Returns on Real Estate vs. Stock Market
There is always going to be debate amount investors over the returns on Real Estate vs.
the Stock Market.
Each side has their valid points and it is mostly going to be up to the investor to make his own decision.
Real Estate has a long history of being a stable and secure investment.
The Stock Market, by comparison is a relatively new creation.
The value of land and property dates back to the very beginning of recorded history, but does this ancient historical value really have much to do with today's investment market.
The supporters of the Stock Market will be quick to point out that they recognize Real Estate's historical value, but will be quick to point out that "that was then, and this is now.
" When you take a look at the average return on investment (ROI) figures for the modern era from 1926 to 1996, you find that it is pretty close to being a tie.
Small stocks slightly outperformed Real Estate during this period, 12% to 11%, although Real Estate edged out the Dow Jones Industrial Average by 11% to 10%.
These figures indicate that there is not much difference between Stock Investments and Real Estate Investments according to historical return figures.
There are several major differences between the management of both investments.
Stocks are easily transferred.
They can be bought in smaller lots or large lots.
There is much similarity between Stocks of different types.
Real Estate investments take a bit of time and effort to complete the transactions.
The transactions costs tend to be high.
The idea of an inexpensive piece of Real Estate does not mean anything at all the same as an inexpensive share of Stock.
All of these factors seem to point to Stocks as being better.
But administrative details and transaction costs do not have anything to do with the rate of return.
In fact, if initial costs on Real Estate transactions are higher, and historically they end up performing as well, it is obvious that once they are in your portfolio, they are going to outperform most Stocks.
Also, the trick to successful investing is not graphing what happened in the past, but predicting what is going to happen in the future.
One of the most compelling arguments for Real Estate investment is the matter of finite space.
There is only so much land and only so much improvement can be made to it.
Corporations and other types of business entities have no such finite limit.
The expansion of the Stock Market into the electronic world that led to the "dot.
com" bust recently is an example.
Since Real Estate has limits on its ability to expand, it would seem likely that it will continue to increase in value as it grows more and more scarce.
Real Estate managed to hold its own against the Stock Market during the period of the Stock Market's great advancement and growth.
The future could very well belong again to the Real Estate investor as it once did in the past.
the Stock Market.
Each side has their valid points and it is mostly going to be up to the investor to make his own decision.
Real Estate has a long history of being a stable and secure investment.
The Stock Market, by comparison is a relatively new creation.
The value of land and property dates back to the very beginning of recorded history, but does this ancient historical value really have much to do with today's investment market.
The supporters of the Stock Market will be quick to point out that they recognize Real Estate's historical value, but will be quick to point out that "that was then, and this is now.
" When you take a look at the average return on investment (ROI) figures for the modern era from 1926 to 1996, you find that it is pretty close to being a tie.
Small stocks slightly outperformed Real Estate during this period, 12% to 11%, although Real Estate edged out the Dow Jones Industrial Average by 11% to 10%.
These figures indicate that there is not much difference between Stock Investments and Real Estate Investments according to historical return figures.
There are several major differences between the management of both investments.
Stocks are easily transferred.
They can be bought in smaller lots or large lots.
There is much similarity between Stocks of different types.
Real Estate investments take a bit of time and effort to complete the transactions.
The transactions costs tend to be high.
The idea of an inexpensive piece of Real Estate does not mean anything at all the same as an inexpensive share of Stock.
All of these factors seem to point to Stocks as being better.
But administrative details and transaction costs do not have anything to do with the rate of return.
In fact, if initial costs on Real Estate transactions are higher, and historically they end up performing as well, it is obvious that once they are in your portfolio, they are going to outperform most Stocks.
Also, the trick to successful investing is not graphing what happened in the past, but predicting what is going to happen in the future.
One of the most compelling arguments for Real Estate investment is the matter of finite space.
There is only so much land and only so much improvement can be made to it.
Corporations and other types of business entities have no such finite limit.
The expansion of the Stock Market into the electronic world that led to the "dot.
com" bust recently is an example.
Since Real Estate has limits on its ability to expand, it would seem likely that it will continue to increase in value as it grows more and more scarce.
Real Estate managed to hold its own against the Stock Market during the period of the Stock Market's great advancement and growth.
The future could very well belong again to the Real Estate investor as it once did in the past.
Source...