I was just listening to the Suze Orman Show on Podcast and she was talking about how she prefers stocks to real estate when it comes to investing. I most definitely agree with her, and my reasoning is exactly the same as hers.
By real estate investing, I’m not referring to the house that you live in, but additional ones that you buy and rent out to others. When you have real estate, it comes with costs besides the actual purchase price. These costs include: mortgage interest, real estate agent commission, insurance, repairs, taxes and periods when no rent is coming in. Essentially, you’re paying a large amount of money each year to “invest.” The actual asset would have to appreciate a significant portion to overcome these costs to hold it.
Compare this to something like dividend stock investing. You buy shares of a solid company (ie: Coca-Cola, Mcdonalds, Chevron, Apple, etc) for about $3-5. Then, around 4 times/year, you actually get paid to hold the stock in the form of dividend. Of course you have to pay taxes on this income, but you still get to keep a large portion of it for yourself.
And perhaps the best thing about stocks is that you can sell them in an instant if you have an emergency or want to use the money for something else. A house that you rent out? It could takes months or years.