The Personal Finance Podcast - Real Estate Investing Vs. Stocks: Which Is Better Right Now?

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Starting point is 00:01:05 versus stocks, which is better right now. I'm your host, Andrews, founder of mastermoney.com. And today on the personal finance podcast, we're going to be talking about what is better right now, real estate investing or stocks. If you guys have any questions, hit me up on Instagram or TikTok at Master Money Co. And follow us on Spotify, Apple Podcast, or whatever podcast player, you love listening to this podcast to and if you want to help out the show

Starting point is 00:01:53 and thank you so much to every single person who has done this, but leave a five star rating and review on Apple Podcast or Spotify. And don't forget to check out our new newsletter that has launched. It's the Master Money newsletter and every single week,

Starting point is 00:02:10 I'm trying to give you actionable advice that you can utilize in five minutes or less. So you're getting that every single week in five minutes or less. So make sure you check that out in the show notes as well. because we are super excited about the new master money newsletter. And there's a ton of stuff that you're going to be getting out of that newsletter, including knowing when Index Fund Pro is dropping,

Starting point is 00:02:29 and you're going to get early access to Index Fund Pro. And in addition, you're going to get access to the free debt course as well. So both of those are coming to the email list first. So make sure that you're on the email list so that you can check that out. Now, today I'm really excited about this episode because I get this question a lot. What is better to invest in? real estate investing or the stock market. And now before we jump into this episode,

Starting point is 00:02:54 I want to let everybody know way up front. I invest in both vehicles. I love investing in real estate and I love investing in the stock market. Both of them are extremely important in my investment plan. And if you can invest in both, I absolutely think that you should

Starting point is 00:03:08 because they both have their pros and they both have their cons. But if you have real estate and you have investments in the stock market, and stock market, I mean things like individual stocks. I mean like index funds and ETFs. dividend stocks, growth stocks, even if you're trading stocks, anything like that is what I'm talking about. But here at Master Money and at the Personal Finance podcast, we are long-term investors.

Starting point is 00:03:29 So typically, when we're talking about this, we are talking about long-term investments. We're not jumping in it out of fads. We're not doing things for the short term. We don't care about the short run. We care about long-term investments to build massive wealth throughout a longer period of time. And I think both real estate and stocks have incredible advantages right now. But the goal is to buy low and sell high. But even more important than that goal is to make sure that you are buying something

Starting point is 00:03:55 that you're willing to continuously invest in. If you invest in stocks one time and don't add more funds to that every single month, then it's pointless to even be investing in stocks. Yeah, sure, your money's going to grow. But just doing it one time is not enough unless you're doing a massive lump sum. In addition, if you're just going to buy one rental property, it may make somewhat of a difference to your budget. But usually when you just buy one property, you're cash flowing two, three,

Starting point is 00:04:18 $500 per month. So for it to make a massive difference in terms of building wealth, that's not something that it can be doing if you're just buying one. So you want to focus on the one that you're willing to invest in the most. What are you the most passionate about between the two? That should be your number one goal. So whatever gets you most excited is what I want you to do. Now, what is happening with both?

Starting point is 00:04:38 Right now, with stocks, stocks are having major swings in either direction. And there's a number of reasons why stocks go up and down. If you haven't heard our episode with Brian Ferraldi, he does a great breakdown in a simplistic way of why the market moves the way that it does. But there's a number of reasons why the market is moving the way it does right now, some of which are that people don't know what to do with inflation. And as the Fed keeps increasing rates, the market goes crazy. People act emotionally and then the market goes crazy.

Starting point is 00:05:07 But guess what? If you're a long-term investor, you do not focus on these short-term things. I'm getting a lot of people where I'm talking about 10% rates of returns, historically with the S&P 500, and they're coming back to me and saying, well, my 401k is down 25%. That is a short-term problem that is not going to be long-term. Now, I say this all the time, but if you don't believe me, take out your phone, turn any index in any direction for a long period of time.

Starting point is 00:05:34 So, for example, you can open up the S&P 500 on your phone, put it to the 10, 20, 30, 40, 50, year time horizon, and what direction does that market go? It goes up. short-term investors do not win. A long-term investors, win. And that is the way you do it. And Brian Ferralti, even in that episode we were referencing, talks about this.

