In this episode, I dive into the debate: stocks versus real estate. Both have their advantages, but which one truly delivers the best long-term returns and cash flow? I break down a video analysis comparing stock market performance to real estate returns and share my expert insights, personal experiences, and examples from my clients.
From tax benefits to market risks, income potential, and the challenges of each, I’ll explain why I believe real estate often comes out on top—not just for returns but for reliable, predictable cash flow. I also share real-life examples of properties that outperformed the stock market while delivering passive income for me and my clients.
If you’ve ever wondered how to make your investments work smarter, this episode will challenge your perspective and help you make informed decisions.
TRANSCRIPTS
Speaker 1 (00:00):
Stocks versus real estate, which one’s going to win the battle? That’s what we’re going to talk about today. Hello, my fellow Ripples. This is Chris Miles, your cashflow expert and anti financianal advisor. This show is for you, those that work so hard for your money and you’re now ready for your money to start working harder for you today. You want that freedom and cashflow right now, not just 30 or 40 years from now, but you want it today so you can live that life that you love with those that you love. But most importantly, guys, it’s not just about getting rich, it’s about living a rich life because as you’re blessed financially, you now have a greater capacity, the blessed the lives of all those around you. That is the ripple effect I’m here to create for you today. Thank you for tuning in, binging and sharing and giving me purpose so that this show, seriously, not only is it just great for me to be able to teach you, but man, you guys have pushed this show into the top podcast in the world, especially when we talk about money and real estate investing and all that kind of stuff.
(01:08)
That’s all because of you guys. So thank you so much for sharing that. And please, if you haven’t done so recently, leave us a review. If you love this show, leave us a review, whether it be just liking and subscribing on this show or liking the video, or even if it’s going to Apple Podcasts and put us a review, I would love to have you guys leave us a review for that. Okay, so the debate is here, stocks versus real estate. This is the debate that’s happened so many times, and I’m going to tell you that I’m sure you’re going to say, well, I know what you’re going to say, Chris. Well, maybe, maybe not. You may not know what I have to say here necessarily, but this is a strong, strong debate that’s gone back and forth. There’s definitely a slant. There’s definitely a bias for many people out there, but I found one video in particular that one of our team members actually sent to me, and this woman’s got a great following young woman.
(01:57)
I’ll tell you just to kind of give you some preface on this. This woman was doing her homework. She was doing as good of a job as I think she could do with her experience. Now, I’d say from her experience, she wasn’t even that good of an investor, but especially on the real estate side. But still, it was some really good interesting points that she made that I really do appreciate that she spent this time going into and made it very simple for everybody else. So I’m going to share her video, but I’m also going to share my experience as well as our other clients’ experiences too, to show the difference, right? Because this is a highly debated topic and depending on how you look at this, you can argue either direction about which is better stocks or real estate. So let’s just kind of go into her video right now.
Speaker 2 (02:40):
Is everyone so obsessed with real estate because the returns over 30 years are good. Walk around any neighborhood and look at houses for sale, and you’ll notice that the prices they were 30 years ago is shockingly low. This house behind me was purchased for $300,000 in 1988. It is now for sale again for 1.75 million in 2024. So it’s pretty crazy that that home has appreciated over 400%. But what’s even crazier is how much that same amount of money would’ve made in the stock market. That same amount in an index fund tracking the overall market would now be $14 million.
Speaker 1 (03:17):
So right there, I said, I got to question this. Is that really what it did? I paused this here even on my own video. Say, well, was it really 14 million? It is showing that it was about, she’s about to say it’s over 11% or yeah, right there it says 11.3%, 11.13% per year. I thought, well, that’s interesting because they talk about reinvesting all dividends too. So I go with the actual stock market, I want to see what it actually is. The truth is that even if you reinvest dividends, still the people that I see that invest in the markets don’t get those kind of returns. Even the s and p and the s and p is always changing. It’s always adapting based on what’s there. I thought, what’s the market actually done? So I went back and you can do the same thing yourself. Now, it doesn’t show dividends reinvested.
