B1 Intermediate US 27 Folder Collection
After playing the video, you can click or select the word to look it up in the dictionary.
Loading...
Report Subtitle Errors
what is up YouTube family my name is Mike the CPA and welcome back to money and
life TV the channel people come to to learn about finances investing taxes and
more! If someone was to ask you what type of income was better dividend income or
rental income what would you tell them how would you respond I can tell you one
thing I would want in this video we're gonna explore that question in great
detail and by the end of it you may find that you actually desire both we're
about to dive into the video but I have a quick favor to ask if you enjoy
today's video let me know by dropping a like leave a comment below and if you're
brand new to the channel please consider subscribing so you do not miss any of
our future uploads what we're talking about dividend income versus rental
income we're actually talking about two different types of asset classes how ok
let's see how do I explain this are you trying to say it's like trying to
compare bananas and oranges thanks schipper that's actually a really
good analogy don't you mean apples and oranges no apples I like bananas and
oranges okay fine chipper bananas and oranges it is it's a good analogy
because comparing dividend income versus rental income it's not a banana - banana
comparison it's very much a banana - orange comparison these are two very
different asset classes with very different attributes dividend income is
primarily generated through owning paper assets versus rental income that is
generated through owning real assets instead of thinking which one is better
I would encourage you to really think about which one is more suitable for the
lifestyle you're trying to build I think as we progress through this video that
answer is gonna become clearer and clearer as time progresses let's start
off by talking about a subject people love which is passive income both forms
of income are very passive meaning you receive money that you no longer have to
trade your time for but one is more passive than the other if you were to
ask me if you want to know my opinion in terms of which form of income is more
passive dividend income really takes the cake here in my opinion with dividends
you simply invest in the company stock or ETF or mutual fund or whatever and
wait for the money to be deposited into your bank account with ritalin come or
real estate or income from real estate you will eventually have a check hitting
your bank account but there's a little bit more to manage being a landlord is
not always fun you may get a call in the middle of the night saying that the
toilet is clogged you may have to evict someone who is damaging or not taking
care of your property a lot of times these are your own family members or
friends it really sucks 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 for some reason they can't pay you because they're too busy
flossing their cat's teeth or whatever it is the hell they do now of course you
can get a property manager involved to help you manage the property but really
if you want to maximize your profits it's crucial that you're able to keep an
eye on the property itself every once in a while because no one is gonna care as
much about your profits as you not even the property manager just like anything
else there are good and bad property managers so unless you're monitoring the
situation a little bit yourself you're not gonna find out which one of the two
you have so real estate can be awesome rental income is great but a little more
legwork is involved now let's compare the two dividend income versus rental
income when it comes to yields where can you get the best yields for your money
if you're looking for a higher yield on your money this is where I think rental
income begins to shine with rentals depending on the type of property and
the deal you get you may find yourself with an average yield of anywhere from 5
even up to 10% or more on your money dividend yields the yields aren't quite
as attractive because the average dividend yield is roughly running 2 to 3
percent on average so it's not a lot now if you venture off into real estate
investment trusts which are as a way you can invest in the stock market into real
estate by purchasing things known as REITs a real estate investment trust you
can get higher yields such as 4 or 5 6 7 % but generally speaking dividend yields
are often lower than if you were to own the physical real estate outright and
renting it out to somebody in rural landlord of course there are a few other
ways to get higher dividend yields in the stock market which was publicly
traded partnerships and corporate this is a question I often find people
have this all right like if I if I choose to go the dividend income
investing route or the rental income or real estate investing route which one is
gonna make me the richest the fastest or how or which asset class is going to
allow me to to retire the soonest that's what I really want to know although both
asset classes can lead 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 if you were lucky enough to invest in the Microsoft when it began or
Amazon you could have made a killing really quickly so there are some
exceptions in terms of which one can make you richer faster but I think in
the long run just from what I've observed definitely real estate is the
way to go you may have seen the shows where people
quickly buy fix up and flip the properties for huge gains you've
probably heard of the stories of people who buy and hold real estate and rent it
out for a monthly cash flow and keep repeating this process until their
passive income exceeds their expenses so those are just some of the ways to
accumulate wealth with real estate like I said there's many different avenues
but those are just some of the ones I want to mention now let's talk about
dividend income now dividend income in my opinion it is easier to build a
passive income through dividends but it takes longer and it takes a lot more
capital money to invest so it's a slower way to get rich so oftentimes if I post
a video and dividend investing there's a lot of people saying hey I'm gonna
