After a long bull market since 2009, all Americans should be rejoicing in their wealth, right? Wrong! Let’s look at what percentage of Americans own stocks or real estate.
According to the latest Gallup poll, only about 54% of Americans own any stocks. Meanwhile, only about 63% of Americans own real estate according to the Census Bureau. This is down from a high of about 69% in 2004.
Given these figures, the bull market has left a lot of people behind. Due to analysis paralysis and uncertainly, a lot of people have just held cash or invested in Treasuries (now looks good post rate hikes) during the entire bull market. Big mistake.
According to the Federal Reserve, of the 10 percent of families with the highest income, 92 percent owned stocks as of 2013 (latest year for their study), the same level of ownership back in 2007. But ownership slipped for people in the bottom half of the income distribution.
The top 10 percent of Americans owned an average of $969,000 in stocks. The next 40 percent owned $132,000 on average. For the bottom half of families, it was just under $54,000. With over a 200% rise in the S&P 500 since 2009, the wealth gap has clearly widened.
What Percentage Of Americans Own Stocks Chart
The chart below shows stock ownership dropping from around 65.5% in 2007 down to 52% in 2016. This is despite the massive rebound in the S&P 500. The main reason for the decline? Fear and distrust. Once burned, twice shy.
Good thing more Americans have been buying stocks since 2016. Here is the latest Gallup poll that shows what percentage of Americans own stocks today. The percentage of stock owners in America have increase to about 56 percent, or a two percent rise since 2016.
What Percentage Of Americans Own Real Estate Chart
Although the decline in homeownership from 2005-2016 looks steeper than the decline in stock ownership, there was only been a 6.3% move from peak to trough in real estate unlike the 13.5% peak to trough decline for stocks.
The reason has to do with transaction costs, the difficulty to sell, the need for shelter, and the view that a home is a home first and an investment second. And as you can see, homeownership rebounded significantly in 2020.
Although a bull market tends to financially help everyone on the spectrum, there is often more dissatisfaction due to a widening wealth gap. Those families in the 90th percentile have a net worth of almost $1,000,000. Meanwhile, those in the 50th percentile or below have hardly any net worth at all!
The Solution To Greater Financial Security
The obvious solution to greater wealth and financial security is to own stocks and real estate over the long run. You can own one or the other, or preferably both. But certainly don’t own nothing. Inflation alone will destroy your wealth over the long term.
Here are some reasons why you might want to own real estate or stocks to help you get started, or help encourage you to own more of either asset class. Personally, I’ve invested $810,000 in private real estate for more income and less volatility.
Why You May Want To Own Real Estate
1) You are more in control. Every physical real estate investment you make puts you in charge as CEO. As CEO, you are able to make improvements, cut costs (refinance your mortgage with Credible), raise rents, find better tenants, and market accordingly. Of course you are still at the mercy of the economic cycle, but overall you have much more leeway in making wealth optimizing decisions. When you invest in a public or private company, you are a minority investor who puts his or her faith in management. Nobody cares more about your investment than you.
2) Leverage with other people’s money. Leverage in a rising market is a wonderful thing. Even if real estate only tracks inflation over the long run, a 3% increase on a property where you put 20% down is a 15% cash-on-cash return. In five years you will have more than doubled your equity at this rate. Stocks, on the other hand, generate roughly 7% – 9% a year including dividends. Leverage also kills on the way down, so remember to always run the worst case numbers before purchase.
3) Tax advantageous. Not only can you deduct the interest on up to $1 million in mortgage indebtedness on your primary home, you can also sell your primary home for tax free profits up to $250,000 for singles and $500,000 for married couples if you live in the home for the last two of a five year period. If you are in the 28% or higher tax bracket, it behooves you to own property. All expenses associated with managing your rental properties are also deductible towards your income.
More Reasons To Own Real Estate
4) Tangible asset. Real estate is something you can see, feel, and utilize. Life is about living, and real estate can provide a higher quality of life while also making you money. Stocks aren’t even pieces of paper anymore, but ticker symbols and numbers. When the world comes to an end, you can seek shelter in your property. Real estate is one of the three pillars for survival, the other two being food and clothing.