Starting point is 00:05:54 If you're invested in the S&P 500 for 20 years or longer, historically, you have made money 100% of the time. That's one of the most amazing stats that are out there, meaning patience, consistency, and continuously investing is what wins when it comes to the stock market. Now, in addition, one cool study that we've talked about here before is Ramsey Solutions interviewed 10. 10,000 millionaires.

Starting point is 00:06:17 And of those 10,000 millionaires that they interviewed, 80% of them made the majority of their $401,000 investing in their 401k, investing in the stock market. Now we jump into real estate. What's going on with real estate right now? We've had a lot of real estate episodes as of late. We've been trying to increase our content on real estate as we've added a second episode. And one thing you'll notice that we've been talking about a lot is that there is a very low supply within the real estate market.

Starting point is 00:06:41 Now, prices may be somewhat softening, but in, Unless there's a massive influx of houses built, we are still going to have a supply problem. Now, you've heard people like Dave Ramsey just talked about this recently. I saw him talk about this on a TikTok where he was predicting that the market for housing is going to continuously go up, at least for the next five years. It's just going to be much slower. Now, we're not in the business of predicting here at Master Money. We're not in the business of predicting at the personal finance podcast.

Starting point is 00:07:09 But what we want you to do is kind of think through is that logical? because this is a supply and demand problem. And when supply is low, demand goes up. Your boy was an economics major. So understanding this is key to understanding how things ebb and flow. When supply is low, demand goes up, meaning prices go up. So the prices are still at high levels.

Starting point is 00:07:32 What does that mean? Well, what that means is when prices are at high levels, it's very difficult to get properties to cash flow. You've got to get very creative to get them to cash flow. So it's much harder to find deals in this market. Now, real estate is a fantastic investment, and it's made an insane amount of millionaires. The stat that always comes out is that 90% of millionaires invest in real estate. Now, I think that is a little bit fluffed.

Starting point is 00:07:52 The reason why is they think they're utilizing their personal residence or their house in that stat. But a massive amount of people have become mega rich because of real estate. If you probably look at the amount of people who are worth over $10 million, it's going to be a much larger percentage of them own rental properties, real estate, they flip properties, all that type of stuff. So they own assets that actually make them money every single month. So today we're going to be talking about the pros of real estate investing, the pros of stock investing, the cons of real estate investing, the cons of stock market investing, and how you should choose between the two. We have a ton to cover in this episode. So without

Starting point is 00:08:31 further ado, let's get into it. Now first, I am going to give you the pros of real estate. Number one, you are in complete control with real estate. And this is a fantastic thing. in a fantastic situation to be in, meaning that every investment that you invest in actually puts you fully in charge. Whereas if you're investing in stocks, you're not in charge. The CEO is in charge. The executives are in charge. You have no control.

Starting point is 00:08:54 But with real estate, you have complete control. So if you're somebody who loves to have that control and feels much more secure with that control and you'll be less stressed because you have that control, then real estate may be a fantastic option for you. Number two, real estate allows you to leverage other people's money. to get rich. And now this is one of the most beautiful things about real estate. Banks are going to be much more likely to lend you money on real estate than they ever would on stocks. Case in point, typically on stocks, they will only lend you 30 to 50% of your portfolio value. And in most situations,

Starting point is 00:09:29 you have to have a large portfolio to be able to do that. When it comes to real estate, you can get loans all the way up to 0% all the way up to 3.5% with the FHA loan if you're going to be living in that residence or if you're buying it as a real estate. You can get loans all the way up to 3. rental property, you can get anywhere from 3.5 to 15 to 20 to 25% down. And the rest of it is loaned out to you. So you can get a 75% to 96.5% loan just by investing in real estate. The amount that banks are willing to get out with real estate is massive. And the reason why is it's a tangible asset. It's an asset that you can see, feel, look at all of those other things. Now, real estate when it comes to leverage is much more enticing when rates are low. So we had rates