retire in the next five years well it's like if you're starting from zero that's
probably not going to happen dividend income is a slow way to get
rich it's very passive it's a great way to make money and build a nice
retirement income for you but it's not gonna happen overnight it could take 20
30 40 years depending on upon how much money you can invest each month or each
quarters now if you say Mike well I still really want to invest in the stock
market I'm really not too keen on real estate so is there is there any way to
get you know richer faster in the stock market besides dividends and I would say
yes if you if you really want to be efficient in terms of really swinging
for the fences then instead of just focusing on dividend income
I would actually focus on growth based and
and that's gonna allow you to get higher returns on your money now of course
that's not guaranteed and so growth you know you can grow your money you know 10
15 20 percent per year with the right investment using a growth strategy but
it's not guaranteed so there's definitely pros and cons with
investing for growth that many investors like yourself might not feel comfortable
with so it's it's finding the right balance of what works for you and what
you can stick with in the long run and be successful with if you were to ask me
at least with dividends you are getting a portion of your investment back each
year plus you still have a chance to receive capital appreciation on top of
that for example we're in what I'm filming this this is August of 2019 some
of my most successful investments this year in 2019 have been dividend paying
blue chip stocks even though some because the market's been a little tipsy
Turbie this year with all the trade wars going on these interest rate
fluctuations with the Fed getting involved but there's like Procter &
Gamble it's one of my best stocks this year and I'm up over 20% this year alone
whereas many of my tech stocks are tech based ETFs that would be more growth
focused aren't achieving or aren't performing as well now let's take a
moment to talk about taxes how is dividend income tax how is real estate
income taxed let's cover this real quick so you guys get a good feel for what
your tax situations can be from this kind of income starting with dividend
income it can be taxed at either the marginal tax rates or capital gain rates
depending on if it's a ordinary dividend or qualified dividend I have separate
videos on this I can link them below if you'd like to check them out
for most Americans their marginal tax rate falls between ten up to twenty four
percent that's where I find most Americans fall in terms of the income
scale whether they're single or whether they do married filing joint so what
this means from a tax perspective when it comes to dividend income depending on
their marginal tax rate for every dollar of dividend income they earn they're
either gonna pay ten cents up to twenty four cents of every dollar good news is
if those dividends are qualified dividends then they get the SPECIAL
capital gain rate treatment which is a lower tax rate
and for most Americans their capital gain rates are only 0 to 15% so in other
words they pay only out of every dollar that only pays zero up to 15 cents per
dollar on every tight R and every dollar of dividend income earned real quickly
how is rental income taxed I think you're gonna find it's pretty
straightforward you may have heard that rental income has numerous tax
advantages and it absolutely does but I'm not gonna go into a sense of detail
here we can save that for a whole nother video that's a whole another course ok
but your your rental income you're not taxed on your gross rental income your
tax on your net rental income which means it's your the rent income minus
all of your expenses so whatever that is so if you let's say you make ten
thousand dollars in rent you have six thousand dollars in expenses which means
your net profit or your net rental income is four thousand well then you
would pay taxes on four thousand dollars of rental income at whatever your
marginal tax rate is rental income does not have any special capital gain rate
treatment it's just taxed just like ordinary income ordinary income you pay
on the net rent you receive like which is easier to keep track of taxes I want
to know because the IRS Eagle in terms of which one is easier to track for tax
purposes hands down no questions asked dividend income is by far the easiest to
track for taxes and the reason it is is because the brokerage company you're
with whether it's Robin Hood whether it's Ameritrade M one finance
whatever maybe they're gonna send you a statement in February of each year that
totals all of your capital gain income your dividend income etc all on one tax
statement and that's you rental income a lot different you actually have to keep
track of all of your expenses associated with the property you might have
management fees depreciation you're gonna have maybe repair supplies
utilities there's all these different expenses that can go into it that you
want to keep track of having a property manager helps because they can summarize
a lot of those the income and expenses on one
but it doesn't mean it's going to encompass everything you need so there's
a lot more record-keeping involved with rental real estate because it's more
like running a business whereas with a stock or with dividend income it's more
like buying into a business and you're just collecting the check real quickly
let's talk about the risk associated with dividend income and some of the
risk associated with rental income with dividend income there is always the
potential that a company starts underperforming or begins struggling
financially when this occurs what usually follows is
a temporary reduction in dividend payments or possibly cutting the
dividends all together now Moore's most recently I think we saw this with
General Electric a lot of people held on to that company stock for a long time
just for the dividend but fundamentally the company started to underperform and
financially just started going south so now we have General Electric stock which
has plunged in value over the last few years and virtually pays little to no
dividend at this point so there's always the business risk that the business may