5) Easier to analyze and quantify If you can calculate realistic expenses and rental income that’s all you really need when it comes down to valuing a piece of property. If you can borrow at 3% and rent out for a 7%+ gross yield, you’ve likely found yourself a winner. Real estate is immediately exploitable if you have the financial means to invest. There’s not only the cash flow component but the underlying equity component that helps investors build wealth. Take a look online for the latest estimates, comparables, and sales history. Investing in real estate crowdfunding with Fundrise is one of the easiest ways to get started.
See: BURL: The Real Estate Investing Rule To Follow
6) Less visible volatility. Your house value could be tanking and you would never know it since there isn’t a daily ticker symbol. During bad times, the utility of your home really helps soften the blow as you enjoy your home and create great memories. During the 2008-2009 downturn, I still got to enjoy my vacation property in Lake Tahoe 15-20 days a year even though its value was plunging. Meanwhile, looking at tickers on the TV or computer screen stressed me out sometimes. When your investment is less volatile, it’s much easier to stay the course and not sell at the bottom.
And Even More Reasons To Own Real Estate
7) A source of pride. Making money for money’s sake feels empty after a while. Every time I drive by my rental properties I feel proud to have made the purchases years ago. I know that my money is working as hard as possible so I don’t have to.
Real estate is a constant reminder that taking calculated risks over time pays off. There is an indescribable feeling nobody tells you once you’ve closed on your property. Even though the bank probably owns most of it in the beginning, you literally feel like the King or Queen of your castle. When you die, you can pass on your pride to your children or closest companions to let them create their own memories.
8) More insulated. Real estate is local. If you’ve made a good decision to buy in an economically strong region, you will be more insulated from the national economy or the global economy. Spain blowing up is likely not going to affect the rent you can charge in Silicon Valley. Global uncertainty helps drive mortgage rates lower as foreign investors bought safe US Treasury bonds.
Look at prices in superstar cities such as NYC, Hong Kong, Singapore, London, Paris, and San Francisco over the past 20 years. They fall the least, recover the soonest and gain the most. Of course, industries in your area could suddenly disappear and leave you broke as well. It’s also a good idea to diversify into lower cost regions of the country with much higher yields.
Favorite Real Estate Investing Platform
I diversify my real estate holdings through real estate crowdfunding. Fundrise is the best real estate crowdfunding platform today. It’s free to sign up and explore. I’ve personally invested $810,000 in real estate crowdfunding to earn more income passively.
9) The government is on your side. Not only do you get generous mortgage interest tax deductions and tax free profits, you get bailouts if you can’t pay your mortgage. The government also aggressively went after banks to force them to extend loan modifications to bad and good creditors. I even got a free loan modification from Bank of America to my surprise (cut my 30-year fixed rate from 5.875% to 4.25% for free).
Programs such as HARP 1.0 and HARP 2.0 are allowing folks to put down a minimal downpayment. There are plenty of non-recourse states such as California and Nevada which don’t go after your other assets if you decide to stop paying your mortgage and squat for months. When was the last time the government bailed individual investors out of their stock investments?
Why You May Rather Own Stocks
1) Higher rate of return. Stocks have historically returned ~7-9% a year compared to 2-4% for real estate over the past 60 years. You can also go on margin to boost your returns, however, I don’t recommend this strategy given your brokerage account will force you to liquidate holdings to come up with cash when things go the other way. Your bank can’t force you to come up with cash or move out so long as you are paying your mortgage.
2) Much more liquid. If you don’t like a stock or need immediate cash, you can easily sell your stock holdings. If you need to cash out of real estate you could potentially take out a home equity line of credit, but it’s costly and takes at least a month.
