Real Estate or Stocks: Which is better
Today let’s talk about why I moved money from stocks to my new duplex investment.
Today I’m talking about investing in assets and why I chose to move money I earned from website investing first into a business asset, stocks, and now into a real estate asset, a duplex.
Should I turn this into a real estate investing opportunity blog? haha! Just kidding guys.
Before we start, I wanted to say thank you again to my websites for making this duplex purchase possible.
Are websites, like real estate, assets you can invest in?
Websites are one type of asset I have invested in that you can also invest in. There are many more investable asset types including businesses that you can invest in via stocks, and real estate you can invest in directly or indirectly through REITs or online offerings such as Peerstreet.
An asset is anything that produces value or income each month. Anything that drains your bank account each month, even by one penny, is by definition not an asset.
This means technically a home you live in, even one that is appreciating, is not technically an asset because you pay more each month than you get back from it.
If you’re looking for further asset reading, I love and recommend the book Rich Dad Poor Dad which goes into explaining what an asset vs a liability is in more detail.
What about NFTs? Are these assets?
I had to throw this one in here. Have you guys heard of NFTs AKA non-fungible tokens? A lot of celebrities, including Shawn Mendes are selling digital art of themselves as NFTs..who would buy that? Sorry if you already bought one, I’m sure it’s a great purchase.
Some people are investing in these as though they are appreciable assets, and they may be, but personally I would not invest in a digital Shawn Mendes art token.
Jack Dorsey is selling his first tweet as an NFT, and someone may buy it for $2.5 million. If you know more about NFTs feel free to email me because I don’t know much, but there are many other assets I would invest in before buying an NFT.
NFTs also don’t return monthly income, so they may be more similar to gold and bitcoin than actual assets such as dividend stocks, websites or real estate that can appreciate and return payouts each month.
What do you do with your asset payouts?
Some website owners like to pour all their profits back into their websites, which can speed up their growth as well as have nice tax benefits, however I actually prefer to take my profits elsewhere for diversification purposes and grow my sites with as little expense as possible.
That’s why I invest the majority of my website profits in other things like stocks, annuities, and now real estate.
This is the email that dives into why I moved a large chunk of my savings, earned from website revenue FYI, from stocks into real estate. *Note, this is not monetary advice, none of my emails are, and I’m not a financial advisor, etc. This is simply my experience and thoughts, end disclaimer*
My feelings on stocks, website investing, and why I bought a duplex
how I feel about stocks
Stocks are a way to buy a part of a company you believe in, and you can get payouts in the form of dividends, and reap the benefits as the stocks grow in value.
I’ve had a large chunk of my savings invested in stocks, most of which I invested during the COVID lockdown-induced dip around April of last year. These stocks did very well over the past year, as most stocks did, ironically so, as investors were pouring money into the market while companies were suffering financially in reality.
At the time, I put money in the market because I thought the economy and US businesses would be back to normal or better in 2 or more years. Now, I actually don’t feel that way anymore.
I’m very happy I had money in the market during this time. However, I see the large discrepancy between actual company performance and stock performance now and the past few months.
Companies are still hurting from the excessive government regulations and people are bullishly pouring their savings, their government printed stimulus checks, and their unemployment money into stocks, driving the market up while actual company performance is suffering.
Who knows how much longer the stock market rise can continue? Either way I don’t feel very good about either the short or even long-term future of the stock market, more because I am now uncertain about the future of the US as a pro-business and prosperous country, and US dollar inflation.
how I feel about website investing
Yes, I still think websites are a great asset to have as part of my overall income and investment portfolio.
Obviously I think that, as they are the reason I am able to earn a living on my own, and the reason I was able to purchase a duplex. I love owning and investing in websites and will keep doing so for a long time to come.
My point is that I have always, and will keep always owning other assets as well.
Every asset and investment comes with risks, and websites are not immune to that. Even assets that appear they have no risk, yes, still have risk.
No investment is risk free.
- Stocks can always go down, just paper money.
- Bitcoin can be hacked or stolen. You can lose your Bitcoin password or hard-drive. Or it could just tank in price due to excessive government regulation, or people losing interest and moving on to the next internet fad.
- Real Estate. Here I am, talking about how I just bought a duplex, but real estate prices can fluctuate up and down, property taxes can rise, maintenance costs can arise, natural disasters you’re not insured for can happen, tenants can stop paying rent and the government can forbid you from evicting them (lol it’s funny because it’s true).
- Annuities & “Guaranteed” Investments. Even “guaranteed” things like fixed indexed annuities have risk. In a crazy scenario, yes, there is always the possibility your insurance company or all insurance companies backing your annuity could go out of business.
- Even bonds aren’t risk-free. Bonds are yielding 1.4% right now. Combine that with the current 1.4% US inflation rate and they’re break even after adjusting for inflation. Then add in the potential for higher inflation and even lower interest rates and there is always the possibility for a negative bond yield after inflation adjustments.
Alternatively, the US dollar could also become worthless. Or, it’s very possible inflation could hit a point with inflation where your annuity could be worth less than half or less of its value very quickly before you have a chance to take the money out.
Every single investment in the world has risk, even if people try to tell you otherwise. Life has risk.
Is website investing still a good idea?
I still love investing in and growing the websites I own. They are my main income stream and have been for the past 4 years. I am currently actively working on and growing the sites I already own. I did also purchase a small website of my own this year. I’ve always invested in multiple things at once, as this is basic diversification.
Now you know the first part of my thought process on why I purchased a duplex as opposed to putting all my website profit and savings into more websites.
Benefits of re-investing asset profits to grow the asset?
I know some website investors and owners like to pour 100% of their website’s profit back into their current site or sites, or purchase new websites with the profit.
This has some benefits, such as being classified as a business tax expense write-off, and allowing you to scale your site much more quickly in a hands-off way. I personally usually prefer to simply take most of the profits, and then use those to invest in other assets so I’m able to have some savings in different areas and so all my eggs aren’t in a single basket.
That’s why I recently purchased my duplex, partly to diversify, partly to move money out of the uncertain future of US stocks, and partly to hedge against possible inflation.
The final email in my duplex purchase series, Part 3, will include my thoughts on and some stats on government spending & inflation. Then you’ll know my full thoughts on why I invested my website profits into stocks and now into real estate in the form of an Austin duplex.
Feel free to reply and let me know what types of assets you are investing in right now.
Also, of course my Ad & Affiliate Disclaimers: I often feature products in the form of paid ads which are clearly marked in the email. Also, I often use and recommend affiliate products (only really good ones I actually like and use). If you use any of these products with my link or code, I get a commission, which is something I have to let you know. I’m also letting you know I get compensated for any ads in this email. You can always ask me about specific products or send questions and I read (and currently try to reply to) every one, so always feel free to send your questions.
Financial Disclaimer: *Nothing in this newsletter is financial advice, and I’m not a financial advisor. I simply share my own thoughts and actions about my own choices and thoughts. You may find or talk to your own financial advisor if you are looking for financial advice or direction.*