Why Real Estate Is Better than the Stock Market

Many of us wonder when considering real estate vs. stock market as to which of the two is the better investment. There are both stock market tycoons and real estate tycoons, so at the end of the day, it boils down to your risk tolerance, general personality, finances, and ongoing returns. Where you are in life also dictates your preference between the two.?

Real Estate Vs. Stock Market - Which Is Better?

Here are a few ways in which real estate is a better investment than stocks.?

More in Control

With real estate, you are in complete control of every investment you make. You are the CEO, and you can make improvements as you prefer. You can cut costs by refinancing your mortgage or any other way you like. You can raise the rent, change the tenants if you don’t like them, and make decisions independently.?

As mentioned earlier, your personality also plays a huge role in your decision to invest in stocks or real estate, and if you are someone who likes to take charge, real estate is a better choice for you. Of course, the dependence on the economic cycle is entirely out of your control, but you still have more authority while making wealth-optimizing decisions. When investing in stocks, you are putting your faith in the company’s management. Often, fraud occurs and the company faces immense losses, and no one really cares about your investment more than you.

Tax Advantages

As of 2020, interest can be deducted from your primary home for up to $750,000 in mortgage indebtedness. Your primary home can also be sold for tax-free profits of up to $250,000 if you are single and $500,000 if you are married, and have lived in that house for 2-5 years.?

Once you have reached the 24% income tax bracket, owning real estate should become a serious consideration for you, and owning a primary residence once you reach the 32% federal income tax bracket is definitive.

Tangible Asset

Real estate is a tangible asset you can feel, see and utilize. Real estate provides a high quality of life, and life is all about living. This has been especially true since the pandemic, during which all of us have been spending much more time at home than ever. This has caused a boost in real estate’s intrinsic value.

With stocks, they are just numbers on the screen and a few ticker symbols that can benefit you once you sell them and use the money elsewhere. However, with real estate, you get a two-in-one deal. When the world comes crashing down, like it was close to happening recently, you can seek refuge within your property. Other than food and shelter, real estate is a basic pillar for survival.

If you owned stocks in the March 2020 stock market meltdown, you most probably sold everything in a panic. All the while, real estate performed well beyond expectations and you continued to collect rent.

Less Visibly Volatile?

Your house could be losing its value, and you might never know as there is no ticker symbol telling you about the situation every day. During tough times, your house helps you get through the bad times while you can continue to make great memories. Again, the pandemic has been a prime example where so many of us got to spend more time with our partners and kids at home and make memories we might never have had the opportunity to otherwise.

Your property at Lake Tahoe might be tanking, but you could still go spend your vacations there. The fluctuating numbers on your TV or computer screen, however, might make you go mad. When the investment is less visibly volatile, it is much easier to stay put and not panic-sell at a price where you end up losing money.

If you prefer real assets and not a piece of paper or tickers, is not a fan of volatility and the stress that comes with owning stocks, prefer control or the illusion of it, and know where you’re going to live for the next two to five years, real estate is definitely a better option for you.