Trying to allocate your portfolio so it includes investments that will ensure a secure retirement can feel daunting (to put it mildly), but it doesn’t have to be that way! When comparing real estate investing to the stock market, there are certain factors that will help determine which is the better investment for your IRA account. Both investments have unique pros and cons, but one has a much better track record for growing wealth!
“While stocks are a well-known investment option, under the right circumstances real estate offers an attractive alternative investment that can be lower risk, yield better returns, and offer greater diversification”, wrote Investopedia.
What’s Better, Real Estate or Stocks?
Ultimately, the decision to invest in real estate or the stock market is a personal one that will depend on a wide variety of factors, including your pocketbook, risk tolerance, goals and individual investment style. While real estate investing and stocks each have their own set of risks and rewards, it’s safe to assume that most people are more familiar with the idea of investing in the stock market… Even though many of us wind up investing in real estate first when we buy our first home.
“65% of U.S. households are owner-occupied”, wrote NerdWallet. “While 55% of American workers participate in an employer retirement plan”.
Still, when we think of “investing,” most people still envision the madness of Wall Street, with images of big banks sharing graphs of numbers going wildly up and down. We think of owning shares in major corporations, buying mutual funds and IPOs… But many investors still don’t realize you can invest in real estate using money that’s currently in a 401k or IRA! This smart investment strategy simply requires you to open up a Self-Directed IRA account and roll funds over… It really is that simple!
Benefits of Real Estate Investing vs Stocks
When you buy a stock or a mutual fund, you only own a tiny piece of that company, and you can only make money (and often, very little) if the value of the company’s stock increases, or if the company pays dividends to its shareholders. Compare this to real estate investing, which permits the buyer to acquire ownership of the physical land and/or development itself and to collect ongoing income by charging rent. In this way, the real estate investor makes money through property appreciation and rental income.
“Real estate is also considered a hedge against inflation”, wrote NerdWallet. “Home values and rents typically increase with inflation”.
But what if you actually really like the idea of not having to do much of anything except sit back and collect your return on investment? No worries! There are passive real estate investments that will produce steady, proven ongoing income… And best of all, that’s exactly the type of investment that the IRS requires if you’re going to buy property using money in a Self-Directed IRA account! So whether you decide to invest in luxury vacation home, become a shareholder in a private real estate investment fund or opt to buy a standard apartment building, there are a wide variety of turnkey income producing investment properties that are professionally managed and therefore ideal for investing with a Self-Directed IRA.
Now, more than ever before, it’s time to protect your assets! Stop losing sleep in the stock market and download our FREE guide, 6 Steps to Investing in Real Estate with an IRA Account.