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Jeff Royce answered:
On a percentage basis stocks have clearly outperformed real estate over the long term. Stocks appreciate at about twice the rate of real estate in fact.
People have made big money off of leveraged real estate, but leverage also increases the risk of losing big money. If you do buy a house with 3.5% down, it only needs to go down 3.5% for you to lose ALL of your investment. You can also borrow money to purchase stocks and leverage stocks. Banks will loan on real estate easier because it is more stable, but in a down market that just means getting upside down is a slower process. If you are going to leverage an investment you need to understand that if moves up and down at a faster rate. This is only a good thing when prices are rising.
Real Estate ownership has great advantages (stability, you can live in it, you control it), but also has disadvantages (you have to take care of it, it's difficult to buy a small amount, it is not as easy to liquidate as stocks, harder to diversify than stocks). A well balanced portfolio will have both stocks and real estate, but stocks will provide the big growth over the years.
People have made big money off of leveraged real estate, but leverage also increases the risk of losing big money. If you do buy a house with 3.5% down, it only needs to go down 3.5% for you to lose ALL of your investment. You can also borrow money to purchase stocks and leverage stocks. Banks will loan on real estate easier because it is more stable, but in a down market that just means getting upside down is a slower process. If you are going to leverage an investment you need to understand that if moves up and down at a faster rate. This is only a good thing when prices are rising.
Real Estate ownership has great advantages (stability, you can live in it, you control it), but also has disadvantages (you have to take care of it, it's difficult to buy a small amount, it is not as easy to liquidate as stocks, harder to diversify than stocks). A well balanced portfolio will have both stocks and real estate, but stocks will provide the big growth over the years.
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