Starting point is 00:10:12 that were extremely low recently. The Fed has been raising rates. So as rates go up, it gets much harder to cash flow. Reason why is that over the course of a 30-year mortgage, you are paying, say, for example, you buy a $400,000 house, you are paying $300,000 more in interest over the course of that 30-year mortgage. It becomes much harder to cash flow. Now, could you refinance that property later on when rates drop? Absolutely. And that is something you should definitely consider if you are going to utilize leverage is always be looking to refinance towards those lower rates if it makes sense with the cost. But at the same time, this is something that you definitely want to think through when

Starting point is 00:10:47 you're investing in real estate. Now, the third thing is that there is much more tax advantages with real estate. Real estate is one of the best tax shelters, especially as your income starts to rise. So I get a lot of questions on what are some tax moves that I should be doing as my income starts to rise. Well, one big one is, if you are anywhere between the 24% income tax bracket all the way to a 32% income tax bracket and above, then you definitely should be considering real estate as a tax shelter

Starting point is 00:11:14 because there's a ton of benefits, one of which is you can deduct the interest on up to $750,000 in mortgage indebtedness on your primary home. Another thing you could do is we talked about this with the live-in-flip episode. And if you haven't heard that episode, it's one of my favorite tactics

Starting point is 00:11:30 when you're investing in real estate, but as long as you've lived in a property, two of the last five years, then you don't have to pay any taxes on the profit, of the sale of your personal residence. So this is an amazing tax benefit. You also have the tax benefit to the 1031 exchange where if you sell a property for a huge profit,

Starting point is 00:11:48 you can defer those taxes by buying a like kind property. So for example, if you buy a commercial building, sell it for a ton of money, then you can defer those taxes by using a 1031 exchange and then defer those taxes into something larger, maybe a hotel or something along those lines. And you can write off the expenses of your properties. So if you have to fix toilets or if you have to do all these other things,

Starting point is 00:12:12 that anything that has to do with your property, you can write it off. However, you just got to make sure that you are within those income limits because there are income limits that apply to that, which are $175,000 per year. So this is a great place for tax advantages as well, and it's why a lot of really wealthy people invest in real estate. The next one, real estate is really easy to analyze. And it is much harder to quantify stocks and figure out what a stock is worth than it is to figure out what a real estate investment is worth.

Starting point is 00:12:41 In fact, in a month, you can get really good at analyzing rental properties. And the reason why is it's just a skill that takes practice. You have to understand what your market is like. You have to understand how much cash flow of those properties can put together. And you have to understand all the expenses, not just your mortgage, but a bunch of other things. Now, we have an episode talking about how to run numbers on a rental property. And if you can do that, you can invest in any real estate market that you want to. You just have to understand how to run the numbers on a rental property.

Starting point is 00:13:11 Whereas stocks, you've got to dig into 10Ks. You've got to do all these other things, and it's much more difficult. The next one, real estate is a tangible asset and stocks are not. Meaning real estate, you can see, you can touch, you can look at it, you can go there and say, man, I am really cool for owning this thing. There's all these different things that you can do with a tangible asset. You could show your friends. You can go by there and wave to all your tenants.

Starting point is 00:13:33 Well, don't do that. It might creep them out. But it's something that you can see, you can feel. you can touch. Whereas stocks, stocks are just on a screen now. They're not even pieces of paper anymore. So if you like tangible things, if you like seeing things, then real estate may be a better option for you. And another great thing about it being tangible, if you need a backup property to go to, you have other properties available to you if something happens to your primary residence. The next one, real estate is way less volatile than stocks. What does volatility means? That means

Starting point is 00:14:01 how much does it go up and down in value? Stocks go up and down in value like crazy. You can see how the market is right now where stocks are going up and down, left and right. You don't know what's happening. And if that freaks you out, real estate doesn't do it that quickly. Now, usually what happens is if there's a real bad correction or like in the Great Recession, which was 2008, real estate trails behind stocks. So you have things like Black Monday will happen. And then three, four, five, six months later, real estate will slowly go down in value over time. It doesn't just instantly drop right away. And like I said, we have a supply problem right now. So that's going to be a difficult thing to do if a lot of people have demand for real estate and there's not a lot of

