Investing in stocks to be a millionaire for 22 years. Talk about negative cash flow!

[Jeff S.]

If you can only invest $1,000 every month and have nothing in savings. If he earns a 10% annual rate of return (compounded quarterly) in a portfolio created by a robo advisor, Investor A will need 22 years and seven months to become a millionaire.

People gripe about negative cash flow but with this plan you probably can't touch it until 59 anyway. A tough road. How about leveraging then sticking that grand toward debt?

[Becca F.]

I love these RE vs. stocks discussions. My stocks are outperforming my Indiana properties. I have a combination of index funds, mutual funds and individual stocks in retirement accounts and brokerage accounts. It averages about 10% for the retirement accounts. One of the funds is getting a 20% return, another one is 7.8%. Another investor calculated my Class A Indy  property as having 8.5% return (owned almost 11 years).

I'd even say my HYSA is outperforming my Class C properties, haven't owned those long, Class C#1 for a year, Class C#2 4 months. For Class C#2, when I used a rental property calculator, on the recent purchase the IRR is 0.68% at Year 10. The cash on cash return becomes positive at Year 17 at 0.53%. I ran those number using 3% appreciation (typical Indy appreciation outside of 2019 to 2022) and 4% rent increases. I listened to a lot of people to acquire more doors and "cash flow." Those are terrible numbers, not to mention the headache factor and I don't think I'll keep those properties for very long. Didn't do enough research... that was a learning opportunity.

I'd say my Bay Area properties are doing well but I do wonder if sold those, took the proceeds how I'd do with stocks. I have significant equity, afraid of leveraging more after those Class C deals. I have a large amount of passive activity losses on my tax returns which will carry forward (not REPS so can't offset my W2 income) 

I don't know anyone who retired early/quit W2 at the age of 40 from their stock portfolio. They're all working until at least age 60 and paying lots in federal taxes. I personally know 6 people who have quit the W2 jobs around the age of 40 (picked the right properties and benefitted from appreciation)  and age 30 (high income earners who leveraged and scaled quickly) from real estate. I'm reminded from non-RE friends about how I take risks with real estate and I should be try to be mortgage free but when I look at my stocks, I have no control over the value other than to buy or sell.