Stocks vs. Real Estate

There has been recent articles written about which is a better long term investment, stocks or real estate. In the comparison it was determined that stocks outperform real estate in the period between 1978 and 2004. Some studies went as far back as 1890 to arrive at the same conclusion. However, the information is biased. What are they basing this on?

There has been no 15 year period in history that home prices haven’t doubled. In addition, there is no possibility of an investment in a home being lost completely (barring uninsured disasters). This can not be said for the stock market. I know many people who had a large investment in Worldcom or Enron and lost their shirts. What stocks are they using to make this judgement? How did they assess risk to the equation?

With all things considered real estate is the safest investment by far for long term planning. Beware of these articles that encourage investment in the stock market for long term planning. While it is good to diversify putting all your eggs in that basket can be a very bumpy ride.

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