The Stock Market for Beginners: Housing Or Shares? The Age-Old Discussion Among Investors
Sydney Tremayne
Study May Be Shocking To Some Investors
For stock market beginners does housing or do shares make more money? This is an age-old discussion among investors.
I have had this conversation with many friends who have done well with real estate. For those who are successful, property is just fine thank-you-very-much!
I had the same argument with the man who shoots my videos, but for him the evidence is in his bank account. Of course people make money with real estate – if the timing is right, the buyer negotiates well, and then sells at the right time. But what about the value of houses over the long term?
Even producing reputable studies does no good.
Home prices unchanged in 100 years, now lower
Professor Robert Shiller, Yale economist co-founder of Standard & Poor’s Case-Shiller Home Price Index, is reported as saying home prices in 1990 corrected for inflation were the same as they were in 1890. The argument of course is that they don’t make more land and that land prices compensate them.
That’s quite true, but real property ages and declines in value. “Housing is a manufactured good and they depreciate,” Shiller said. “If they go up in price they will make more of them.”
He added: “Most people think they will go up in price; they are wrong.”
Shiller says there are 10 million property owners in the United States whose debt is larger than their home value and this has broad implications for how Americans feel about their wealth and spending habits.
No quick recovery seen
“The current hopeful consensus – that house prices will bottom soon and then begin to recover – is most likely a dream. Housing markets don’t usually have ‘V-shaped’ recoveries. And even if house prices stabilize in normal terms, after adjusting for inflation most people will continue to lose money.”
I know people who have had good luck with real estate, buying and selling at the best times. But investing in anything successfully and consistently requires knowing what we are doing. Or lots for luck!
Rental property, properly managed, should result in profitable investment if rents actually pay the mortgage and maintenance. But as I learned the tough way it is hard work. Also, as many know, real estate can take a long time to sell, unlike stocks that can be disposed of in seconds.
Aren’t stocks dangerous?
Giving you investment knowledge is what this series of articles is intended to do: To show you in simple terms what took me 55 years to learn about successful stock market investing.
But isn’t it dangerous? I am often asked. Sure it is if you refuse to take time to learn something about it. That applies to life.
Understand what I will teach, simple rules that take no special aptitude, and if you start in your 20s or 30s I will turn an unusual number of you into millionaires on the small amount of cash most of us waste every day without even realizing it. Start later and you will still improve your fortunes if you follow this easy plan.
It favors protection and avoids gambling. If you want thrills and spills you’re in the wrong arena. Straight and steady like the tortoise wins the rewards.
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