February 09, 2009

What is the Best Long Term Investment… Stocks or Real Estate?

One of the great market research services we subscribe to for up-to-date market information is SteveHarney.com. Mr. Harney sent us the updates on the latest foreclosures numbers, interest rates, the impact of the government bailout, and the proposed stimulus package as it relates to real estate. One of the comparisons was how real estate investments compared with stocks since January 1 of 2000 to December 31 of 2008.

In addition he supplied us with a Reecon Advisors Inc survey where 53.7% of investors said that real estate provides a better long-term investment than stocks.

We bring this to your attention now because right now real estate inventory is high, interest rates are low and now is the best time to buy. Sellers are willing to adjust prices in order to move their properties.

Stock Market ROI: If you had $100,000 to invest in the stock market on January 1, 2000, you would now only have $80,200 because stocks have dropped 19.8% during this eight year period.

S&P 500 ROI: That same $100,000 invested in 2000 would now only be worth $64,800.

Nasdaq ROI: Again, the Nasdaq has lost 59.9% of its value in this period leaving only $40,100 of your original investment.

Real Estate ROI: Real Estate on the other hand has shown an increase of 69.8% even with the decreases in value of 2007 and 2008. On average, real estate historically appreciates between 5% and 6% each year. In addition, rental income on properties yield a higher cash-on-cash return than the stock market produces at this time. You can borrow money to buy your real estate but you can’t find a lender to loan you money to invest in the stock market. The $100,000 placed into a real estate investment in 2000 would now be worth $169,800.

One of our new investors said that they were tired of paying the high salaries and bonuses to CEOs who don’t perform. This investor plans on making his money back through real estate.

For information on how to begin investing in real estate go to MyRealEstateRetirementPlan.com and click on the Real Estate Planning Guide button…or just send me and e-mail.

Posted By: Steve Randall