Let's take a look at what each investment type brings to the table. This chart here shows how much you could have made if you put $100 into real estate (that's the red line) and the stock market (the blue line).
Unlocking the Potential of Real Estate Investments
Owning real estate can feel more solid because it's something you can touch. It can bring in regular income if you rent it out, and it's also known to stand up well against inflation. Plus, you get some very significant tax breaks, which is always nice. Say you buy a $100,000 property with just $20,000 down; if the property's value goes up, you could make a decent profit. But, real estate can be pricey to get into, it's not easy to sell off quickly if you need cash, and it can be a hassle to manage, especially for rental properties.
The Dynamics of Stock Market Investment
Stocks, on the other hand, are much easier to jump into and out of, you can spread your money around different types of companies easily, and you don't need a lot of cash to start. Historically, stocks have given better returns than real estate. But stocks can also be a roller coaster ride with their prices going up and down with the market's mood swings.
Insights into Returns and Risk Management
Looking at the long-term, things like the Vanguard Real Estate ETF and the S&P 500 ETF show us that both real estate and stocks have their ups and downs, and how well they do can depend on how the economy's doing. Some people might prefer the steady feel of real estate, while others might like the flexibility and growth potential of stocks.
Diversification: Balancing Risk and Reward
Smart investing is all about not putting all your eggs in one basket. Having a mix of real estate and stocks could help you handle the risks better and take advantage of what each has to offer. Real estate can be a more stable, long-term bet; while your money might be tied up a bit longer, the value of your property is likely to stay solid even when the economy gets shaky. It's a way to guard against inflation and gives you the chance to earn a steady income and appreciation over time.
On the flip side, stocks can be quite the wild ride. They have the potential to grow your money quickly, and you can sell them off fast if you need to. But remember, the stock market can be unpredictable—values can swing dramatically, and it's possible for investors to see their wealth take a big hit in a single day's trading. Balancing these two can give you the best of both worlds: the security of tangible assets and the opportunity for quick growth.
The key is to mitigate one risk against the other by having a diversified portfolio.
Final Thoughts
So, the tug-of-war between real estate and stocks isn't about which one wins; it's about how you use them together to meet your financial goals and what you're comfortable with when it comes to risk. Both paths can lead to wealth, each with their own set of pros and cons.
For those who like the idea of investing in real estate but don't want to deal with the hassle of managing properties, there's something like the Blue Lake Multifamily Fund. This lets you put your money into real estate through a fund that's managed by professionals. This way, you can still get the financial benefits and tax perks of real estate, but without the stress of being a landlord. It's a more laid-back way to add real estate to your investment mix.
As always, Be Bold, Be great, and Keep Pushing Forward!
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About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.