3) Lower transaction costs. Online transaction costs are under $10 a trade no matter how much you have to buy or sell. The real estate industry is still an oligopoly and fixes commissions at a ridiculously high level of 5-6%. You would think the invention of Zillow would lower transaction costs, but unfortunately they’ve done very little to help lower expenses. They are in cahoots with the National Association of Realtors because they are their source of advertising revenue.
More Reasons To Own Real Estate
4) Less work. Real estate takes constant managing due to maintenance, conflicts with neighbors, and tenant rotation. Stocks can literally be left alone forever and pay out dividends to investors. Without maintenance you’re able to focus your attention elsewhere such as spending time with family, your business, or traveling the world.
You can easily pay a mutual fund manager 0.5% a year to pick stocks for you or hire a financial advisor at 1% a year. Or you can just track and analyze your portfolio yourself due to so many free financial tools online like the ones by Personal Capital, my favorite.
5) More variety. Unless you are super rich, you can’t own properties in Honolulu, San Francisco, Rio, Amsterdam and all the other great cities of the world. With stocks you can not only invest in different countries, you can also invest in various sectors. A well diversified stock portfolio could very well be less volatile than a property portfolio.
6) Invest in what you use. One of the most fun aspects about the stock market is that you can invest in what you use. Let’s say you are a huge fan of Apple products, McDonald’s cheeseburgers, and Lululemon yoga pants. You can simply buy AAPL, MCD, and LULU. It’s a great feeling to not only use the products you invest in, but make money off your investments.
7) Tax benefits. Long term capital gains and dividend income are taxed at lower rates (15% and 20%) than the top four W2 income rates (28%, 33%, 35%, 39.6%). If you can build your financial nut large enough so that the majority of your income comes from dividends, you could lower your marginal tax rate by as much as 20% or so, depending on the current legislation.
Even More Reasons To Own Stocks Over Real Estate
8) Hedging is easier. You can protect your real estate investments through insurance. If disaster strikes, it’s often a pain to get your insurance company to pay for damages because the burden is on you to prove your claim. With stocks, you can easily short stocks or buy inverse ETFs to protect your portfolio from downside risk.
9) Potentially less ongoing taxes and fees. Holding property requires paying property taxes usually equal to 1-3% of the value of the property each year. Then there’s maintenance costs, insurance costs, and property management costs. You can build your own portfolio of individual stocks and bonds for just ~$5 a trade. Or you can have a digital wealth advisor like Betterment build and maintain your investment portfolio for just 0.25% a year.
Characteristics Most Suitable For RE Or Stocks
Real Estate
* Believe wealth is made up of real assets not paper.
* Know where you want to live for at least five years.
* Do not do well in volatile environments.
* Easily spooked by downturns.
* Tend to buy and sell too often. High transaction costs ironically keep you from trading too often.
* Enjoy interacting with people.
* Takes pride in ownership.
* Likes to feel more in control.
Stocks
* Happy to give up control to those who should know better.
* Can stomach volatility.
* Have tremendous discipline not to chase rallies and sell when things are imploding.
* Likes to trade.
* Enjoy studying economics, politics, and researching stocks.
* Don’t want to be tied down.
* Have a limited amount of capital to invest.
The Key Is To Invest For The Long Term
The choice between investing in real estate or stocks is like choosing between eating a seven layer chocolate cake or a homemade lemon meringue pie. Both are good provided you don’t go overboard and can hold on for the long term.
When you are younger, investing in stocks is easier and makes more sense since you have less money and want to be more mobile for job opportunities. As you get older you probably want to set some roots so owning at least your primary residence is beneficial.
With stocks, it’s nice to see portfolio values go up. But after a while, it becomes unsatisfying to see more money accumulate in your brokerage account. Money needs to be spent on something, otherwise, what’s the point of saving and investing?
Hence, my bias is towards real estate because you not only get to enjoy the asset, there’s also a good chance you can make a profit over the long run as well.
Own assets that rise with inflation such as stocks and real estate. Even if there’s a 20% correction, 10 years from now you’ll likely be happy you invested today.
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If 20% less Americans own stock (down to 52% from a high of 65%), then who is going to panic and sell the next time around.
