Real estate investing in 2010 vs. stock investing in 2010 and beyond is interesting because real estate and the stock market might not move in tandem. Investing in real estate now takes many forms; and going forward the debate between real estate investing vs. stock investing might favor the former. Here’s my reasoning, and the solution I prefer.

REAL ESTATE INVESTING

Both the residential and commercial sector were on fire going into the year 2007, with rising prices fueled by cheap money and easy lending practices. Then reality and a financial crisis hit and the bottom feel out of the market. For real estate investing in 2010, the jury was still out. Many properties were selling at 2003 prices.

STOCK INVESTING

Equities (stocks) were on a roll going into 2007 as well. Then the stock market fell over 50% by early 2009. Equities then sky rocketed over 50% in a matter of several months. In early 2010 there was an 800-pound guerrilla in the stock investing arena: had the stock market gone up too far too fast? Were equities headed toward another big fall?

REAL ESTATE INVESTING vs. STOCK INVESTING

I believe in buying AFTER a steep price decline in any market… not after a big run-up in prices. That’s why I favor real estate investing in 2010 and beyond, plain and simple. Now, if you’re like me you like to eat your cake, and still have it too. By this I mean that I don’t like the hassle and lack of liquidity that comes with owning real property. At the same time, I don’t want to miss out when property values come roaring back.

The beauty of stock investing is the instant liquidity advantage. You can buy or SELL stocks over the internet in a matter of seconds at fair market price. Can you make an investment in properties and do that? The answer is that yes, indirectly, you can. Here’s how it works. You buy stocks called exchange traded funds (ETFs) that invest in a portfolio of commercial-properties companies. These companies own and/or manage commercial properties like office buildings, apartment complexes and shopping centers.

When you buy shares in one of these funds you own a piece of the action in commercial real estate. Historically, as the industry goes, so goes the value of the shares of companies that invest in the sector. Two such funds (ETFs) have the stock symbols IYR and VNQ. If real estate investing gets hot these funds should take you along for the ride. If not, you can sell out your position over the internet for a commission of about $10. All you need to play the game is a brokerage account with a discount broker.

You can invest as little as a few hundred or millions of dollars in the comfort of your home or office. Change your mind at will, because you can add to or sell out your position with the click of a mouse.