The stock market has never been bigger, from a hype standpoint. We constantly hear stories of people making millions trading stocks. When we turn on the news, there’s a little stock ticker at the bottom of the screen giving us real-time updates, like sports scores. Many people, while working in an office all day, keep a tab open to watch what is happening in the stock market in real time. Our society is obsessed with the stock market.
Which is why I’m not so into it. Well, it’s one reason. I think about it this way – with the accessibility of information and the ease of trading stocks these days, what are the odds that I’m going to outwit most of the people out there with my cunning in stock trading? Not real good. And even if I am successful, nothing I can do can revert a sudden economic disruption that either greatly devalues my shares or perhaps even causes the company I’ve invested in to fold entirely.
- What if, in the event that your stocks greatly depreciated in value and you couldn’t sell them when you hoped, you could suddenly (and easily) let another person temporarily have them for a monthly fee, so the stock is still able to generate money, despite being depreciated?
- What if this fee that you’re getting paid is so generous that in less than 10 years (and perhaps as few as five years) the original stock purchase will have been completely paid off, and you can sell it for whatever you want, netting the full sale price?
- Better yet, what if you could use someone else’s money to buy the stocks and then temporarily let another person have them for a fee? So you’ve forked out no money or very little money, and yet, with the payment you are receiving, you can pay off the debt you owe on the stocks plus some and own the stocks outright in 15 years or less?
- And to top it all off, what if there was a reasonably priced insurance policy that you could purchase for your stocks that ensured that if they ever lost 100% of their value, you would be reimbursed?
The above scenario may sound like a dream in the world of stocks, but it’s a reality in the world of real estate. Or, if you’re willing to indulge me, it’s a reality in the world of realty. See what I did there?
I like to think about it this way. Stocks, when you boil it all down, are a piece of paper. (Nowadays, they are more like an email, but I digress.) Yes, they signal your ownership in something much larger, like a corporation, but if that corporation is suddenly no longer needed (Hello, Circuit City!) your stock is essentially worth the paper it’s printed on. That’s pretty terrifying.
Now real estate is also prone to the ups and downs of the market. But there’s a big difference – a house is always going to be worth something, even in a recession and even when contractors go crazy and build more houses in the area than are needed. It may not be worth what you originally planned on, but if you find yourself stuck and unable to sell when you hoped to, you can rent it out. And even if the house burns to the ground, there are very reasonable insurance policies to make sure that you’re protected – policies you could never buy for the stock market.
And you can buy real estate with borrowed money. Lots of it. More than you probably need. Because homeownership is the American Dream, right? Well, at least that’s what the banks believe, and more power to them!