How can they sell in a panic and crash the market if they haven’t bought the market yet?
These people need to read a book by Felix Dennis entitled “How to Get Rich.” He talks about how ownership is everything, and if his own brother came to him asking for a single share, he wouldn’t give it up. As I write this your poll indicates that there are 1% of poll takers who do not own real estate or stocks. If you fall in that general category, please do yourself a favor and get some ownership. If I can do it on honestly and on minimum wage, then most people can do it.
(Yeah I know Financial Samurai’s readers may own businesses or be rich instead of owing stocks/real estate, its not the point of my comment).
Because stocks have a small float. It doesn’t take a lot to cause a panic, just like it doesn’t take a lot to cause a bank run and have the banks close their doors and run out of cash.
Oh I get the concept now. Thanks for taking the time to point out what must have seemed obvious to you, I appreciate it.
We play in both markets, but have a strong preference for stocks over real estate (the only real estate we own, partially because it isn’t paid off, is our primary home). I prefer to have to no back chat from my investments, and that is where stocks really shine when compared to tenants.
Wage stagnation. Hard to buy stocks or real estate when both their values have artificially grown due to serious policy flaws and your paycheck remains flat.
https://www.epi.org/publication/charting-wage-stagnation/
The market going up is a redistribution of wealth that has gone upward. Stock buyback programs, huge stock based compensation packages that companies now get to report “Non-GAAP earnings” without this piece factored in, allowing foreign investors to buy up properties in major coastal markets, massive student debt loads, major run ups in health care costs, college graduates earning almost exactly what they earned 15 years ago in real terms.
Most would like to invest, but the opportunities for far too many remain out of reach. Policies that made the already well off incredibly rich need to be fixed.
I have roughly $850K in stocks and $250K or so in real estate (ell equity in my primary home). I’ve always wanted to buy more real estate, but reading some of your posts Sam, about nightmare scenarios with tenants, really makes me squeamish about the whole thing. Thank you for reinforcing some of the principles behind the two. Both roads lead to Rome.
>>Your bank can’t force you to come up with cash or move out so long as you are paying your mortgage.
Sam, that’s not 100% correct, is it? I thought your note could always be “called”, even if you’re making payments. If at anytime, the bank thinks you can’t handle the note, they can call it. I’ve read stories from a number of folks who were highly leveraged, and when the housing market crashed, their notes were called, even though they were making their payments.
(I’m not arguing — I really want to understand and know what the rules are)
Those that are looking to do free stock trades may want to check out the Robinhood app. It’s only available as an app so if you’re a person that likes to do transactions on your computer then this isn’t the platform for you. There is a $75 flat fee to transfer the money out of Robinhood but this fee is pretty much paid for when considering the cost to do a handful of trades on other stock trading platforms. The only negative for me is that Robinhood doesn’t allow beneficiary designations so it’s important to account for investments in Robinhood in a will/trust.
Great article as always, Sam. As a working middle class, I don’t know finance/stock as much as those in Wall Street, not even close. In the zero-sum stock market, I know I will be the loser or make little profits when no major financial crisis. For real estate, as long as I pick the properties in the best school district, my risk is always manageable. In addition, the tenants coming to the decent area normally have stable income… So I have funds and stocks all in retirement accounts while getting stable rental income + appreciation from rental properties.
Stocks aren’t zero sum. GDP is growing last I checked.
As a young person (20 years old) I currently am only invested in stocks. The reasons being that I don’t have sufficient capital to purchase a rental home and I do not want to tie myself to the area in which I currently live. After I graduate college, I plan on moving to wherever I find the best job opportunity for myself. I use both the robo-advisor Betterment, and the brokerage TD Ameritrade to manage my taxable account and Roth IRA.
I briefly had a desire to own rental property but realized that dealing with tenants is not for me and paying a property manager seems silly. The only way I may decide to buy a second property is if I buy it for my use and then have a company AirB and B it when I am not using it. It would then earn money, but it’s main purpose would be my own enjoyment. Do you do that with your Tahoe house?