(04:03)
This is just the s and p 500 index price so that the index reinvested actually does have roughly about a percent and a half extra return if you’re actually in it long-term and you’re getting that kind of thing, it’s very possible. Now, if we go back where she said it was April, 1988, that’s 2 61 36, well, what if I put that right in here and actually I had 2 57, so even this is actually going to be less 2 61 0.36. I didn’t see it was April before. If I do that for three, six years, even at now, if I put it at that 11.13, it’s going to be much higher in the market. It’s going to show like 11,672. Obviously, it’s not going to be that much. If I put this, let’s see, what was this one? 9.1? I think it was right around there. Yeah, just under that.
(04:53)
So we’ll even say 9.1. That’s a little bit higher than the market. So really the market’s done about 9%. If you want to try to add in the dividends, you’d probably look em closer to 10.5%. So let’s put that invo. I mean now you’re 2 61 bucks would be nine 12, but it will not be even at this 9.1 that’s still a little bit higher. It’s almost nine flat. Here’s the thing, guys, that when you see this video and they’re showing you these numbers, it’s like, wow, 14 million. Well, 305,000, if I put that number here, went to this one now, three 5,000, oops, make sure it’s a thousand. Let’s say we put it at the 10.5%. Look at this, 11.1, okay, maybe that’s cool, could do that. It’s possible, but would it really? And also we’re refactoring taxes and everything else. What do you actually keep?
(05:49)
And she does address that in this video too. You end up not making that much, especially if I put in a tax rate. Say if I put in a tax rate of 24% and now you’re down to 4.6 million, but that’s not the point of this video here. The point is, of course, is how’s it compare to real estate? Put these numbers back. Okay, now let’s continue on, which is what she’s saying. If you’ve been following this podcast, you’re probably looking for great ways to create passive income right now. Well, we got you covered here with central lending. Central lending specialized in alternative investments that actually are designed to create steady returns and long-term financial security for you and your family. Now, they prioritize transparency. They love building those strong relationships, giving you that confident peace of mind, knowing that you have your money working harder for you so you don’t have to work so hard for that money. You want to learn more how to do that. Go to central lending.com and check out what they’ve got today to create your passive income and wealth creation right now.
Speaker 2 (06:41):
So that’s a 4000% return. This is the thing that we often forget in the conversation of is real estate worth buying is actually comparing it to what you would get in the stock market. But obviously a lot of people wouldn’t be buying in cash. You would likely just do a 20% down payment. So let’s say $60,000, even just that $60,000, no additional amount added with the same return would be about,
Speaker 1 (07:06):
Okay, so let’s go about this. Remember, this property went to 1.75 million. Well, what does that actually look like as a rate of return for 60,000? Well watch this
Speaker 2 (07:14):
Market portfolio would not charge you also closing costs when they bought and sold the home. There’s generally a lot more fees when it comes to investing in real estate that we have.
Speaker 1 (07:24):
All right, so you look at this here, look, 9.82% in the real estate market. If you’re factoring that 20% down payment, that $60,000 she was talking about, that’s pretty comparable to the stock market, isn’t it? And remember, we’re not even factoring in income. This is just based on appreciation, which I tell people not to bank on. The income is the real power when you have real estate, when you have these kind of investments, it’s the income that’s coming from these that really matter. But notice even from a growth perspective, that’s pretty good. And remember, this is also looking at properties on the West coast. You’ll see that everything here is slanted towards California, not a good measure for the entire country as a market. She even mentioned Seattle property, which show here in just a second here. I find that fascinating. I went to do the same numbers. It wasn’t exactly double. It’s almost overly simplified. It almost seems too perfect that it was exactly double In this case, it was pretty close though. It was 96% return in that period of time in the s and p 500, but let’s just say it’s because of dividends reinvested. We’ll give her the benefit of the doubt, a hundred percent return, great, it sounds awesome,
Speaker 2 (08:27):
Which is actually a 100% increase. So I doubled my money on that in five years. Typically it takes 10 years in the stock market.
