Invest in Real Estate or the Stock Market?
Real Estate is a good asset class no question about that. It has given a good return and will probably continue to do so in the future also, even if some markets are in a bit of a slump right now.

The Real Estate People look down on the Stock Investors
Generally I think the real estate investor thinks of himself as riding the whiter horse. And if you are a serious money person you should first and foremost get into the real estate market. Renting is the biggest money sin and it is a waste of money. So “they” say at least.

Renting and investing in stocks:
When you are young and starting out, most people are not strapped money wise. So that first real estate, your appartment, may be a steep investment. You may afford it, but it will take a big cut of the cash flow from your job.

A different approach could be to rent, and save as much of the pay check as possible. The savings could be invested regularly into the stock market.

This has a number of benefits:

  1. You can diversify your stocks or buy an index fund. With real estate you will be fully loaded on that one appartment.
  2. You may have to settle for an appartment in an area that is not optimal, or not in the best condition since you may have little capital to bank roll. Buying a less quality appartment may be a bad trade off and not give the best return. With stocks you can be totally selective and only buy what you think are the best stocks.
  3. With stocks you can scale the investing to your paycheck. You can buy for the amount you are comfortable with. With real estate you will have to settle for whatever mortgage load you are able to bear and what the market is demanding for that particular appartment.
  4. You can feel good by renting since you will still be invested and get a capital gain from your stocks, while you are able to perhaps live better since you can pay for other things you like when the mortgage does not take all of the paycheck.
  5. If you have a steady job your stock broker will give you access to margin. This makes the stock market competitive to real estate since a big reason for why real estate is lucrative is because of the high leverage. But generally good stocks outperform real estate on an unleveraged basis.

So I am not so sure loading up on one real estate is better than renting an appartment and having the rest of the money in the stock market.