Real Estate vs. Stocks Over Long-Term

Recently, I was asked, "Should we invest in real estate or stocks?"

Today’s Chart of the Day is the long-term total return of the FTSE Nareit All REITs Index compiled by FTSE Russell company.

The chart shows the total return of $100 invested 30 years ago, which shows growth to $1,547 for real estate, brown, and $1,561 in stocks, blue. This is only a $14 difference. This indicates that historically, someone should have been indifferent, except that real estate had a higher volatility during the Great Recession in 2007-2009.

The past is no predictor of the future, but, as with all things, you would imagine as long-term investments theoretically these two investments should track together. When the price of real estate investments are too low, people will sell stocks to buy it, and vice versa, keeping both within a close range of each other.