Starting point is 00:14:39 supply. So stocks go down in recessions first. So real estate is much less volatile. Number seven, this one's kind of hard to explain unless you've done it, but real estate provides a great source of pride. And what I mean by that is it's cool to look at your buildings and say, hey, I worked hard, I bought this thing. And this kind of goes along in the same lines with tangible assets. But it's something that you can look at and feel pride and happy about and when you drive by your property unless it's a property that really causes you headaches, which I've had a few before. And with those, I don't want to even get close to driving by those because I don't want to think about them. But for the most part, real estate is something that really brings you pride and satisfaction

Starting point is 00:15:16 in what you're doing. The next one is real estate is local. So for real estate, for example, think about something recently like the Russian Ukraine crisis, which is still going on at the time recording this. When that started, stocks went all over the place and they were moving up and down and nobody knew what was going to happen. That's not going to happen with real estate. It's hyper local to your actual market. So knowing that going in, it's actually beneficial because it just won't move around as much. And number nine is that you can always refinance real estate. And I almost see things like HELOCs as backup emergency funds to your emergency fund. If you have something catastrophic happened, maybe like a sinkhole swallows up your primary residence, for example, then you still

Starting point is 00:15:53 have backup cash to your emergency fund. If your emergency fund's not going to cover that, you can go get a HELOC on one of your properties, especially if you have them pay down pretty well. And as long as you can afford those payments, then you have that backup as well where you can pull from that cash. Now, you can do this with stocks too, but you can't pull as much. So being able to do that with real estate and having that available to you, just having that HELOC available to you is very comforting because you're always going to have cash that is there. And then number 10, the government is on the real estate investor's side. So you get things like mortgage interest tax deductions, which we just talked about.

Starting point is 00:16:24 You get tax-free profits. You get bailouts if you can't pay your mortgage. And the government will actually go after banks. if they're predatory or things like that on people who get mortgages or take loans out on properties. And then number 11, real estate is inherently less risky than stocks. What I mean by that is because it's a basic need, it's something that every single person in this world needs. They need shelter. It's one of the three basic needs.

Starting point is 00:16:49 It's food, water, and shelter. And because everybody needs shelter, real estate is inherently less risky because you're providing something that everybody needs. And you won't wake up one day and it goes down all the way to zero. Unless your property gets swallowed by a sinkhole or catches on fire or anything like that, those are like the inherent risks that are there. But it's much less risky than the stock where a stock can go to zero and it's out of your control. Real estate is much less likely to do that. And over the long run, real estate tends to increase in values where it's usually ahead of inflation.

Starting point is 00:17:18 So between all of those things, those are some of the great things about real estate. Now let's jump into the great things about stocks. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it.

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Starting point is 00:20:44 to invest in real estate. So if you're a newer investor, here's some things you need to know about stocks because stocks actually have a higher return over time than real estate does. So according to Forbes, an investment in real estate earns just 3 to 4% per year historically. And on the contrary,

Starting point is 00:20:58 investments in the stock market post about 10% annual returns. We know that from the S&P 500s. You can adjust down for inflation, but we've talked about how to adjust down for inflation. You adjust your contribution instead of adjusting down for inflation.

Starting point is 00:21:10 The second one is stocks are more liquid. So if you don't know what liquid means, it means you can access your cash very quickly. So you can get your cash out of a stock within three days max. Whereas to get your cash out of a stock, real estate, you got to call up a real estate agent, you got to put it up for sale, then you actually have to sell the house, you got to go through the inspection period, it could take

Starting point is 00:21:31 you anywhere from 15 to 60 to 90 days, and depending on what condition the property is, and it could be sitting there forever if you misprice it. So making sure that you understand that stocks are way less liquid, you can get out of them immediately. And it's one of those things where you can get your cash out right away, whereas real estate, you really have to wait a long time to be able to do that. Now, sure, you can get a heat lock out on real estate, but at the same time, that process still takes some time before it can go through. Now, number three, and this is the biggest one for me, owning stocks is significantly less work. If you are a lazy investor, if you just want to chill out, watch Netflix and not have to worry about anything, not having anybody call you or worrying about any

Starting point is 00:22:10 stuff like that, then real estate may be the best for you because if you're managing your property yourself and your boy has been through this many of times, tenants are going to call you late at night. Even if you tell them your office hours are not available late at night, your tenants are going to call you when their toilets start exploding. Can you tell that I've had that happen before? So this is something where you're going to get bothered a lot more when it comes to real estate. Even if you get a property manager,

