"Stocks versus real estate" is a common topic of debate inside and outside the forum. It's hard to make any fair comparison....Thank you very much for the comment! I am totally convinced that Bogle's method is as good as anything else on the financial market . But if we don't believe that the stock market will consistently do well, maybe one can invest out of the financial market instead. For example, one might buy a townhouse and collect the rent...
I would say that almost any kind of real estate investment has a much larger element of entrepreneurship, much more like running a business, than the kind of financial market investment that Bogleheads do.
There isn't really any way to invest directly in real estate in a passive, adequately diversified, and--above all--liquid way. You can sell your mutual fund or ETF in a day (fund) or a minute (ETF). There are pioneering fintechs but Fundrise (for example) is not liquid.
Another problem--for someone of moderate means who is not hoping to make real estate their career, and just wants to save and provide for retirement--is that real estate is highly local and it's practically impossible to be geographically diversified. Not if you want to personally keep an eye on them.
You can participate in (mostly) commercial real estate through (mostly) REITS in funds like the Vanguard Real Estate Index Fund, but that's just a stock sector, and in 2008-2009 it crashed deeper than Total Stock did.
Despite slogans like "they aren't making any more land," real estate is risky. 2006 should have shown us that real estate is subject to crashes, too. People will always need land, but maybe not your land.
There's no way to make an objective comparison of stocks versus real estate. They're just too different to compare. It's like asking which is better, pizza or pickleball?
Statistics: Posted by nisiprius — Tue Dec 10, 2024 8:04 am — Replies 15 — Views 1054