Comments on: Diversified Stock Portfolio Beats Real Estate…?

By: campton-stock market investing

campton-stock market investing — Tue, 14 Oct 2008 10:25:13 +0000

Diversification does not mean having more than one company’s stock. Think of your portfolio as a little financial ecosystem, a bunch of different things working and interacting with each other to thrive in their environment.

By: AJC @ 7million7years

AJC @ 7million7years — Wed, 30 Apr 2008 07:00:03 +0000

Cash on Cash return is what you just described … and is EXACTLY the reason why real-estate FAR outperforms any other ‘buy and hold’ investment method. Why?

Exactly as you said: it’s the power of leverage … applied!

By: fiscalmusings

fiscalmusings — Wed, 30 Apr 2008 03:09:00 +0000

Thanks for the comment. I also read the article you mentioned in your comment, but it seems to be more concerned with one’s own personal residence. It mentions that real estate has the added benefit that you can live in your “investment” rent free. I can’t agree with this since you’re making a payment which generally goes mostly to interest.

I don’t view one’s own home as an investment anyway. A real estate investment, is just that though, an investment. And these investments over a period of time will enjoy great returns with power of leverage.

By: Millionaire Money Habits

Millionaire Money Habits — Tue, 29 Apr 2008 18:44:41 +0000

Hi,

Thanks for the link. To be honest, I resisted coming to that conclusion as I could never understand how stocks can beat real estate when you have so much leverage working for you.

I cam to the realization that stocks beat real estate when I was doing research to find supportive evidence for another post I wrote a while back. I was shocked to find very little support for this and that the contrary was actually true. Here’s one from Forbes, for example:
http://www.forbes.com/2005/05/27/cx_sc_0527home.html

I’m still a believer in real estate as a way to build wealth (especially multi-unit or commercial properties that cash flow), but I think it should play a supportive role in a portfolio.

Ryan