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I had a conversation with a friend the other day that has sparked my thinking about this, so I'm curious what others out there think. The earlier discussion thread on annuities has also fueled the fire.....

I've been investing for a long time in many different vehicles: stocks, corporate bonds, CDs, mutual funds and real estate (rentals and speculative land). As I plan for the imminent retirement years, conventional wisdom "sorta" says high-yielding dividend stocks are the way to go. But when I think of earning enough in dividends to actually replace income in retirement years, I think that would call for investing a lot of money (say $100k) in a given stock for a dividend to actually help with your annual costs. And investing $100k in a company is a big leap of faith to take given your reliance on that company to operate ethically (Enron) and not make major business mistakes (Netflix -if it had a dividend).

With that being said, wouldn't real estate be a better solution at the end of the day? With the monthly rent check coming in -which doesn't really depend on a home's "market" value- wouldn't that be a better (maybe "steadier" is a better word) investment than stock dividends? Even if you paid a property management company to manage your rentals you could presumably get a better/steadier return than a dividend stock. And with less risk since stock prices/dividends can drop fairly quickly but rental rates rise and fall a lot slower, neighborhoods deteriorate a lot slower, etc, which makes the impact to your income more manageable.

Although I am diversified, I am thinking about lightening up on some of my other investments and go more heavily into real estate rentals.

Am I missing something here? Any insights appreciated.


PS: I purposely didn't post this on the "rental" boards because I wanted input/feedback from those that don't own rentals as I think input from those with different opinions are always more helpful.
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