The invasion of artificial intelligence (AI) is upon us.
The tech industry is buzzing about an AI called ChatGPT right now. This is a conversational AI that can also write stories, essays, and emails upon command.
Naturally curious, I gave ChatGPT a spin. To see what it could do, I asked the AI to write an email comparing real estate investing to investing in the stock market.
Here’s what it came up with:
Dear Reader,
When it comes to investing, many individuals are looking for ways to maximize their return on investment.
When deciding between real estate and stocks, it is important to understand the differences in terms of returns. In this email we will discuss four returns associated with real estate investments, as well as how they compare to stock investments.
When investing in real estate, investors can look forward to four main returns: cash flow, equity build-up, tax benefits, and appreciation.
Cash flow refers to the income earned through a property’s rental payments or other sources of income generated from a property.
Equity build-up occurs when an investor pays off the mortgage or pays additional money toward principle. The equity build-up increases over time until the entire loan is paid off and any remaining funds are kept by the investor in addition to any profits made from selling the property.
Tax benefits refer to deductions that can be applied against rental income earned from an investment property such as depreciation expenses or interest paid on a loan used for purchase.
Finally, appreciation refers to increases in market value of a property that can be realized through capital gains when you sell it at a higher price than what was initially paid for it.
In comparison, stocks offer only two main types of returns: dividends and gains of appreciation.
Dividends are payments made by corporations that own stocks which are distributed amongst shareholders of those stocks in proportion with each shareholder’s ownership stake. Therefore larger shareholders receive more dividend income than smaller ones proportionately.
Capital gains refer to profits gained from buying low and selling high – meaning if you buy stocks at a lower price and then sell them at a higher one you have realized a profit through capital gain tax implications.
On the other hand if these same actions result in selling at a lower price than what was initially paid for them then there will be capital losses incurred instead.
Thus investors who invest in stocks cannot benefit from cash flow or tax benefits whereas investors who invest in real estate can benefit from all four types of returns mentioned previously: cash flow, equity build-up, tax benefits and appreciation resulting from capital gains.
Thank you for taking the time to read this email comparing real estate investing with stock investing!
Hopefully this summary has helped shed some light on how these two differ not only quantitatively but also qualitatively speaking so that you may make an informed decision regarding your own investments based upon your individual goals and preferences!
All the best wishes with your investments!
There we have it. The AI spit this out in about five seconds.
As far as the content goes, ChatGPT is pretty spot-on with its comparison. The AI’s writing style could use a bit of work though. Its readability score is much higher than I typically shoot for.
Still, this is pretty impressive.
Going forward we won’t be able to know whether what we’re reading was written by a human or an AI. There’s something a little unsettling about that.
The good news is, we don’t have to deal with AI’s when investing in real estate. And for those looking for a great system that makes building passive income with real estate simple, check out our new program right here: