About This Episode
In this episode of GDS Unplugged, Glen and Robert tackle a frequently asked question in personal finance: Which investment strategy makes more money, real estate or stocks? With decades of experience and a practical approach to financial planning, they break down the pros, cons, and nuances of each investment type.
If you're a seasoned investor or just starting out, this episode offers a balanced perspective and insights into how you can align your investment choices with your financial goals, risk tolerance, and lifestyle.
Understanding the Investment Landscape
Stocks and real estate have long stood as foundational paths to building wealth. Historically, diversified stock portfolios have shown strong growth potential, while both residential and commercial real estate have also delivered solid performance. But performance alone doesn’t tell the full story.
Glen and Robert emphasize that real estate can outperform stocks, but usually only for those deeply immersed and savvy in the real estate field. For most investors, the stock market offers a more consistent and diversified path to growth.
Diversification and Risk
Diversification can be an important factor in managing investment risk. Stocks allow for broad diversification across industries and geographies, often with good research and decent effort. Real estate, on the other hand, tends to be concentrated. Typically, people own one or a few properties in a limited area, which can increase exposure to local market downturns.
Real estate often demands more time and effort. From property maintenance to tenant management, the time commitment can be significant. Stocks, by contrast, require diligent research but are largely hands-off once invested.
Tax Implications
Tax treatment varies significantly between the two. Real estate offers depreciation benefits, which can be a major incentive for investors. However, rental income is taxed as ordinary income, which can erode returns for high earners.
Stocks benefit from favorable tax treatment on qualified dividends and long-term capital gains, often resulting in lower tax liabilities. Glen and Robert advise weighing these factors carefully, especially when planning for retirement.
Real-Life Examples
Glen shares stories of clients who’ve succeeded in both arenas. Successful real estate investors often own multiple properties and treat it like a business. They benefit from economies of scale, better property management deals, and diversified rental income.
On the other hand, many clients have faced challenges with illiquid REITs and high fees. Glen advises investors to carefully review investment products and understand associated fees and risks before investing.
Resources
Ready to take your learning to the next step?
- Connect with Glen Smith and Robert Casey on LinkedIn.
- Click here to read more helpful information about the stock market.
- Contact GDS Wealth Management for a complimentary financial consultation.
- Submit your questions to Glen and Robert, GDS Unplugged mailbag by emailing gds@gdswealth.com.
Why Listen?
This episode is full of practical advice and real-world insights to help you choose the right investment strategy. Glen and Robert discuss both the emotional and financial aspects of investing, sharing guidance on ways to keep your approach practical and straightforward.
If you're weighing your options or refining your portfolio, this episode aims to help you make informed decisions and get you closer to reaching your financial goals.
GDS Wealth Management (“GDS”) is an investment adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. The content of this blog is for informational purposes only and should not be construed as personalized investment advice or a recommendation to buy, sell, or hold any specific securities, real estate, or investment products. References to individuals, companies, services, products, or strategies are illustrative and not endorsements or recommendations. Examples, testimonials, and performance data are for illustrative purposes only, not guaranteed, and may not reflect typical results. All investing involves risk, including the potential loss of principal. Diversification and asset allocation do not ensure a profit or protect against loss. Past performance is not indicative of future results. Readers should consult a qualified financial, tax, or legal professional regarding their specific situation before making investment decisions. For additional information, including services, fees, material risks, and disclosures, please visit https://www.gdswealth.com/.
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