The notion of investing varies a lot between generations.

• The older folks prefer Real Estate Investing.
• And the younger ones prefer Stock Market Investing.
  But is one better than the other?
  No, they both serve their own purposes.
• Depends on what stage of investing you are in.
• Do you need cash flows or growth?
• Do you need to be diversified?
  And that’s what we will take a look at today.

1. Returns:

Equity Markets (Nifty as an example) gives around 11-12% CAGR over a 10-20 year period.

Now if you look at Real Estate Markets over a long period it gives relatively lower returns (~3-4%).
Does this make real estate a bad investment?

NO.

• You are not understanding the impact of Black and White Money here.
• The actual return would be much higher, and more importantly, this is just the Appreciation. You are not considering Rental Yield.
• We will discuss more about this later.
• But the point is your returns on Real Estate are not what official data shows us, there is more to the story.

2. There is also a concept of Re-investment risk, which is lesser in Real Estate

• Real Estate lets you stick to your assets, and this becomes specifically easier if you are planning to invest for your kids.
• As long as it brings in good rent, you don’t need to think of selling or reinvesting your property.
• The idea here is that different Asset classes have different purposes.
• Real Estate is more about stability and the Stock Market is about liquidity and growth.

3. All Asset classes go through cycles.

• They go through an up-phase, down-phase, and consolidation phase.
• Real Estate normally has a longer cycle.
• Equity Markets go through a lot of volatility.
  

But what's important here is that if you are diversified, you get to make good decisions at bad times.
A smart investor will understand and explore both asset classes, and maintain a diversified portfolio.

• Some people will make money in both markets,
• And some people will lose money in both markets.

What you need to do is take time out to learn and apply.

• The idea is that during bad times in Equity Markets, you have consistent cashflows.
• And during bad phases of the Real Estate Market, your Equity Portfolio continues to grow.

The biggest issue is the Opaqueness in the Real Estate Market.

Source

• Akshat Shrivastava 30 days Newsletter.