Let’s review the last six months of the US economy: Home values and prices fall. New home sales reach 12-year lows. Resetting mortgages push people out of their homes, destroying their credit on the way out. Home builders slow down construction as housing inventory reaches a 40-year high. The financial system takes a blow and economists cannot accurately predict the future. Fear and uncertainty set in as stocks tumble, rebound and tumble further. The Federal Reserve makes an emergency interest rate cut and the White House pushes a major plan to stimulate the economy as the media debates about whether the US will avert a recession.

For someone who has some extra cash they are anxious to invest, it’s tough to find some safe ground. Anywhere you look the housing slump and mortgage meltdown has affected investment returns, whether it be CDs, international investments, investment properties or the US stock market. Where is an investor to find a safe haven?

If you have the guts, there are some fantastic opportunities in both the housing and stock market. According to Money Magazine, over the next 2.5 years $233 billion in home values could be lost and an estimated 3.5 million homeowners will enter default on their mortgages. As a buyer in this market, this puts you at the upper hand to negotiate prices and pick up property on the cheap. On the other hand, price-to-earning ratios and other indicators suggest that stocks are also very cheap and will pay handsome returns to the long-term investor who can ignore the short-term whipsaws.

So What’s the Better Move – Investment Property or Stocks?

According to a 2004 Forbes.com article, real estate has surged 56% from 1999 to 2004 where the S&P 500 sank 6% during the same time period. But over the longer term, the S&P 500 grew 1,000% between 1980 and 2004, where home values only grew 247%. CNN Money also reported that stocks are the better deal for the long-term investor, with a 13.4% annual return in the S&P 500 versus an 8.6% average annual return in home appreciation between 1978 and 2004.

But there’s more to consider than just the return on investment. Let’s compare the pros and cons of investing in real estate versus the stock market:

Real Estate Pros:

• Buyer has greater ability to negotiate price and bid on foreclosures
• Borrowing money to invest is relatively easy and amplifies returns
• Rents go towards equity in the house and can provide additional cash flow
• Appreciation in property value produces additional equity
• Greater tax benefits on capital gains
• You can borrow against your home equity

Real Estate Cons:

• Hunting for the right property can be rather time consuming
• Land lording can create headaches
• Vacant properties, maintenance and repairs reduce profits
• High purchase costs/fees/expenses
• Housing Prices can continue to decline

Stock Market Pros:

• Buying an index fund involves minimal effort
• Little to no account maintenance. Just buy and hold
• Minimal purchasing costs/fees/expenses
• More liquid than real estate. You can sell and get your money out quickly
• Diversification

Stock Market Cons:

• Day-to-day ups and downs can have a psychological toll
• Borrowing money to invest is more complicated. Buying on margin is highly risky
• Volatility: Stocks can see dramatic movements that gain and lose money in relatively short periods of time.
• No tangible assets

While the current economic conditions are offering opportunities to purchase investments that can provide substantial long-term returns, you need to decide which option is most appropriate for your situation, ability, risk tolerance and overall investment strategy. If you are currently heavy on equities, consider adding some investment property to your portfolio. If you are just building up your nest egg, buying an index fund may be ideal in order to create a foundation of core, diversified holdings.

Millionaire Money Habit: Taking advantage of buying opportunities means having the guts to purchase investments that you see value in while others are apprehensive about them. Figure out the investment vehicle that is appropriate for you, and do your homework. You will certainly find some bargains during these times of panic and uncertainty. -RT

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Now for the list of some of the best personal finance articles from around the web. To kick start your week, spend some time digging through the Millionaire Money Habits archives and the links below to improve your financial literacy.

Money Matters for All Ages:

• Did you catch the Money Matters for All Ages series? The complete guide can be found at My Dollar Plan.

Investing:

• Market Volatility, Should I Get Out of the Stock Market? at Moolanomy
• Wise Investing Made Simple Review Part 2: Debunking Common Investing Myths at I’ve Paid for this Twice Already
• We’re On Sale: Time To Buy America! At The Digerati Life

Taxes and Fees:

• 2008 Tax Rebate Stimulus Package Explained at Blueprint for Financial Prosperity

• Ways to Get a Tax Refund at MoneyNing
• Suspicious Bank Fee on Your Statement? It Might be the Elusive Regulation D Savings Account Fee at Generation X Finance

Spending and Saving:

• Don’t Spend Your Rebate Before It Arrives at Mrs. Micah: Finance for a Freelance Life
• Five Things I Think It Is OK To Spend Money On at My Two Dollars
• Thrift Savings Plan for Idiots and Dummies at DebtFREE-Revolution

Advice:

• Creating a Home Inventory for Insurance Purposes at fivecentnickel.com
• I’m Frugal, But My Spouse Is Not at The Simple Dollar
• How to Stop Fighting With Your Spouse About Money at Get Rich Slowly
• The Worst Financial Advice From Around the Web! (Today only) at I Will Teach You to be Rich

Money Thoughts:

• Dave Kori, the Snow Day Kid, Radiates Success at Green Panda Treehouse
• Improving Your Finances: Direction Not Perfection at Gather Little by Little
• Create Your Own Path at Cash Money Life
• Are You Ready to Own a Company? At Brip Blap
• Your Past Influences Your Present at Being Frugal

Millionaire Money Habit: To build wealth, you need to perpetually improve your financial literacy. Digest as much information as possible and stick to a plan that works for you. In addition to the articles above, browse through the suggested readings listed at the very bottom of this website’s page, and be sure to subscribe to our RSS feed or by email.

I have to admit that when I first started to get serious about financial planning I did not find it exciting. In fact, I found it darn right dreadful. But my entire life I pictured myself having no limitations because of money. I remember when I was about six-years-old I literally thought I was going to create a money machine. I still remember what it looked like . . . a silver half-sphere that had an endless supply of dollar bills ready to be picked like a Kleenex box.

It wasn’t until I entered my mid-twenties that I realized I actually could produce money machines by building profitable businesses and investing wisely. I had a vision, but now it was time to take action.

Growing up in a lower class family, but immersed in upper-class surroundings I had a real curiosity about why rich people became rich while poor people who worked so hard remained poor. As an adolescent I read the classic books like The Millionaire Next Door, and Think and Grow Rich. Even though I didn’t understand most of what was being discussed, I tried reading and re-reading to try to figure it out. I figured everyone was capable of becoming rich; I just had to find out how.

I continued to read and read, and finally I came to a point where I decided it was time to get real about personal finance. Sure these books made me feel warm and fuzzy because they told me that I too could become rich, and they gave some introspection about the wealthy class, but they did not actually increase my financial IQ – the one thing almost all “how to get rich” books preach about. They did not teach me how to understand the stock market, what a dividend payment was or how to decrease my taxable income.

So, I took the advice of the books and famous money mentors. I decided if I want to become wealthy, I had to increase my financial IQ. But that sure sounded painful considering I had to willingly teach myself about economics, use math and read about other boring topics.

But I had a vision to follow and nothing was going to stop me. I subscribed to Money magazine, and started reading the Wall Street Journal and listening to a.m. radio. I tried to imitate wealthy people and went directly to their information source. And let me tell you, I did not find the topics enjoyable. It was like trying to read something in a different language. Lots of acronyms, charts, articles about mergers, acquisitions and IPO’s, how the Dow is performing, international trade, and retirement planning.

Yuck! At 22-years-old the only thing I was worried about was if I had enough available credit on my credit card to support my weekend lifestyle. It was just not interesting. After all, the things people are mostly interested in are things they are good at. Well, I enjoyed sports and music. I always had an aversion to finance and couldn’t digest the information, so how could I be good at it? Strangely, I never thought in order to become wealthy I had to understand the principles of money and money management.

But I kept to it. I made myself read every article entirely and listened intently to every financial radio and television show. I figured if I could just decode the message, I would be well on my way to becoming rich. And you know what I found out? After failing to find quick riches by chasing hot stocks and quickly losing in the foreign exchange market, among other things, I found that the there’s nothing fancy or complicated about the road to wealth. It’s about being disciplined with money, investing in boring index funds and contributing to your 401k so you can take advantage of compound interest.

Somehow, I have found a way to now be totally infatuated with this stuff. I am fascinated by the global economy, and how economics plays its role in the stock market. I love the competitive nature of the wealth game and the potential to make more money. And now I can now participate in discussions with wealthy people about investment strategies and other opportunities.

I’ve found that there is an unlimited number of ways to build wealth, an endless amount of information to digest, and personal finance is a great challenge. It’s like playing in a highly competitive sport, but the only opponent is you, with a million ways to win and millions of dollars at stake. And when you win, the only thing to do is to figure out how to outdo yourself to win even bigger next time.

What I’m getting at is that financial planning can be boring at the core, but when you discover the competitive side and the personal development it can bring, the hunt for wealth can be very exhilarating. Maybe even more satisfying, when you learn to accumulate wealth at a greater pace, you have the ability to teach others to do the same and watch them grow personally and financially.

Millionaire Money Habit: Push yourself to read and listen to financial news. Subscribe to a personal finance magazine, tune in to personal finance radio while driving, and pay attention to the financial segments on the news. It may be boring, but immersion is the best way to really improve your financial literacy and, therefore, be able to act like and become a millionaire.