Starting point is 00:22:33 your property manager is going to be calling you saying, hey, this tenant has a thousand dollar issue. You need to pay up. So it's much less work because you don't have to deal with the maintenance. You don't have to deal with conflicts with neighbors. You don't have to deal with tenant rotation, which is super annoying to get a tenant into a property. You don't have to deal with all those other things,

Starting point is 00:22:50 those late night calls, all those other things. You can just literally leave it a loan forever and just continue investing. Number four, stocks have way lower transaction costs. So if you know nothing about real estate investing, if you want to get the highest dollar, most people think that you still have to hire a real estate agent. Now, I think that industry could slowly go away. But as of right now, nobody's innovated enough to make it go away. So you're still going to have to hire a real estate agent. And real estate agents will charge you anywhere from 2.5% to 6% if you're the seller and you have to pay both sides. And this is something

Starting point is 00:23:21 that is very costly, whereas stocks have free transactions. So, for example, you sell a $100,000 property, let's do easy math. We're going to have to pay the real estate agent $6,000. If you sell a $200,000 property, you're going to have to pay them $12,000. $300,000. You're going to have to pay them $18,000 if you're paying both sides. So that's a very significant fee and a hefty fee to have to play. And we know how much fees impact our investments. So making sure that you minimize fees is incredibly powerful. So another pro for stocks, because those transaction costs are literally zero. Unless you're getting in a high mutual fund or something like that, which if you listen to this podcast and you're still in a 2% mutual fund, what are you doing? Because fees are going to significantly

Starting point is 00:23:59 impact your investments over time. Just a 2% fee will impact your investments well over $100,000 over the course of like a 30 year investing career. Number five, stocks offer way more variety. What do I mean by that? Well, with real estate, you're going to be hyperlocal or investing in your local market. Maybe you'll expand out. And if you get really, really, really ultra wealthy, Then you can start to expand out to investing in L.A., New York, Chicago, London, Tokyo, Paris, all these different places. But you can't do that unless you're really wealthy. Whereas with stocks, you can buy all different kinds of industries, you can buy all different types of stocks. You can literally buy every single stock in the stock market with one trade in VTSAX, which is the Vanguard Total

Starting point is 00:24:41 Stock Market Index Fund. So between all this stuff, it's really important to understand that there's a lot more diversification that you can get into when it comes to stocks. Now, does this matter, it can, but if that's the sole reason why you're trying to decide between the two, I wouldn't harp on that too much. Number six, stocks are much easier to invest in stuff that you like to use every day. So there's a great book by Peter Lynch, and it's called One Up on Wall Street. It's one of my favorite investing books. And he's actually one of the investors that could actually outperform the S&P 500.

Starting point is 00:25:12 It's a fantastic read. If you haven't read that book and you're new investing, read that book. And what he would do is he would go to the mall and walk around the mall and see, what are people actually buying and what stores are really packed. And then he would walk around and see what his kids are buying and what his family is buying. He would actually invest on those thesises sometimes. And this is the cool thing about stocks is that you can go out and you can buy stocks around the things that you love. So for example, if you're addicted to your iPhone, raise your hand. Every single person slowly raises their hand. Then you can invest in Apple. Or if you love Nike clothes, you love Nike

Starting point is 00:25:45 yoga pants, you can invest in Nike. But this is also fantastic for teaching kids how to invest. too. So this is one big thing that I'm doing with my son who's three years old now. He absolutely loves Disney. He's in that Disney phase. And so I'm showing him, hey, you can invest in Disney and you can buy a piece of this company. You can own a piece of this company. Or you can invest in something like Mattel if they have their favorite toys or anything else that kids love. And this is a great way to show them how investing works. And this would be one reason to buy individual stocks is because you can really teach that you own a piece of this company. And this is the best way to do it. one of the coolest ways to do it as well. So that's a fun thing that you can do as well if you have

