For most their biggest investment is their own home. They eventually pay off the mortgage, the house has appreciated in value, and now they have an asset. I tend to see most blue collar individuals gain wealth through RE, where as white collar seem to be more stock related. Either way if you want to be wealthy one day you need to increase your income so you're saving a substantial amount of money every year - if you can bank say 80k or more over your expenses and invest it, that will turn you into a multi millionaire over a 10-15 year period. This is the biggest struggle - most are barely able to pay their bills or have say 10-20k left over at the end of the year and that won't get you far.

Theft

A classic.

So you think holding cash is a good move? What if a crash does not happen for 10 years and the crash then leaves the market higher than current levels?

You are trying to time the market, quickest way to go broke!

Buy something that's worth 2 million for 1 million. Sell it for 2 million.

If you are paying rent you gotta get a house first. This will save you more money over 30 years than anything else.

Rich people don't like competition, so the buy/bribe officials and regulators for favorable laws and/or selective enforcement.

Two decades into the increasingly corrupt 21st century, it may very well be easier to accumulate wealth by going into politics than by going into business.

To get rich:

Be very good at something. So good, that people will pay good money for your services.
Be very knowledgeable about the market for a specific product. Buy cheap, sell for profit

I partly agree.

If you keep trying to time the stock market every single day will you will keep racking up fees and you will get a very poor result investing.

But, everybody times the market to some extent. For example, if you want to buy a house in your neighborhood and it's absolutely beautiful, it's still not worth an infinite price. If you were thinking rationally you would look at the amount of rent you could get out of the property over a 40 year period and compare it to how much the property is selling for and then you would decide whether it's an attractive investment or not. Saying well I better buy now because what about if the price doubles isn't thinking rationally. That's chasing a bubble which eventually pops.

Over the last decade interest rates were zero and it pushed stock prices, housing prices, bitcoin etc to very high levels as people chased yield. My opinion is that inflation is going to be a much bigger problem than people realise over the next decade and that will cause asset prices to fall as the Fed hikes rates.

In the 1970s the last time there was terrible inflation the stock market went down 38 percent in 1971, 50 percent in 1974 and 35 percent in 1982. There were massive falls and massive rallies but holders got killed in real terms as they were stuck in a range and inflation eviscerated the value of their savings.

That's the kind of environment I think we are going to be in. I could be wrong. Nothing is a guarantee. But that's what I am betting on. People will be amazed at how cheap stock prices get. And if I'm wrong and you hold cash in a money market fund you are still getting a 5 percent yield. It's not the end of the world.

This is incorrect. Whether to buy or rent is a math problem (if you are looking at it purely from a wealth standpoint). Sometimes buying comes out on top, sometimes renting does.

Owning real estate ties you to a particular geographical area making it harder to move in pursuit of opportunity. Unless you are running a real estate investment business (which probably doesn't make sense unless you have some specialist skills or knowledge that you can leverage to add value), or you've made a firm decision to put roots down somewhere, it is usually smarter to rent.

The way you build wealth is investing in yourself, developing skills, knowledge, and a social network, and then being smart with the money that you earn, building up savings while earning a moderate low-risk return, and maybe taking some high-risk high-reward shots when you can afford to do so.

100% agree. Renters have no idea how much money they light on fire every year.

Regarding renting versus owning, there are obviously pros and cons for both, but there are legitimate reasons that owning > renting in the long run.

I was a renter for about twelve years before buying my current house. Every year, there was this poker game with the landlord where he would want to raise my rent, and it was up to me to either accept or refuse, which typically means moving out. Every time you move out, you have to spend literal days of your life looking for a new place to live, packing up, hiring movers, etc. It is a hassle and time better spent doing other things.

But the real reason that owning beats renting is simple. When you purchase a residence at a certain price, the monthly payment you make is set. When you rent, the price will continue to rise to a point that it will surpass the cost of buying.