Speaker 1 (08:35):
Notice little disclaimer she just had there. She’s like, I’m not showing my actual account values. I’m just showing you what the index did. Okay, that’s fine, but just understand that. I also like to see what reality is too
Speaker 2 (08:47):
Tough for real estate to beat because those are unusually high returns. Not to spoil anything. Real estate also did quite well. So let’s look at the first property, which is the townhouse my sister and I own in Seattle. We bought it for $770,000 in 2019, and now it’s valued around 915,000. So it’s appreciated $143,000 for this house. We only put 10% down, so $70,000, my half of that being $35,000, we had 5,000 in closing costs making my initial investment $40,000. Then in those last five years, we’ve paid down $56,000 of equity. Some of that was from when my sister lived there and had roommates, and then in the last two years, we’ve actually had a tenant living there. The amount left on the loan is 644,000, and remember, it’s now estimated to be worth 915,000 if we sold today, making it so that if we sold today, we would have $271,000 before any fees. Of course, you do have to pay the real estate agent fees. It’s usually about 5% of the sale price total. Monica is a real estate agent up there in Seattle. So that would save us on,
Speaker 1 (09:54):
Okay, so that’s good. And also you don’t have to live in the property. You can pass on that equity tax free by doing a 10 31 exchange. So there are different ways to do that. Now let’s talk. I’m going to skip a little bit ahead to kind of her final thoughts because she compares this back and forth between the stock market. She even compared to the Palm Springs house, which didn’t cashflow as well, it actually came out worse than the stock market. So the stock market came out better. They didn’t make that much profit on the house. They didn’t appreciate as much Palm Springs or anything in California I would never use, well, one, I personally wouldn’t invest in properties in Seattle nor would invest in California because the cashflow is horrible on the west coast. Oregon’s included in this, you know, are Oregonians. I’m from there.
(10:37)
I wouldn’t want to buy real estate in these places because there are a lot of expenses. Property taxes are horrible, even in Oregon, they’re horrible in California especially. So you get these pretty bad property taxes and other factors that really just eat your cash. Washington is a little bit better, but just not great. It’s just not a good place. There are so much better things. You can go out more the Midwest, even the central states, even going out southeast. So much better cash while out in those places. So I appreciate what she’s doing, but she’s taking this tiny little subsection of a market that looks a little bit different. Now, let me go to her final thoughts here. Now she’s going to have her own commentary. She totally agrees, and she’s like, everything goes to it. Now, Ryan Pineda, I actually was just on his show.
(11:18)
I just recorded a podcast. So by time when you watched this, this isn’t going to be before even our podcast releases, and here’s the thing. He’s correct in so many ways for a lot of properties. Now, I was being diplomatic when I was sitting with him because obviously he’s the host. I’m not going to try to argue with him on that show, but I’ll tell you when he was saying, yeah, you don’t really make any money, all goes to maintenance. That’s his experience. He lives in Vegas for one. Secondly, he hasn’t been in real estate that long. I remember in 2019 first meeting him, he was in a mastermind group with me, him and his sister, and I was like, wow, these are just kids. These are just young kids. It’s getting started right now. His business is wholesaling real estate. He is all about wholesaling.
(12:00)
He teaches people about it. Just like I teach people about how to make money passively in real estate. He’s teaches people how to make money doing wholesale investing. Great, awesome. But his slant is going to be, of course, don’t do rentals and especially if you don’t really do a good job with rentals anyways, don’t really do the rentals. And yes, there is more hassle if you’re doing rentals. By the way, did you know you could do more than renting and real estate more than that a little bit later. But again, when you come back to rentals, I agree with them, yeah, there can be hassle, there can be complaints, there can be issues overall not that bad. So just remember he’s coming from a wholesaler business owner perspective that obviously going in the rental game is not what he likes to do. Also her, she’s agreeing with him because she’s buying properties.
(12:43)
Again, the western half of the United States, again, where I live, I wouldn’t buy properties here either. Why are you guys buying properties here is because all, I just don’t agree with that. So overall, her opinion is this. She’s like, listen, I think we should do both. She’s like, if I were just looking at the numbers, maybe selling my real estate would be better. Just put it in the stock market. It’s way easier. You don’t have to think about it. And it’s true, the stock market is set and forget it. But also remember too is that the stock market can go down and it will go down. It’ll go up, it’ll go down. Generally over time it goes up. Of course, it usually goes up as inflation goes up. So as we’re seeing bubbles happening in the market, which is way overbought right now, did you know that there already predicting the s and p will only average about 3% a year for the next 10 years.