Starting point is 00:26:23 kids. Number seven, stocks are taxed really favorably in comparison to real estate. So real estate has a ton of different taxes that are thrown on there. If you've ever owned a house, you can see your property taxes every single year. It's thousands and thousands of dollars a year. But stocks are tax very favorably. So long-term capital gains tax on stocks are anywhere between zero, 15, and 20% depending on your tax bracket. So long-term capital gains means that if you've owned the stock for a year or longer, you're going to be taxed much less than short-term capital gains. This is another reason for long-term investors. Owning a stock for over a year or more means your tax rate goes down way more on your gains, the money that you make after investing

Starting point is 00:27:04 your dollars. So making sure that you keep your investments for at least a year is going to significantly reduce those tax rates as well. Number nine, Stocks have way less ongoing fees than real estate does. So like we just talked about, property taxes are really high. So for example, property taxes can run anywhere from 1 to 3% of your property. And as values increase, your taxes go up over time. So if you're buying a house, that's one thing you definitely want to be checking on before you buy the house because you can be very surprised how much higher your mortgages than

Starting point is 00:27:34 you thought it would be if you're not calculating your taxes. The same thing goes for rental properties. You absolutely have to factor in taxes when you're running the numbers on rental properties. But in addition, there's even more fees than just your taxes. There's maintenance costs. There's insurance costs. There's management costs, which are very costly. If you haven't heard our episode Buy versus Rent, we go through all the costs of owning a house and it's significant.

Starting point is 00:27:56 I mean, it really eats into your return because of all the costs of owning a house. So you have to factor all of those costs in and make sure that you have the cash on hand to even be able to do that because it's thousands and thousands of dollars a year. I don't care where you live. You're going to be paying thousands of dollars a year. based on all those different factors. Whereas if you hold individual stocks or stocks, there's no ongoing fees that happen. So that's one other thing to consider as well.

Starting point is 00:28:22 And then lastly, stocks just have no maintenance costs or budgeting, meaning you don't have to forego a bunch of cash because a roof caved in, or you don't have to forego a bunch of cash and remodel a house to update it. There's nothing like that that you have to do with stocks. You just literally buy it, set it, and forget it.

Starting point is 00:28:37 And that's another beautiful thing about stocks is you're not having to budget out money and figuring out where dollars are going to go. real estate takes a lot more time. And that's kind of what we're saying here is real estate does take a lot more time, but you can be rewarded if you know how to buy it right. If you buy it wrong, you're not going to be rewarded. In addition, you're going to have a ton of stress and anxiety.

Starting point is 00:28:54 So you have to know how to run those numbers and then buy it right. So now let's get into who real estate would be best for and who stocks would be best for. All right. So the last thing we're going to talk about is who real estate is best for and who stocks are best for. So real estate is best for the following people. If you're the type of person who likes real tangible assets and you think that's how true wealth is built, then you may be better off with real estate.

Starting point is 00:29:17 And if you know where you want to live for the next 10 years, then you may be better off with real estate. Now, this is a big one for people. If you don't do well in volatile markets, meaning when the market goes up and down, then real estate is one that is much more secure for you like we talked about. Or if you tend to buy and sell too often. So for example, if the market moves really quickly and you are like, oh, shoot, the market's going down, I'm going to sell. If that's you, you know who you are. If that's you, then you may be better off buying real estate because it's not really easy to sell real estate.

Starting point is 00:29:43 You can't just be like, oh, shoot, the market's going down 3%. Let me sell my real estate real quick. You're going to change your mind of the course of 90 days because it's how long it's going to take you to get rid of that property. If you enjoy interacting with people, if you're a extrovert, then real estate may be great for you because you have to do a lot of interaction with people with your tenants. You have to do a lot of interaction with people to find properties, which is one of the biggest factors there. You have to do a lot of interaction to make deals. There's a lot of things that you have to do there.

Starting point is 00:30:08 So if you enjoyed that interaction, then it may be for you. And if you like to feel in control, if you like to control things and be in total control, you don't like releasing control and you know who you are, then real estate may also be a great option for you. Now, who are stocks suitable for? If you don't like to talk to people, introverts, I'm talking to you. Then stocks are fantastic for you because you don't have to talk to a single soul if you don't want to. It's all done in the computer so you can buy, sell, trade, do everything online. If you can stomach volatility means you don't care if the market's going down at all.

