Are Rental Properties or Index Funds Better in Pursuit of FIRE?
FIRE (Financial Independence, Retire Early), a flourishing lifestyle movement, has crept its way into mainstream culture throughout the past decade. As we've seen the pandemic spark a renewed push for people to create more autonomy in their lives, there is continued debate about the most sensible way to invest if FIRE is your goal. Real estate proponents advocate for potentially robust monthly cash flow, price appreciation, and tax advantages, whereas index fund adherents cite minimal expenses, a lack of constant oversight, and efficient trading as reasons to invest. In reality, there are benefits to both strategies, which might lead you to consider a hybrid approach.
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You'll hear FIRE proponents across the internet lauding the benefits of real estate investing, and in the right circumstances, you should listen. The benefits of direct investing in real estate are well documented: you'll receive stable monthly cash flow in the form of rent payments and will benefit from potential price appreciation of the property if you hold it long enough. In most cases you will need to take out a mortgage on the home and as the landlord, you are now responsible for maintenance, lock-outs, and taxes. The idea is to become "cash-flow positive"; that is, your monthly rent receipt on the property exceeds your monthly obligations to lenders and government entities.
Source Fool.com
