I make about 25K-30K from my part time job yearly. My goal is to retire early either through the stock market or real estate. What is more profitable in your experience, investing in mutual funds (S&P 500) or buying rentals?

I have quite a bit rental property and prices are pretty high right now. You really gotta find some bargains. At the same time though, it's super safe assuming you're doing your due diligence.

I think if you really educate and train yourself in the stock market the potential to grow money especially via options is really high. However that's obviously way riskier.

BenTheGoodAg said:

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I don't own real estate, but want to in the future and have a lot of family that does.

My takeaway is that that real estate has a better potential for returns, but demands a lot more work if you want to get there. You've got to understand the right market to buy in, and every company you sub out to takes a big cut of your profit. So if you're handy and available, you can save a lot of the costs.

The stock market seems a better place to buy and hold for autopilot investing.

Personally, I think a mix of both would be a good thing.

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Probably some of the best advice you will get here.

I have done both and have seen many clients do one or the other or both. I did not get into rentals until later in my career.

I have done pretty well all in all, with my stock market investments. I did not buy any company whose business I did not understand. I do wish I had invested more in real estate, but my work was such that I did not have time to manage real estate and do my job.

As someone posted, if you can do much of the routine maintenance, and have the time to tend to it, you can do much better. When looking at deals, set your parameters and don't deviate from them just to get a deal done. I have never done single family rentals; I saw what happened to a couple of clients and a friend of mine. In one instance, a tenant purposefully destroyed a lot of the interior, and he was out a lot of money and several months without any rent while renovating the damage.

Take your time, buy the right property and screen the tenants.

BenTheGoodAg said:

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This seems to be missing some information, such as what happened to the 47 years of rent and how was it reinvested?

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Yep. A very slanted statistic. However, moral of the story: do both or do what makes you feel comfortable and is more 'known' to you. If you don't feel like you know anything about either, then soak up some knowledge. Ultimately, make sure you are investing.

Also that $100 investment would give you access to $500 worth of asst, so the gain is really like 4500 in addition to the dividend ect

I don't understand the obsession with the stock market. Buy rentals

MS08 said:

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BenTheGoodAg said:

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This seems to be missing some information, such as what happened to the 47 years of rent and how was it reinvested?

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Yep. A very slanted statistic. However, moral of the story: do both or do what makes you feel comfortable and is more 'known' to you. If you don't feel like you know anything about either, then soak up some knowledge. Ultimately, make sure you are investing.

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OldArmyCT said:

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From Investopedia:

Or, consider the 47 years between 1975 and 2022. A $100 investment in the average home (as tracked by the Home Price Index from the Federal Housing Finance Agency [FHFA]) in the fourth quarter of 1975 would have grown to about $928 by the first quarter of 2022.6 A similar $100 investment in the S&P 500 at the beginning of 1975 would yield approximately $19,351 in 2022, provided all dividends were reinvested.

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A 1000X this.

Stocks, a set it and forget it approach, is going to be less irritating and make you more money if history is any indication of future performance.

I don't know how old you are, but Id do stock first, then diversify into real estate later. This will be less fun because your idiot friends will be buying homes and other little properties...But you will be better off in the long run.

I don't agree with that statement at all. Everyone has their story to tell but my story is the complete opposite. If you want to be passive for retirement, then agree it's stocks. If you want something that could in turn build wealth that would leave a legacy, real estate to me is that route.

It's way easier to evict a bad stock than it is a bad tenant.
You'll never need a plumber or a new aircon for a bad stock.
Dividend checks never bounce.
You don't need a lawn service for a stock portfolio.

BenTheGoodAg said:

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I don't own real estate, but want to in the future and have a lot of family that does.

My takeaway is that that real estate has a better potential for returns, but demands a lot more work if you want to get there. You've got to understand the right market to buy in, and every company you sub out to takes a big cut of your profit. So if you're handy and available, you can save a lot of the costs.

The stock market seems a better place to buy and hold for autopilot investing.

Personally, I think a mix of both would be a good thing.

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Of course it's a good thing to own some real estate as a part of a well diversified portfolio. However, the common notion that buying a bunch of single family homes as your retirement plan is actually hilarious.

On each of those homes you're tasked with finding and keeping reliable tenants, paying for things like taxes, insurance, repairs and maintenance, and property management.

How much of this are you paying on dividend paying (and growing) equities? I'd urge you to look up the growth of the cash dividend of just the S&P 500 over the last 50 years and then tell me equities that have a consistent track record of growing their dividend each and every year shouldn't be the primary source of your retirement income.

I'm confused. Seems like you are disagreeing with my post, but are addressing a different set of points?