Starting point is 00:30:37 you're going to actually buy more when the market goes down because you know you want to buy low and sell high, then stocks may be a great option for you. If you have a ton of discipline or you like to trade, then stocks may be a great option for you. And if you enjoy studying and researching stocks, there are people out there who do and I'm one of them, then stocks may be fantastic for you. And if you don't want to be tied down to a specific location and have to worry about the stress and anxiety that comes along with having to deal with properties and figuring all that stuff out, then stocks may be way better for you. And this is the big. biggest one. If you are limited in the amount of capital that you can put down and you're just

Starting point is 00:31:11 not making a lot of money and every single year maybe you're saving up two, three, four thousand dollars, well, stocks are going to be better for you because you can actually invest those dollars over the course the next five, ten years and watch that money grow. Then as your income rises, that's a great time to start getting into real estate because real estate takes money. And a lot of people don't realize this. Like there's so many people out there saying buy into real estate with low money down or no money down. I see this all the time. I see TikToks where people are saying Real estate is like creating money in thin air. No, it's not.

Starting point is 00:31:39 Real estate takes a lot of work, it takes a lot of time, it takes a lot of money. Trust me. You have to have capital available because if something happens, you have to be able to fix that toilet. You have to be able to fix that sink. You have to be able to go in there and remodel a property if it's not renting out. Otherwise, if you can't raise the rent and you thought the rents were going to be $1,000 when you ran the numbers and the rents are only $750, you've got a major problem there because you're at a negative cash flow.

Starting point is 00:32:04 and at a negative cash flow, you are making $0 every single month. You have to have a cash on hand to raise those rents. There's a number of different reasons why you would need money in real estate, and those are some of them. So making sure that if you have a low set of capital, if you don't have a ton of cash on hand, you don't make a lot of money yet. And it's completely fine if you do. Don't worry about what everybody else is doing.

Starting point is 00:32:22 Focus on yourself and focus on your wealth journey. And you can buy real estate later on as your income rises. But it's not smart to buy real estate if you don't have cash on hand. But whatever you do, When you're trying to make this decision, do not do nothing. Do not get analysis, paralysis, and try to figure out which one should I do, which one should I not do? Because your biggest goal is to get as much cash as possible into assets.

Starting point is 00:32:48 So you absolutely need to be doing that every single month no matter what, whether it's putting in your high-yield savings account because you're saving up for a down payment on your next rental property, or it's taking that cash and putting it into index funds and ETFs so that you can grow that wealth over time. For most people, if you don't know what you want to do and you've been sitting there on the sidelines for the last year or two, then probably investing in stock market or at least starting to invest in the market is something that you want to consider. And it's something you want to look into because sitting on the sidelines too long is not something you want to do. You want to grow your wealth over time.

Starting point is 00:33:19 And the only way to build wealth, the only way to create wealth is to invest your dollars. Otherwise, you're going to be working for your entire life. And that's the last thing we want you to do. We are trying to avoid that for every single person in this world. That's what we want to do is make sure that every single person in this world can build wealth. So making sure that you do not do that is key. It's paramount to building wealth over time. Thank you guys so much for listening to this episode.

Starting point is 00:33:42 If you guys have any questions, you know where to hit me up, Instagram or TikTok at Master Money Co. And make sure you follow us on Spotify and Apple Podcasts. And don't forget, the Master Money newsletter is coming out. Index Fund Pro is coming. Get ready for that. I'm so excited to share that with you.

Starting point is 00:33:58 It's over 40 lessons on learning how to invest and teaching people that invest. We're going to do advanced strategies in Index Fund Pro as well. We're going to be keep putting content into that course. And that course is going to have hundreds and hundreds of dollars worth of value. And we're keeping it under $100 at the price tag. So I'm really excited to share that with you guys as well. So stay tuned for Index Fund Pro coming out.

Starting point is 00:34:19 Stay tuned and sign up for the Master Money newsletter because I'm going to be giving you so much extra information in that newsletter. And we're going to try to make it fun as well. So really excited to share that with you guys. If you guys have any questions, like I said, reach out. Thank you guys so much for this episode, and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-O-Jo, the online casino with all the latest slot and live casino games.

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The Personal Finance Podcast - Real Estate Investing Vs. Stocks: Which Is Better Right Now?

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