Real Estate vs. Stocks: Which Investment Is Right for You?

When it comes to building wealth, two of the most common investment options are real estate and stocks. 

Both have created fortunes, both carry risks, and both can play an important role in a well-rounded portfolio. But which one is right for you? The answer depends on your goals, risk tolerance, and timeline. Let’s break it down.

Real estate is often seen as the more tangible option. When you invest in property or real estate–backed notes, you’re putting money into a physical asset that can generate cash flow and long-term appreciation. According to the Federal Reserve, real estate accounts for the largest portion of household wealth in the United States, outpacing other assets like pensions and stocks (Federal Reserve Survey of Consumer Finances, 2023). Real estate offers stability, tax benefits, and the opportunity to generate passive income, but it can require significant upfront capital and ongoing management if you own property directly.

Stocks, on the other hand, represent ownership in a company. They’re more liquid, meaning you can buy and sell quickly, and historically the stock market has averaged returns of about 10% per year over the long term (Morningstar, 2024). However, stocks are subject to volatility. Market downturns, inflation, and global events can cause sharp losses in the short term, which can make them stressful for risk-averse investors.

So which is better? If you’re looking for liquidity and long-term growth, stocks are hard to beat. They allow you to start with small amounts of money and diversify easily across industries and geographies. If you want predictable income and stability, real estate provides a more secure foundation, especially when investments are backed by tangible property. Many seasoned investors actually choose both, using stocks for growth and real estate for income and diversification.

One of the biggest changes in recent years is that real estate investing has become far more accessible. Platforms like Connect Invest allow you to invest in short-term, real estate–backed notes with as little as $500. Instead of waiting years for property values to appreciate, you can earn fixed, predictable returns up to 9% in as little as six months. This makes real estate a strong complement to a traditional stock portfolio.

The bottom line: there’s no one-size-fits-all answer. Stocks offer growth potential and liquidity, while real estate provides stability and income. The smartest strategy for many investors is a combination of both. By diversifying, you can enjoy the best of each world, the growth of stocks and the security of real estate, while protecting yourself from the weaknesses of either.

Want to see how simple real estate investing can be? Open your Connect Invest account today and start earning fixed returns backed by real property.