The verdict is in: Stocks beat real estate as an investment

Fewer Canadians are in the stock market, even though that’s the best place to generate big returns

This week Statistics Canada released a study showing Canadians are a whole lot wealthier than they were seven years ago. The gains in net worth were overwhelmingly due to soaring house prices, which have risen faster than our ability to pile on debt (though we’re sure trying).

But buried in the data is a breakdown of household assets into categories like bank deposits, mutual funds, stocks and bonds. And they show that while the value of peoples’ homes have soared, their investment portfolios have risen faster. (Returns reflect the change in the median value for family units holding those assets.)

Returns-on-stocks-vs-RE1-660x305

Of course, next to real estate, stocks and mutual funds make up a tiny portion of peoples’ assets.

Stocks-vs-RE-values

In fact, StatsCan’s data show that between 1999 and 2012, the percentage of Canadian families holdings mutual funds and stocks has been dropping. The share of families investing in mutual funds fell from 14 per cent to 11. 6 per cent, while those owning stocks dropped from 9.9 per cent to 8.5 per cent. As I wrote recently, stats from the mutual fund industry suggest Canadians have largely sat out the incredible bull market that’s occurred since 2009, only buying in recently at elevated prices.

Net-sales-of-mutual-funds1-660x310Net-sales-of-mutual-funds1-660x310

What’s that you say? A house is different than a stock and shouldn’t be treated like an investment? You’re right, but try telling that to the 49 per cent of Canadians who plan to sell their home to pay for their retirement.

This latest batch of figures confirm something that’s been known for a long time, which your average real estate agent is loath to admit—over the long term, the best bet for wealth creation is the stock market.




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The verdict is in: Stocks beat real estate as an investment

  1. This study appears to ignore the effect of leverage that can be used with the purchase of real estate that can’t be used with stock. You need to dig a little deeper. Go to http://www.empm.ca to read an article on rising farmland prices and leverage.

    • I can’t use leverage for the purchase of stock? Really? You sir (or madam) do not know what you are writing/talking about.

    • On what planet can I not leverage the price of a stock?

  2. It is meaningless to talk about “Canada” as a single entity when it comes to real estate. There are two Canadas. A lot of Canadians live in houses that are worth less than $100 000. Those have not climbed much in value. And a lot of other Canadians — they live in Vancouver and Toronto — will never be able to buy a house, because houses there have risen astronomically in value.

    • 80% of Canadians are urban these days…..and I haven’t seen a house worth less than 100K in years. That’s beyond even being a fixer-upper

        • She? should at least go outside every once in a while.

        • To see poor housing? Don’t think so.

          • No – to see less expensive housing in less expensive parts of the country.

          • I’m not into ‘boonies’, thanks.

          • So many great unwashed plebs out there.

          • Perhaps you should develop an interest in the boonies – preferably where there are no Internet connections.

          • Perhaps you could mind your own business

          • I am sure you hardly come and post in public forums with a notion of “minding your own business”. You’re hilarious EmilyOne – tragic too, but hilarious.

          • This site is for public discussion….not personal remarks and attacks.

          • Not for personal remarks and attacks? I have seen plenty of your posts in other forums EmilyOne. You certainly don’t subscribe to that comment. Also – I don’t think you can comment on another’s post without it being personal.

          • No, actually you haven’t seen me in other forums, but thanks for your participation.

          • Then you have duplicated or stolen another’s name.

          • I’m sure there are lots of Emilys around

      • My family lives in a small village of about 2000, 2 HOURS north of north bay, not quite the boonies. Lots of dairy farms there. The price of land has risen dramatically. There are still houses that are worth 100000$. I would have made more money buying a piece of land there 3 years ago than putting it in stocks! I have lost a lot. In real estate, I would have doubled my money!

        • Well North Bay is considered the boonies, much less north of that.

  3. Not to mention it’s far easier to fleece the proles with a piece of paper than a plot of land.

  4. BS. I have been invested in both for 30yrs .
    Stocks/bonds portfolio -75,000 invested(over 10yrs)200,000 value as of today. 220%10yrs
    Real estate — 45,000 invested(over 10yrs) sold for 135,000 300%-10yrs
    — 35,000 invested , value today 105,000- 300% 8yrs
    I rest my case.

    • So I guess we should just take your personal experience over all of the data compiled by Stats Can?
      The fact that a single person did better on real estate than through stocks is hardly fatal to the premise of the article.

    • QED. One anecdote settles the debate for all time.

    • First you need a math lesson. $200,000 is 267% of $75,000. And I agree completely with Mike2 – your individual experience is hardly ample evidence to claim BS on the Stats Can data. And you didn’t tell us what kind of leverage you used or anything to go with the numbers? Were the returns over the same periods (probably not since you talk of 30 years experience)?

      • work in the financial industry ?? too bad, so sad, for you

    • I`m happy you guys agree. RE has made many more fortunes than stocks

  5. Over the long run, your best investment is to get out of debt as fast as possible. Pay off your mortgage, then bulk up on diverse investment vehicles.

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