start failing financially and may need to either temporarily reduce the
dividend or completely cut it altogether that's the risk I think with dividend
income that's one of the risks and rental income has its own risk as well I
mean it's no cakewalk there's always the risk that a tenant the your renter could
leave and you might have trouble filling the vacancy also there's the risk that
that tenant could damage your property when they leave I actually knew I
actually knew a person whose property whose rental property wasn't in the best
area had very kind of shady renters not the best renters unfortunately well one
of the tenants when they had to go and evict them they actually burnt down the
entire house so real estate is definitely not without risks so beyond
you know just losing your tenant for the chances of potential damages there's
other expenses that might creep up as well that might increase over time such
as your insurance cost to insure your home
of course also property taxes can increase over time which cuts into your
net profits on your rental all right now let's talk about which investment
dividend income or rental income gives you more control with dividend income
unless you a major shareholder of that company that
owns more than a 50% stake you're basically at the mercy of the company so
you have no you virtually have no say and how that company conducts its
business with rental income there's a lot more control in terms of what you
can do to maximize your profitability you can raise rents you can be more
creative with improvements you make to the property to extract higher rents you
can manage your expenses or find ways creative ways to reduce expenses to to
you know to continually increase your profits you can decide whether you want
a property manager or don't want a property manager there's a lot more
control of what you have there you can also do a 1031 exchange into a different
property to avoid paying tax in the sell so like I said with rentals a lot more
legwork but also a lot more control in my opinion all right guys real quickly
just rapid fire mode now rapid fire time I want to cover a couple of their
factors with you guys regarding dividend income and rental income I think these
are just some other key takeaways or things to know before making your
decision of which one to invest in or both the first one I mentioned is both
dividend income and rental income can increase over time dividends can
continually increase their payouts and you can continually increase rents and
in many areas of the country both both of the underlying assets have a chance
to increase in value that's important understand just because you have a
dividend meal doesn't mean the stock itself isn't rising the value could it
could certainly appreciate and just like with rentals just because you're
receiving rental income doesn't mean the value of your property isn't increasing
at the same time so it just depends on what the markets doing now is one safer
than the other I think it really depends on the sophistication level of the
investor and how they manage the investment I think both investments can
be safe depending on how well you understand them so as long as you know
what the risks are and how to manage those risks or mitigate the risk I think
you'll be fine it really comes the more experience you
have with those kinds of investments I think the better off you're gonna be one
thing I forgot to mention was leverage one nice thing about rental income or
real estate is you can borrow from the property to help you purchase other
prease not something you can do with dividend income of course with Vivid
income and rental income both have tax advantages on the dividend income side
we have qualified dividends which are tax at the lower capital gain rates
which we discussed earlier in the video and with real estate it has numerous
actually real estate as one of the best assets to own and one of the best in the
world in terms of tax deductions bottom line is real estate has crazy amounts of
tax deductions available for the for a real estate investor but it would just
there's it's too broad of a category to go in the detail here if you guys would
like me to produce a video in the future on tax deductions for real estate please
let me know down in the comments below I'd be happy to produce a video on that
alright guys I have two awesome articles for you to check out and I actually won
some of the article I checked out before making this video I'm gonna leave links
below ones from seeking alpha and once from in Zacks finance I think both
articles are good I think you're gonna get a lot out of them and they both
explore the difference is that the pros and cons of investing and dividend
income versus investing and rental income or investing in a real estate so
check them out if you have time I'll leave the links to those below alright
ladies and gentlemen that is all the information I have for you today I hope
you got a lot out of this if you did let me know by dropping a like and if this
is your first time here I just want to say welcome here on money and live TV
our goal and mission is to help you become fiscally fit and we do that by
teaching finances investing taxes and more on a regular basis alright
everybody until then is always an honor I am so honored that you guys spend time
with me here on YouTube it means the world to me
I love interacting with you each and every week so I'll see you in the
comments take care everybody have a great week live life on caged
pace
    You must  Log in  to get the function.
Tip: Click on the article or the word in the subtitle to get translation quickly!

Loading…

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

27 Folder Collection
王惟惟 published on January 13, 2020
More Recommended Videos
  1. 1. Search word

    Select word on the caption to look it up in the dictionary!

  2. 2. Repeat single sentence

    Repeat the same sentence to enhance listening ability

  3. 3. Shortcut

    Shortcut!

  4. 4. Close caption

    Close the English caption

  5. 5. Embed

    Embed the video to your blog

  6. 6. Unfold

    Hide right panel

  1. Listening Quiz

    Listening Quiz!

  1. Click to open your notebook

  1. UrbanDictionary 俚語字典整合查詢。一般字典查詢不到你滿意的解譯,不妨使用「俚語字典」,或許會讓你有滿意的答案喔