(13:28)
Here’s the problem, when you get some people that are younger, right? And this is not trash on younger people. Again, I loved her video. I thought it was one of the most fair assessments she could do, and even she tried to acknowledge the limitations and I have to acknowledge limitations to even in my own perspective, because there are different markets, there are different circumstances, changes, different time periods. So we got to be fair and honest. The numbers and how we’re doing assessment, the real question is over what time period. I mean even the stock market, yeah, it looks great for the last 15 years, but if you haven’t been investing the stock market for at least 20, 25 or 30 years, you really have no concept of what the stock market really can really do. So let’s talk about one of my properties. 2018 is when I bought it, it was doing pretty well since then.
(14:14)
I put a $32,000 down payment with closing costs. So 32,000 out of pocket, that same 32,000 for 2018 until now, I’d made about 120% return in the market if I was in the s and p just like she is, right? So that means my 32,000 would be worth about $70,000 in the market. However, because the property I bought with 32,000 down payment bought it for about 134,000, it has appreciated now about 220,000 as a result. Guys, also cashflow the entire time too. And yes, there’s been a few costs here and there, but very minimal in relation to that, even with property management fees. See, they were managing their property. I’m farming that out. I’m still paying for property manager to do it for me so I can be more hands off. And as a result, guys, in total that 32,000 has now generated and created 165,000 of total returns between appreciation paying down the mortgage for me because the renters paid down the mortgage, not me.
(15:09)
And also the cash flows come from that property. And this is not all guys. I mean, that’s a loan by itself pretty amazing. Even if you factor in since 2020, I got another property, same thing. I mean it’s produced about, it’s well over a hundred percent rate of return even though the stock market’s done about 80% rate of return in the last four years. And so as a result, guys, this is all good, but the income is what really matters. It’s the income, the cashflow. The problem is with people, even with this woman here, even with Ryan Pineda and people that often are buying these cruddy markets and behind these crappy, crappy markets, and then yeah, they can’t even cashflow or barely cashflow, which is why we’ve had so many clients say, listen, let’s go ahead and sell this property, sell it off and put it somewhere else where you’re actually going to cashflow, have some real income come from this thing, and that’s just if you do properties right?
(16:01)
So hands down, what I’ve seen in reality over time is that real estate’s done great even the last five years. She talked about the last five years. We actually, I had two people, two different clients. One of them had a quarter million in the market that’s probably worth maybe a half million today. This other client had a quarter million in the market, and I’ve already mentioned this in a recent podcast that I did, but I’m going to bring up again, but that quarter million now is generated to the point where it’s created a 660,000 of equity in his properties that he bought with that quarter million. On top of that, he’s now cash flowing 3,500 a month. It’s the income guys. That’s what really matters. The problem is this, is that when she’s saying, well, hey, you’ll have X amount of dollars and then you kick off 10% a year, you live on that.
(16:45)
No, you don’t live on that because the markets don’t go at a straight line at 10%. They go up and down and all around. So as a result, that’s why you have the 3% rule or 2% if you’re younger, to not pull out that much more money. So income wise, it’s not enough, regardless of taxes and everything else. The truth is there’s not much tax benefits with stocks anyways. Real estate, I can write off certain things, I can become a real estate professional. I can do all kinds of stuff that way, but that’s the difference is that I can generate the income. See where someone having a market, yeah, they got half a million dollars in the market, cool. Even if they try to pull off income, they’re living on 15,000 a year, but my other client’s living on 40,000 a year with tax advantages, big, big difference.
