Real Estate Is Still a Good Investment: See How It Stacks Up Against Other Assets, From Gold to Bitcoin

Pros

Real estate values have grown at a slower pace than the S&P 500 on a year-over-year basis, but according to a Realtor.com analysis, real estate saw an average five-year return of +26% since 1975 as of the end of 2024. Typical homeowners have also accumulated at least $147,000 in housing wealth in the past five years, according to the National Association of Realtors® in its fourth quarter of 2024 report. "Traditional investments like 401(k)s, IRAs, and ETFs are great for passive growth, but real estate brings in a whole different level of wealth-building," says Dan Reedy, a real estate investor and broker. "With real estate, you can actively influence your returns by making strategic upgrades or managing rental rates. Plus, real estate offers deductions — mortgage interest, depreciation — that can make a huge difference come tax season."

Cons

If you value liquidity and being able to access your funds at a moment's notice, it's probably not the right move for you. Buying and selling homes can take months — if not years — and can require a lot of upfront costs. "The biggest problem I see is that people have record equity in their home right now — more than they've ever had before. But that's just a number on paper," says Ralph DiBugnara, founder of real estate resource site HomeQualified. "You can't really do anything with it unless you're willing to take money out of the house, unless you're willing to leverage it."

Pros

REITs allow investors to buy shares in a real estate company. Their portfolios typically include a mix of residential and commercial properties. "You don't own the property directly, so you're hands-off, which is easier for most people," says Sara Levy-Lambert, vice president of growth at RedAwning. "They're also traded like stocks, making them more liquid. Just buy or sell whenever you want, without the management headaches." The IRS requires REITs to pay out at least 90% of their income as dividends to shareholders, so investors have a steady flow of funds coming in.

Cons

REIT dividends are generally taxed as ordinary income — not at the lower capital gains rate. The average annual dividend yield for publicly traded REITs currently hovers around 4%, though this can vary by sector and market conditions.

Pros

There's big money to be made in the cryptocurrency market at the moment. Bitcoin initially traded at $0.00099 in 2009, but today it's over $88,000, and early investors who have held on have made many millions of dollars. The current presidential administration is also very invested in making crypto more accessible.

Cons

Investing in cryptocurrency comes with many risks. "Cryptocurrencies are notoriously volatile, subject to speculation, and witness frequent bubbles and crashes," says Harry Turner, founder of Sovereign Investor. "That's why cryptocurrencies are really only suitable for individuals with a high risk tolerance and an understanding of the underlying technology, which can be complex. Real estate doesn't have this problem."

Pros

Gold is a relatively stable asset. It's less reactive and can be a good hedge against the volatility of the market. In the four years following the 2008 financial crash, the price of gold increased dramatically — in 2011 alone, by 32.8%. After hitting an all-time high price of $4,225.10 per ounce in early October, gold remains a popular safe-haven asset.

Cons

It's fairly difficult to sell gold commercially — and you'll have to do a good bit of research to get a fair price. Physical gold is hard to move around, and you'll want to insure it. If you sell, you'll have to pay a capital gains tax of up to 28% on any profit. (The typical capital gains on stocks and bonds is 20%.)

Pros

Relatively niche markets allow investors to dig into the things they love, be it art, cars, or wine.

Cons

There's a high barrier to entry in some of these particular markets — not just financially, but in terms of knowledge. Alternative assets can be exciting and sometimes profitable, but they come with extreme volatility. "Look at crypto. Bitcoin, for instance, went from $60,000 to $20,000 in under a year," says Dan Reedy. "The occasional blue-chip wine or NFT might pay off big, but real estate lets you sleep at night while building long-term wealth."