IS IT BETTER TO INVEST IN BONDS OR REAL ESTATE?

I have seen some heated online debates on whether it is better to invest in treasury bonds or real estate. Proponents on either side had compelling reasons to support each viewpoint. For instance, the people in preference of treasury bonds pointed out that bonds are fairly safe, liquid and provide a passive income stream. They also demonstrated that real estate is capital intensive, not easy to liquidate, and is dazzled with speculation. The real estate guys argued that real estate is tangible wealth which often appreciates in value and if developed can earn reasonable rental income. They also pointed out that treasury bonds are prone to the negative effects of inflation and that paper assets can easily diminish in value over time.

Often times when either party failed to convince the other, the conversation spiraled into name calling and a few insults were exchanged.

I watched in “kamoli” as the debate raged on and refused to engage. I have learned from experience not to intervene in online street fights lest you get bruised yourself. So I decided to ponder this question in a calm manner. What I discovered is that this kind of question presents what is commonly called a fallacy of false dichotomy.

A false dichotomy, also known as a false dilemma or binary fallacy, is a type of logical fallacy that presents only two options or sides when in reality there are more. This often oversimplifies complex issues into an either/or scenario, ignoring the potential for nuanced and diverse responses. The basic structure of a false dichotomy is: “Either A is true or B is true. But A is not true, therefore B must be true.” This reasoning is faulty because it excludes the possibilities that both A and B could be false or true, or there could be another option, C, which is true.

The problem with this type of reasoning is that it can be misleading and manipulative, leading people to believe they have fewer options than they actually do. It’s often used in debates and arguments to corner the opponent into a specific position, making them appear unreasonable if they do not choose one of the presented alternatives.

So back to the question of treasury bonds vs Real Estate. We can clearly see that this is an example of a fallacy of false dichotomy. The answer to the question depends on people’s unique circumstances and goals. Someone seeking passive income without too much hassle will clearly opt for treasury bonds. On the other hand, someone wishing to build long-term term wealth with some reasonable capital may opt for real estate. Another prudent person with some resources to spare will do both. Also, there are people who are prospering who neither do bonds nor real estate. So I found the whole debate rather superfluous and based on wrong assumptions from either side.

To contemplate the matter further, I recalled the man with a hammer analogy. The man with a hammer tends to see every problem as a nail. Proponents on either side of the debate seemed biased because some were real estate developers and others earned a living from dealing in bonds and other securities. Surely they were seeing the problem as a nail because they each held a different hammer. Their biases were further reinforced because they each had an incentive to push a certain viewpoint.

The funny thing is there was another category of debaters who clearly didn’t know what they were talking about. Online street fights tend to draw in all sorts of people and at some point, everyone forgets what they were arguing about. So the whole thing descends into a shouting contest.

So in conclusion is it better to buy bonds or real estate? My answer is that it all depends on your unique circumstances and aspirations.