What's better for early retirement: real estate or stock market?

Hey everyone! I’m trying to figure out the best way to reach financial independence and retire early (FIRE). I’m 41, single, and make about 200k a year. My goal is to retire at 50 with 70-75k yearly income.

Right now, I’ve got about 1.2 million in assets:

  • 630k in retirement accounts
  • 500k home value
  • 100k in stocks
  • One rental property worth 275k (owe 220k)

I can save about 50-75k extra each year. So I’m wondering:

  1. Should I buy more rental properties? I could get three more at 200-250k each. They’d give me about 72k yearly income when paid off.

  2. Or should I put all that money in stocks? I think I’d only get around 26k a year from dividends on 1 million invested.

The rental option seems better for cash flow, but stocks might grow more over time. I’m not too worried about dealing with tenants.

What do you guys think? Any advice on how to retire even earlier, like at 45?

Thanks for your help!

I’ve been down this road, and here’s my take: diversify. Real estate can be great for steady income, but it’s not all sunshine. Dealing with tenants, repairs, and market fluctuations can be a headache. Stocks, on the other hand, offer growth potential and liquidity, but volatility can be nerve-wracking.

In your shoes, I’d split the difference. Maybe add one or two more rental properties for cash flow, but also boost your stock portfolio. This way, you’re not putting all your eggs in one basket. Remember, the goal is to sleep well at night while your money works for you.

Consider maxing out tax-advantaged accounts first. Then, look into REITs for real estate exposure without the hassle of direct ownership. Retiring at 45 is ambitious, but with your income and savings rate, it’s not impossible. Just be prepared to make some lifestyle adjustments and stay flexible with your plans.

Mixing it up might work. Real estate gives steady cash, while stocks grow over time. Maybe add one more rental, then invest remaining funds in stocks. Ever considered REITs for a hands-off approach? What do you think about balancing hassle and return?

mix both, mate. rental properties for steady cash, stocks for growth. maybe grab one more rental and throw the rest in stocks. have ya thought about REITs? less hassle, still real estate. what’s ur take on balancing effort vs return? good luck with the early retirement goal!