Stocks and Real Estate

[Felipe R.]

How well do stocks and real estate complement each other?

Stocks are amazing tax wise and have performed neck to neck with real estate (excluding taxes) in many countries due to the nature of business but they tend to have low cash flow and the volatility can lead to one needing cash right when the market is down. Real Estate tends to be extremely focused and thus, high risk due to being confined to a single neighborhood with a relatively high amount of capital but it cash flows better than anything else. This cash flow provides food when stocks are down or up.

The standard mantra in finance is to hold stocks and bonds but stocks and real estates seems wiser. You can diversify into other countries and land rights often have strong rights because they affect all classes and thus, all classes want to defend their home or farm rights.

Do you know anything about this asset mix relative to stocks and bonds? It's more diversified, cash flows better, and real estate cash flow can be more stable than the constantly changing cash flow from bonds.