The stock market has fallen sharply, a rout that has turned January 2016 into the worst month for stocks since 2008. The Dow and S&P 500 have now fallen more than 8 percent this year, while the Nasdaq is off nearly 11 percent.

Stocks were coming off a broad rally on Thursday that gave the S&P 500 index its biggest gain since early December. That gain was a reversal from a day earlier when the market turned in its worst day since September. Behind the market swings are growing investor jitters about the slowdown in China’s massive economy, plunging oil prices and the implications those trends may have for U.S. corporations.

Most investors are anticipating rough waters ahead for the stock market, amidst economic difficulties worldwide. This isn’t mysterious economic research and analysis. This information is available on the front page of virtually any newspaper and news website in the world.

“Investor jitters” isn’t referring to you or me. Two-thirds of all stocks are owned by institutional investors. That’s everything from hedge funds to pension and government retirement funds to international investment groups. When the people who manage those huge funds get scared, things happen fast.

This leaves individual investors relying on luck… hoping that your buy and sell orders coincide with what the big players are planning.

But when it comes to “hoping” vs. “planning” which side would you rather be on?

Asking the questions, “Which is a better investment – real estate or stocks?” There really isn’t an answer because a lot of it comes down to your financial situation. It also comes down to the specifics of the individual investment. So the answer, as with many things in life, isn’t as easy as it may seem.

Let’s begin by looking at each type of investment:

• Real Estate: When you invest in real estate, you are buying physical land or property. Some real estate costs you money every month you hold it – think of a vacant parcel of land that you hope to sell to a developer someday but have to come up with cash out-of-pocket for taxes and maintenance. Some real estate is cash generating – think of rental houses or strip mall where the tenants are sending you checks each month, you pay the expenses, and keep the difference as the profit.
• Stocks: When you buy shares of stock, you are buying a piece of a company. Whether that company makes clothing, sells cars, manufacturers appliances, creates software, or provides consulting services, you are entitled to a cut of the profit, if any, for every share you own. If a company has 2,000,000 shares outstanding and you own 5,000 shares, you own 0.025% of the company.

 The Positives

• When you invest in real estate, you invest in something tangible. You can look at it, feel it, drive by with your friends, point out the window, and say, “I own that”.
• It’s more difficult to be deceived in real estate compared to stocks if you do your homework because you can physically show up, inspect your property, run a background check on the tenants, do repairs yourself … with stocks, you have to trust the management and the auditors.
• Using debt in real estate can be structured far more safely than using debt to buy stocks by trading on margin. Furthermore, you have a tenant paying off that mortgage vs. no one but yourself to fund that margin.
• Your equity grows from two sides. First, as your mortgage is paid down with dollars paid to you from your tenant and second through appreciation.

The Negatives

• Compared to stocks, real estate takes a lot of hands-on work. You have to deal with the midnight phone calls about exploding sewage in a bathroom, gas leaks, the possibility of getting sued for a bad plank on the porch, and a whole host of things that you probably never even considered. Even if you hire a property manager to take care of your real estate investments, it’s still going to require occasional meetings and oversight.
• Real estate can cost you money every month if the property is unoccupied. You still have to pay taxes, maintenance, utilities, insurance, and more, meaning that if you find yourself with a higher-than-usual vacancy rate due to factors beyond your control, you could actually have to come up with money each month!