Dividend Income VS Rental Income - Which Passive Income is Better?

Dividend Income VS Rental Income - Which Passive Income is Better?
Learn to invest based on the lifestyle you want build. Whether that is dividends or rental income (Or both) is totally up to you.

Time stamps so you can jump to/rewind to any point in the video.
0:43 - How many videos I've published on YouTube.
1:40 - Passive Income - Which one is more passive?
3:22 - Yields - Which one provides higher yields?
4:25 - Which one will make you the richest the fastest
7:53 - How taxes for for dividends and rental income
10:05 - Which one is easier to track for taxes?
11:21 - Risks of dividend investing vs investing in real estate
13:10 - Which investment gives you more control?
14:12 - Other key factors

Our complete investing library can be found here:

Stock Market Investing: https://goo.gl/hi2kK4

Dividend Investing Playlist: https://goo.gl/njSrk2

Other important videos:

How To Buy Dividend Stocks: https://youtu.be/isDiBoFxH-g

Roth IRA Rules Explained: https://youtu.be/3MzZfRrgEYg

How Rich Can A Roth IRA Make You: https://youtu.be/2nx0vHGNVmE

Articles regarding dividends vs rental income

https://seekingalpha.com/article/4061424-dividend-investing-vs-real-estate-investing

https://finance.zacks.com/dividend-stocks-vs-rental-properties-3683.html - ZACHS

Dividend income primarily is generated through owning Paper assets vs rental income that is generated through own real assets. Instead of thinking which one is “better” I encourage you to think about which type of income is more suitable for your lifestyle and your interests after we discuss the differences between the two types of income.

Passive Income

In terms of income passivity you dividend income takes the cake here. With dividends you simply invest in the company stock or etf, and wait for the money to be deposited into your bank account.

With rental real estate on the other hand you will get a check deposited to your bank account, but there are more responsibilities to manage.Being a landlord is not always fun, you may get a call in the middle of the night saying the toilet is clogged, you may have to evict someone who is damaging or not taking care of your property, worse yet, you may have to deal with a renter who doesn’t want to pay you and always seems to have an excuse as to why they are late on their rent.

You can get a property manager involved of course, but that is not full proof you will still want to keep eye on your properties and monitor how the property manager is doing if you want to maximize your profits. Rental income is great but it comes with more leg work so be prepared.

Yields

If you are looking for higher yield on your money this is where rental income begins to shine. WIth rentals (Depending on the type of property and the deal you get you may find your self with an average yield of 5 - 10% on your money.

With dividends the yields generally aren’t quite as attractive with the average yield ranging only from 2 - 3% unless you are looking certain type of investments such as REITs, corporate bonds, publicly traded partnerships, etc for a higher yield.

Which asset will most likely allow you to retire the soonest or make you richest the soonest.

Although both asset classes can you lead to you to the same goal, real estate has been the more consistent victor in allowing people to retire sooner and building wealth from what I have observed. . with the exception being if you found the next amazon stock of course.

How is dividend income and real estate income taxed? The answer is it depends.

Starting with Dividend income it can be taxed at either marginal tax rates or capital gains rates For most Americans their marginal tax rate falls between 10% - 22%. This means they would pay anywhere from 10 cents to 24 cents for every dollar of dividend income earned.

If the dividends are qualified dividends then you pay tax at capital gain rates which are even lower. In this case taxes would either be 0% or 15% for most Americans.

How is rental income taxed? You may have heard that real estate has numerous tax advantages, and it does, but if you have “net rental income” at end of year after all expenses are deducted you will pay taxes on that rental income at your marginal tax rate. Like i said for most americans that is between 10 cents to 24 cents of every dollar of rental income earned.

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