock classes, using a buy and hold strategy.
Over time, this investment approach has proven to be effective, especially if employers match contributions in employer sponsored retirement plans (e.
g.
401k).
Many people believe that stocks are the best performing asset class, over time.
In contrast, only about one percent (1%) of the US population owns real estate investments (real property), in spite of the fact that about half of the US owns a home.
It is not common knowledge that real estate investments provide excellent returns compared to stock and can provide a hedge against inflation.
Comparisons between the historical performance of stock and real estate investments usually show that real estate does not look like a great investment.
This type of comparison tries to present real estate investments and stock on an equal basis along with a bank savings account, a sort of "apples to apples" comparison.
What these comparisons fail to account for are the eight advantages of investing in real property: Leverage, Appreciation, Other People's Money (OPM), Inflation Hedge, Taxes, Equity Access, Depreciation and Management.
When you correctly account for these eight powerful investing advantages, real property has the highest return, over time, while providing the best hedge against inflation.
Since 1963 real estate investment has outperformed stock and has never lost value due to inflation, unlike stock.
Up until 1983, the start of the largest economic expansion in US history, stock investments did not keep up with inflation.
Real estate investments have made more millionaires than perhaps any other form of investing and there are eight powerful reasons why.
We have helped many of our clients achieve their investing goals by first understanding these eight basic investing advantages that have made real property the most successful investing method of all time.
This series of articles will briefly explain each of the eight powerful real estate investing advantages.
In spite of all the apparent chaos, there has been no fundamental shift in our economy that would cause historical investing wisdom to change.
Buy low and sell high is still valid.
Buying low does not mean at the absolute bottom of the market but rather near the bottom when the fundamentals of the investment are favorable for you.
Your mattress has never been and will never be a good place to put your money.
By far the most common form of individual investing in the United States is stock.
Over half of the US population owns stock either directly or indirectly through mutual funds or retirement accounts.
Today, employer sponsored retirement accounts drive stock purchases by making stock ownership easy and automatic.
To balance risk and return, many investors diversify among different stock classes, using a buy and hold strategy.
Over time, this investment approach has proven to be effective, especially if employers match contributions in employer sponsored retirement plans (e.
g.
401k).
Many people believe that stocks are the best performing asset class, over time.
In contrast, only about one percent (1%) of the US population owns real estate investments (real property), in spite of the fact that about half of the US owns a home.
It is not common knowledge that real estate investments provide excellent returns compared to stock and can provide a hedge against inflation.
Comparisons between the historical performance of stock and real estate investments usually show that real estate does not look like a great investment.
This type of comparison tries to present real estate investments and stock on an equal basis along with a bank savings account, a sort of "apples to apples" comparison.
What these comparisons fail to account for are the eight advantages of investing in real property: Leverage, Appreciation, Other People's Money (OPM), Inflation Hedge, Taxes, Equity Access, Depreciation and Management.
When you correctly account for these eight powerful investing advantages, real property has the highest return, over time, while providing the best hedge against inflation.
Since 1963 real estate investment has outperformed stock and has never lost value due to inflation, unlike stock.
Up until 1983, the start of the largest economic expansion in US history, stock investments did not keep up with inflation.
Real estate investments have made more millionaires than perhaps any other form of investing and there are eight powerful reasons why.
We have helped many of our clients achieve their investing goals by first understanding these eight basic investing advantages that have made real property the most successful investing method of all time.
This series of articles will briefly explain each of the eight powerful real estate investing advantages.
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