(17:30)
So that’s my point. I say, what’s better stocks or real estate? I think still even with rental properties, real estate can still be better in the long haul, short term, it may not be better, the market might be better in the short term, but there’s other strategies you can do too. So instead of just buying rentals, what else can I do? I could lend my money out right now, lenders in the last few years have been winning, lending my money out for 10, 11, 12 or percent or more. That generates income and gives me a good consistent return. Is it possible the stock market could do better? Yes, but here’s the thing, do you know when the market’s going to go down? I don’t. And by the way, I’m a trader. I’ve been a trader of stocks and options. I’ve trained 200 people how to trade stocks and options, and even I can’t fully predict when the exact timing is.
(18:15)
All I know is the market is way overvalued and that it would be a bad time to try to gamble at it. Yeah, I can make some quick dollars if it’s short-term trading, but I know some of you, and I even have a client right now that was telling one of our coaches saying, well, I still don’t see why I would just not put my money in the market. It’s easier. I still make 10, 12% returns. Do you make 10, 12% returns? Are you sure about that? Are you positive because you’re gambling your life way? And there’s been too many people thought that same thing, just like my dad, just like many other people, and we’re wrong, you will inevitably become wrong once the market turns. If it’s only going to average say three, maybe 4% next 10 years, would you want to put your money there?
(18:55)
What if you knew you could make double digit returns? Potentially. Again, there’s always risk. You can always lose money. Heck, you can lose money in the market. You can lose money in real estate. This is why it’s so important. You surround yourself with good quality people, have the right connections, the right relationships, and the right investment opportunities that you’re going into to ensure that you get the best odds of success. Doesn’t mean it’s a hundred percent, but you can get lower risk doing it the right way, diversifying the right places, and get great returns. That’s the thing, guys, once I saw that, even though I could put my money in the market anytime, I could throw in mutual fund money all the time, and just so you know, I don’t care if I’m doing real estate or mutual funds or stock market, whatever, it doesn’t matter.
(19:35)
I just care the fact that it makes me more money for me. I don’t care about, I mean, if I knew I could make more money in stock market, guess what this podcast would be talking about the stock market. I would be telling you that because the truth is I can tell you to do anything you want because I don’t really profit from that. Heck, I can profit just as much from telling you to buy stocks as I would from telling you to buy real estate. No difference. For me, the difference though is what allows me to sleep at night letting you know what gives you the best chance of success. What’s important to me, again, I’m not giving investment recommendations, right? I’m not doing that. I don’t even know your situation. We’re just talking here. You know me better than I know you probably.
(20:15)
But I will tell you that if I were, well, I’m already doing it wherever I’m putting my money, I put my money in real estate in different types of real estate, so I diversify. So I’m not in the same kind and no, I’m not buying a ton of rental properties. But I’ll tell you, even my bad rental properties, I’ve had three years still made a 40% return, 40% in three years off of a bad situation. Was it more headache than if I was just in the stock market? Yes, but the returns would’ve been very similar. That was my bad investment in something that has more certainty. It holds value better, which is real estate and can have better tax advantages. Yes, that’s why I choose real estate, and most importantly, it creates income. That’s why we have so many people converting away from stocks and mutual funds to real estate, something that’s tangible, real and provides real income.
(21:07)
Now, if you’re just looking at overall returns, this is why I don’t buy a house outright in cash. Yeah, you buy a house outright in cash, you might make 4% a year, but again, it comes down to the income. What’s the cashflow, the income that you get off of it? And that is the one thing that in my interview with Ryan Pineda, we came to agree on every time was it’s about the cashflow, the income that is the true measure of what is actually working versus those things that are just hypothetical and might work. You can make so much more money in real estate that you can in the stock market. You have questions about that. You can always reach out to us@moneyripples.com to ask for more clarification. But guys, I just challenge you that do what you feel is right. Do what you want to do.
(21:51)
I’ll just tell you over the years, over and over, I’ve seen so many people pick stocks and regret it much more than I’ve seen people pick real estate and regret it. Stocks have often been regretted real estate. People have been grateful. You can do it better. It just requires you to do it the right way versus just doing it blindly out of Palm Springs or Seattle or Vegas. So I just challenge you guys, it’s up to you to decide how you want your life to live. If we can ever support you in any way, let us know. Make it a wonderful prosperous week.