As for stocks, sure they are volatile and you can take a big hit, but at least no one is calling me at 1 in the morning.
We own both rentals and stocks. Rentals are great, but stocks are so much easier. As we get older, we’ll probably move more toward stocks, REIT, and real estate crowdfunding. Owning rentals isn’t as passive.
That’s probably why the boomers likes stocks more.
I agree that the key is to invest for the long term. Stocks may not do well in the short term, but it is a proven way to build wealth. Keep investing!
Sam,
It’s very disheartening to see how few people are preparing for their futures financially. I have some friends and family who are doing very well but I have more who are terribly unprepared for retirement. They’re all trapped in doubt, debt, and bad habits. Most people are willing to buy a house. Unfortunately most people buy the most home they can afford and consider their homes to be “investments” even though they would be under if they had to sell or rent their homes out.
Owning rental properties turned out to fall squarely into the “too much work” category for me, and I swore off them. I’m not lazy, and it’s not that I don’t have the handyman / basic fix-it skills required. I simply didn’t have the *time* to allocate towards maintenance and upkeep (landlord duty) and when I looked into outsourcing those tasks to a property management firm, the costs would’ve eaten up my returns so much it became silly. So I dumped the rental property and never looked back, and REALLY noticed how much I preferred to spend my time NOT being a landlord.
Sam – would be interested in reading your thoughts on “property managers” vs. “do it yourself”. I’m guessing you’ve at least looked into outsourcing all that, for your same-city-you-live-in rentals? Now that you’re a parent, your “how to spend your time” math is changing – would be interested in what your tipping point would be for changing your mind on owning rentals and/or whether or not to handle the landlord duty yourself vs. outsource it for a fee…
Brian,
I too would be interested in hearing from Sam about his thoughts on “Property managers” vs. “Do it yourself.”
Having recently sold a condo after renting it out for 5+ years, I’m definitely enjoying the freedom of not having to deal with any of the maintenance or tenant issues. And we were really lucky to have great tenants throughout.
I would like to get back into real estate investing when the time is right. I plan to factor in the cost of property management though. Even if I take in on myself, it would be nice to know the option is there and the numbers would still work.
A rising tide won’t lift if you don’t have a boat. I prefer to own both, but being a wage earner in a bull market, my 401k of stocks has become lopsided. Trying to balance that with real estate crowdfunding now, but it’s hard to keep up.
-RBD
We currently invest ~98% of our net worth in equities, but 22% of that is in the Vanguard REIT index fund. While not physical real estate, the diversification and liquidity is something very appealing to my wife and me at this time.
We currently rent and intend to do so for the next few years until we decide on a location where we see ourselves staying for an extended period of time. From an investment perspective, I would like to look further at direct real estate ownership after owning our primary residence. In the interim, I’m quite content owning passively via a REIT.
I enjoy both. Much more of our net worth derives from RE currently, as we continue to build our stock portfolio (index funds). The goal is to have 1.5M in stocks and 5 rental properties owned free and clear.
As a “millennial” I do like my cash! Either as HSA or just sitting there in a savings account. Of course the returns are zilch. So I’ve been investigating using whole life insurance policies as a cash option to get a better return on cash equivalent asset.
What are your thoughts on the “infinite banking concept”? — where you essentially become your own bank to fund your lifestyle by borrowing against your own life insurance policies?
infinite banking is a way for insurance brokers to separate you from your money. It’s basically bonds wrapped in extra expenses.
Everyone I know (folks, my uncle, and a neighbour who invested heavily in insurance) has never ever, made money from insurance.
However my one uncle who was an insurance salesman and sold my parents the lemon made a killing!
Insurance is to protect from potential disasters.
Investments are for growing wealth.
We used term life for insurance and invested the price difference (between term vs universal life/whole life/whatever they’re calling it today.)
Before I knew better, I had a “whole life” policy. The sales pitch was “the money grows tax free and when you’re 65 it’ll be worth $25,000!” This was back in the mid ’70s, when a Bimmer cost <$5000. I turned 65 a few years ago…that $25,000 would have been chump change! (I cashed out the policy in the early '80s.)
