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Should I Invest in Stocks or Real Estate? (Which one is better?) - YouTube
Channel: Toby Mathis Esq. | Tax & Asset Protection
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- Hey guys, Toby Mathis here.
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And a question we often get is
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should I start with stocks
or real estate or better yet?
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Which one's better?
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And I always just say
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yes.
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Either one's going to be great.
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I'm going to show you the numbers.
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Now I'm a tax attorney by trade.
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And so I tend to focus on numbers
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because I know that stock brokers can lie.
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Real estate agents could lie.
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Numbers don't lie.
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And I like to look at the stats
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from a historical standpoint.
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So if this is percentage of growth
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over here on this category
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and on this line this is time.
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And so this is a long time horizon.
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So let's say 20 years,
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the chart is going to
look as follows for each
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of the categories.
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I'm going to start
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with your real estate
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the traditional real
estate which is your house.
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Everybody always says,
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Oh, but your house is going to grow
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it's your best investment.
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A house statistically is going to grow
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in value about down here like this.
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So this is your home,
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no rent,
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no nothing.
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I'm just living in a house.
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That's about what you're looking at.
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It does not reach something
called compounding
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or exponential growth ever.
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Like the only way you'll ever
make money on a house too,
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is if you sell it.
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And so this is what you can expect
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to steady growth over the years.
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It's about 4% or thereabouts
statistically over time.
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So it's okay.
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What's interesting by the way,
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is that gold is right here along with it.
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Gold
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also,
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whoops,
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gold kind of follows along the same line.
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It doesn't ever reach exponential growth.
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The reason I bring this
up is because stocks
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over time go like this.
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They do have exponential growth
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because they tend to like,
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let's just use rule 72.
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It's this idea that
whatever percentage you make
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you divide that number into 72.
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And that's how many years
it takes for it to double.
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So you're able to start
doubling much faster
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with stocks because they have
a statistical growth rate
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of around 7%.
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Which means your stock
portfolio is doubling.
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Now here's what they don't tell you,
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of that amount about 40%
of it is the dividends
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that are being paid out from the company.
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So big chunk of its growth
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in the stock market is paying out profits.
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So if you're investing in
stocks that don't pay dividends
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you're leaving close
to half of the benefit
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on the wayside.
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And you're going to be down here.
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You're not going to do as well.
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So you have to invest
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in dividend producing companies
to see the true growth
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in the great return.
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Now, if you're any questions
on that by all means,
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click on the link that
I'm going to put up here
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and you can learn more about these things.
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So you can make intelligent decisions.
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But just know that we want something else
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besides the growth of the company.
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If you're just looking at growth,
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that's what you see down there.
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If you're just talking
about the value went up,
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I bought something at X.
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I bought it at $10 and now it's worth 15.
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That's what our growth looks like.
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when it goes up to 15 plus it's paying you
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a dividend every year or in real estate.
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Plus it's paying you rent every year.
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You get to come up here and by the way,
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the real estate goes back
and forth kind of like this.
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I think it's a little bit above
our stock friends right now.
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But they jockey for number one
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and it's sitting up here and
this is exponential growth.
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It starts to curve up over time
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because you have a compounder in there,
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which is the rents in the real estate,
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in the dividend,
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in the stocks.
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Now, if I'm being completely
transparent with you,
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I'm going to say,
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start with the stocks.
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Even though they're fairly
equal in the reason is this
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stocks are more liquid.
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I can buy a share of T and T
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today,
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I could sell it tomorrow
and I could get access
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to that cash Within two days.
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If I buy real estate,
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I could buy it today.
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I'm probably not going
to be able to close.
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Even if I was doing cash,
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it's still going to be a week or two.
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And usually your closing is
going to be 30 days to 60 days.
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And then if I sell it,
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I'm going to be looking at the same.
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I'm much more delayed and slower,
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in real estate than I am
when I'm doing stocks.
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And so I'm always going
to direct people when
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they're starting off,
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stocks are more liquid.
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Which means if you have
an unexpected life event,
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you know something happens.
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Car breaks down,
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lose a jobs,
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medical emergency
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you name it
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or great investment opportunity.
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Your stocks are much more liquid.
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You could turn it into cash much easier.
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And then people say,
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well, what if the market crashes
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and all this.
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If you're buying good dividend stocks
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they do not fluctuate like
the rest of the market.
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They tend to be pretty steady.
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Real estate.
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Again, fantastic investment.
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We want them both
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but I would go stocks first real estate,
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simply because real estate tends to be
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a little bit less liquid.
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It's illiquid.
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It's a little tougher
to get back your money.
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And then if you've ever
bought or sold a property
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you know, that there's
agents involved typically.
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And it's a lot more costly.
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I could sell my shares in a company.
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And right now there's zero
commissions in most platforms
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Charles Schwab,
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TD Ameritrade,
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Robin Hood.
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None of those charge you anything.
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If I sell real estate,
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I'm probably paying.
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And I'm just going to give you the
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the typical is about 6%
to an agent that list it
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and the agent that buys it,
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they want a percentage of it.
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So you're looking at closing plus,
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the plus the taxes and the closing costs
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is usually around 8%.
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So that could be a little more pricey.
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And then all of a sudden you're like,
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Oh.
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So real estate is great long haul,
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a little bit less liquid.
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So I'm always going to start with stocks.
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But if somebody asks me,
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which is better stocks or real estate?
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I'm just going to say,
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yeah.
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(upbeat music)
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