142 - What Are the Tradeoffs Between Real Estate and Stock Market Investing?

Scott and James discuss the tradeoffs between investing in real estate and the stock market. Listener Question My wife and I just purchased our first home (30-yr fixed, low interest rate, strong housing market in suburbs of a major city).  As we start a family, we realize we'll likely need a larger home in 5-8 years.  Should we plan to purchase a second, larger home, while maintaining our current home as a rental property (which I assume requires less risky investments today), OR invest more aggressively today and plan to sell our current home when we upgrade (have only one house, no rental).  Hoping you can provide a framework to help think through potential returns/tradeoffs of each scenario.  For example, how to compare the return on a rental property (appreciation of property value and eventual sale) vs returns if the same money was invested in the market.  Also, imagine there is tradeoffs between liquidity of owning a rental vs investing in market. Our home is worth between $650-700k, interest rate 2.6%.  Unclear what rent we could expect, maybe around $3k/month. Planning Points Discussed Retirement Planning Utilizing Time Efficiently Capital Appreciation Purchasing Power Other issues (IRAs, Inflation, Financial Goals, etc.) Timestamps: 3:07 - Liquidity For a Purchase 6:27 - Multiple Mortgages 9:55 - Tax-Writeoffs 12:05 - Home Prices 16:17 - Comparing Stock Market v. Real Estate 18:22 - Net Worth  21:08 - Desire For Simplicity LET'S CONNECT! James Facebook LinkedIn Website Scott Facebook Twitter Website ENJOY THE SHOW? Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play. Leave us a review on iTunes. Have a money question you want us to answer? Submit one here