Real Estate vs. the Stock Market: What Builds More Wealth Over Time?

Jul 30

If you’ve had a good financial year — maybe a raise, a bonus, or extra income — you might be wondering:
“Should I invest this money in the stock market? Or real estate?”

A lot of people choose the S&P 500, which is a group of big U.S. companies (like Apple, Google, and Amazon). Over time, it usually grows by about 8% a year.

That’s good. But there’s another option that could build your wealth even faster — and give you monthly income while doing it:

👉 Buying a rental property.

Let’s break it down in simple terms.

You have $60,000 to invest. What are your options?

Option 1: The Stock Market

You invest $60,000 into the S&P 500 and just let it sit there. If it grows by 8% a year:

In 5 years, you might have about $88,000
In 10 years, about $129,000
In 20 years, around $280,000

That’s solid, but you only make money when you sell your investment. It doesn’t pay you each month, and there are no tax breaks.

Option 2: Buy a Rental Property

You use the $60,000 as a down payment to buy a $300,000 house that you rent out.

Now you own an asset 5x the size of your investment. Here’s what happens next:

Year 1 (conservatively):

Rent: $2,200/month = $26,400/year
Mortgage + Expenses: ~$25,000/year
Cash Flow: ~$1,400/year
Tax Write-Offs (depreciation, interest, expenses): $20K–$30K+
Bonus Depreciation: You might write off up to 100% depreciation in the first year, depending on how it’s structured (check with your CPA, or reach out to us about a CPA that specializes in real estate investments)

Long Term:

The home appreciates at 4% per year → your $300K home becomes $438K in 10 years
Your loan balance goes down for free (renters pay your mortgage) → you build more equity
Rent rises with inflation → more cash flow over time
You’re building ownership + monthly income + tax savings

The Key Difference: Leverage and Control

With the stock market, your $60K grows at around 8% per year, which means it might become $129K in 10 years.

With real estate, your $60K controls a $300K asset. That $300K property grows at 4% per year — so you're building wealth off $300K, not just your $60K, and a little cash-flow along the way.

Plus, you can:

Adjust rents
Improve the property
Use tax strategies
Refinance later
Pass it to your kids

You’re not just a passenger. You’re in the driver’s seat.

So, What’s the Best Move?

If you’ve had a strong income year and you’re ready to build long-term wealth, a rental property could be your best move.

It helps you:
✅ Pay less in taxes
✅ Start earning a monthly income
✅ Grow your wealth year after year

Want help running the numbers or finding the right property in Pinellas County or Tampa Bay? Let’s chat.

Kimberly Hildreth