Real Estate vs. Day Trading

When you have a small trading account, but lots of time on hand and dedication, successful DT can help you accumulate capital rapidly. Granted it takes lots of discipline to do it right. Your account is market to market on a daily basis. Market can stay irrational longer than you can stay liquid. Leverage exacerbates mistakes from lack of discplines and bad position/risk management. Less than 5% of DTer eventually make a living out of it over long term.

 

Once your account equity reached 7-figures, it became very difficult to utilize your capital efficiently and achieve consistent mid-to-high double digit returns year in year out. The bottleneck can be either market or emotional capacity constraint. RE is a good alternative vehicle to invest surplus capital at this stage.

 

RE business is more capital intensive, but opportunity for extremely high returns (again mid-double digits) do not come by easily. RE prices and rents move much more slowly, which allows experienced RE professionals to read and ride the trend and take their time to react. Also mortgage leverage is not marked to market (no maintenance margin requirement for mortgage loans) and rents are not as volatile as RE prices. So it gives landlord an edge to react rationally to smooth out RE boom and bust cycles.

 

Just my 2c.