It is amazing to me how disinterested the Millennial generation is in investing in stocks for a long-term purchase. We talk now about the retirement crisis impending when the baby boomers retire, and how social security might not exist in its current form for future generations. My natural instinct, as I’m sure is the same for most people who read this blog, is to cut my spending, save more, and don’t expect anything from the government. But at a time when young people should be using time to their advantage and growing their portfolios as much as they can, they prefer cash as the primary vehicle for savings! I am normally and optimist, but I see things like that and can’t help but think we’re all doomed.
Great article! Love the reminder to put our dollars to always get our dollars working for us. It always bothers me to see the growing wealth gap discussed as some evil doings of big corporations or Wall Street, when it mostly has to do with investment choices. Yes, higher wealth families typically have better financial educations – but the discussion should be around educating everyone about investing, not demonizing the people who already do it.
Interesting that millennials’ top investment choice is cash, which isn’t an investment at all… For a generation that craves freedom, it isn’t a smart path to financial independence. Another sign of the lack of financial education in the U.S. as well as the lasting fear the 2009 downturn caused for a generation that graduated into high student debt and unemployment rates.
Interesting that Boomers appear to prefer stocks, whereas Millenials seem to favor real estate. I wonder if this is “stage of life” (Millenials looking to buy first home, or upgrade).
Diversification is the key, and owning both is logical. In addition, other asset classes (“alternatives”) should be added as the portfolio grows. Interesting article.
Readers, do you own stocks, physical real estate, or both? Do you prefer stocks or real estate as an investment?
We own stocks and real estate. I like having both part of my net worth. Real estate is definitely the solid rock foundation. Just wish we were closer to paying off the house (work in progress).
Some days only have stocks seems like a better options…you know when you have to mow the lawn, or weed, or fix ____ which suddenly broke. ;)
I own my primary home (mortgage) and an stock/bond/option portfolio. Just starting out in a career and with the “American Dream” being to own a home, I took the plunge rather quickly. In hindsight, I wish I would have saved a bit more first for various expenses, but I see it as an investment in two ways. One, the home will “probably” increase in value. But more important, second, I see it as an investment to cut down expenses in the future. Renting is about the same as my mortgage, and after that’s paid off, I’ll have about $800 freed up each month.
With rates so low, do you think it’s a mindset shift or limited supply for new homebuyers now? Outside of major cities, homes have still appreciated considerably, but the payment has slightly adjusted with rates.
We currently own both stocks and real estate, but our real estate is our primary residence so we do not consider this an investment. Stocks have been a low barrier to entry and affordable way for us to invest. We are heavily invested in low cost index funds via our 401k and IRA, and have a bit of individual stock through my employers ESPP. While we know there is plenty of risk in the stock market, we believe in the US economy and trust that it will rebound after any dips or crashes (though it may take a few years).
Both real estate and stocks are good to own, but I wonder how balanced a typical portfolio is given the general lack of retirement savings.
I truly believe most people own real estate for the wrong reason (paying too much for a house, buying a bigger house then they need, dont keep a house long enough to realize the benefits, tied up too much of their capital to invest), and they’d be better off renting if they have the discipline to invest and save.
But then again, it is the American dream and dreams are meant to be as emotional as it is logical.
Bluenotes, Espirit, Gap, Target, Sears, Quiznoes, airliners. Enron, worldcom, nortel systems.
Lot of big names have disappeared. What happens should you feel a little confident cause you read a little and think you have a little knowledge and decide not throw your $$ into an index fund, and instead start investing in only a few companies you think you know?
I don’t like Snapchat, Twitter negative earnings models year in year out. I see them being bought out entirely in losing value acquisitions later on, alot like yahoo.
At least you can forecast the next quarter accurately in your home city with real estate. Developments leading to up and coming oversupply, a new tax, dying industry, new industry are seen over the quarters unless you’re too asleep to see these slow, gradual macro changes in your own city.