To give an easy example with my own circumstances: I bought in 2019 for around $275K. If I attempted to buy this house now, the price would be approaching $450K. My current payment is (more or less) fixed at approximately $1700. I say approximately, as rising taxes and insurance do raise the monthly payment every year, but it is not a massive number. Compare this to if I attempted to rent my house: a similar home in my neighborhood is rented out for $2700 a month. In 2019, when I bought my house, that house was rented out for $2,000. If current trends hold, five years from now that house will be renting for over $3,000. Five years from now, even with my increasing taxes and insurance, i will still be paying less than $2,000 a year. That's at least $12K a year that is not just disappearing into thin air. It adds up.

That is not even taking into consideration that I can sell this house right now and make a profit of at least $150K.

Buying a house when I did was easily the best and luckiest decision I have made. If I waited a year, I would have been completely screwed.

Buying can be very, very good for your financial well being (it has been for me, very), but it's simplistic to think that it is always, or even mostly, the right choice. For one example, if you are in a situation where for your chosen career you need to relocate every 2-3 years, buying would be a bad choice.

Many don't consider that quality of life difference due to frequent moving. As a renter you also tend to buy cheap furniture that falls apart every few years, especially when it is moved. Then there is the forced saving and investment of owning. A lot of the math I see showing renting being financially superior to owning relies on investing and getting a good return on what would have been a down payment. Not everyone has that much discipline and would likely spend it instead.

No other investment I can think of is driven as much by interest rates as real estate is and rates have been artificially brought down over the last 40 years. We have yet to see the long term effects of an increase in interest rates on real estate, but we likely will soon.

I agree the illiquidity of a house has prevented some people from making a dumb decision, but let’s not pretend illiquidity is a positive thing for an investment.

Of course the math that shows renting is sometimes better than owning includes a return on the money not put down for a down payment - it would be silly to assume the person wouldn’t get a stock market like return from the money saved early on from renting via buying.

In saying all this, the answer to the question in the title is real estate and it isn’t close. However, that doesn’t mean it is the best way.

Of course it is not always the best move, but on average, I think it is.

Right this moment, interest rates are high and, at least where I live, housing prices are still rising. It probably doesn't make sense to purchase in my area right now. Still, rents in my area are also rapidly increasing. I am glad I am not in the position that I would have to decide between renting and buying right now, but even in this environment, it is a close call.

Regarding the choice between investing your down payment or using it to buy a home: I put down a measly 5% to buy my house. I sure am glad I didn't put that $13K or so into the stock market instead of buying a house with it!

This is true. The main advantage to buying is that it enforces financial discipline since it's psychologically easier to build up equity by making your mortgage payments rather than by putting money aside into a savings account that you'll be tempted to dip into (technically you can dip into the equity in your house by borrowing against it, but that takes a bit more effort).

As far as quality of life, there are pros and cons to both. Some people prefer being able to call the landlord whenever something breaks, for example, instead of having to deal with building contractors.

You can cherry pick a timeframe or give us anecdotal evidence about your timing, but looking at a long-term chart shows which has performed better throughout history.

https://www.longtermtrends.net/stock...-estate-ratio/

Home ownership as a means of getting rich is a myth sold to you by a realtor.

When people look at the appreciation of real estate over time they forget that it's new houses that sell for the big money.

If you want to buy a house nobody wants to buy one that's 80 years old. They are worn, they are not modern by today's standards and they end up getting torn down.

It's just like nobody want's to buy a 6 year old Iphone or a 20 year old car.

Stocks which are pieces of businesses or opening and running a business yourself in it's entirety is how people get rich.

Whether you buy a home or rent one it will always be your biggest monthly expense.

Living in your brothers basement is way cheaper than renting or buying

When it comes to the renting vs. buying debate it always depends on the situation of course, but I'm going to have to agree in large part with DonkJr.

Most of the people I know that are lower class are renting. Most of the people I know that are middle/upper class own. Every situation is unique of course, but from my anecdotal experience this is what I see.

People will laugh at you but if you save 10k a year on rent and put it into stocks you will have the final laugh.

I really hope your analysis is not just "SPY outperformed real estate, so it is better to rent than own", as that would be ridiculous for many reasons.

Are you sure that's not the result instead of the cause?