Hence, a good idea for the average investor who makes a living doing something else is to just buy an S&P 500 ETF or index fund. The goal is to just gain exposure.
Most of my money is in stocks right now just because of the good match I get for my 401(k). However, I still have a distrust for the stock market and prefer something tangible like real estate. The additional pros like favorable tax benefits and leverage of OPM don’t hurt either! I own 3 units right now, but I’m hoping to pick up 4 more units over the next couple of years.
Do you lean more toward liking physical real estate or do you prefer REITs and other options like RealtyShares? There’s obviously pros and cons to each option, but I’m just curious on your take.
— Jim
The low ownership of stocks has me very concerned. We have been moving towards a more capital-centric economy where the value of labor is declining for a number of different reasons, none of which seem poised to correct themselves anytime soon. If people are making all of their money from labor rather than investments, they’re going to fall further and further behind. Increasing our already extreme income inequality is not going to be good for anybody.
I wonder how much of the decline in stock ownership is due to people being permanently scared of stocks after the Financial Crisis. I know after the Great Depression there were people that refused to ever buy another stock.
I guess I could also make the same argument about Real Estate. People who lost homes or watched others lose homes during the Financial Crisis are afraid of buying homes.
I also know of at least one person staying out of stocks right now because he thinks the market is too high to invest.
I only own stocks and REITs at this point. After Mrs. Freaky Frugal and I FIRED, we sold our home, downsized to an apartment, and consciously decided we don’t want to own property right now because we want flexibility to move wherever we want.
Own primarily stocks – but we do “own” our home and have about 8% of our investable assets in a REIT.
We will look at physical real estate a lot harder once my student loans are gone in 9-10 months.
This is such a great analysis as always. I agree with you that we should own real estate or stocks, not nothing. Coming from Vietnam, I have seen and heard about hundreds and thousands of people becoming self-made millionaires because they invested in real estate. Of course many people failed in the process, but the general pattern is that people get rich because of real estate.
I know many people in China love real estate as well. I think it’s because the stock markets in Asia are not as stable as the ones in the West, so people prefer investing in something tangible like real estate.
Lol yes girl Chinese people love real estate. But not their own. They like international cities like the ones Sam mentioned above. A mcmansion house down the block was brought with cash by a Chinese foreigner and I doubt they’ll even move in haha.
We own both stock and real estate but stock is still my favorite by far. I actually think real estate has much less control because there’s no liquidity in it at all.
I think I read the other day that millennials prefer real estate to stocks by a 2 to 1 margin and are still scarred from the recession, which is really too bad considering how quickly stocks have recovered. It’s interesting to see the perspective of those with experience who have seen stock market crashes continue to invest while those that don’t have as much experience look around and say I’m not going to do that.
I’d be curious to read this article! Not that I don’t completely disagree, but as a millenial myself, I would think that witnessing the housing market crash, it would deter them from both, or more likely RE investing if it had to be one or the other.
That being said, I do prefer RE myself over stocks- but I feel like I’m in the minority from my personal circle of friends. (Not a really scientific way to analyze though)
I prefer for reason #1 in this post! Being able to control the asset and make my own decisions.
This is very interesting. We own stocks and our own home, and are working towards rental properties. I’ve always felt more comfortable with the physical reality of rental properties vs stocks. Since owning the stocks, I’ve seen the value you are talking about of having them. My parents were not ones to put faith in stocks, so I saw them as dangerous and that they would take our money. I do enjoy seeing the numbers go up with them though. Now, my husband is getting into rentals more. I think for the same reasons as you, wanting to have the pride that comes with it vs clicking on the computer to see the increase in stocks.
Funny enough, my parents have gotten my husband to invest in stocks for them a bit here recently. They have seen him handle and grow our finances and trust him. They are definitely in the lower income bracket that has less invested, but they are getting a little more trust in the market as compared to before. That could be due to the fact that they didn’t have money in before to get burned when it all disappeared. Great info!