According to Federal Reserve data, 60% of Americans hold equities. The same Federal Reserve data indicates that approximately 60% of Americans hold real estate. During a divorce, spouses are likely to fight over at least one of these asset types. In many divorces, however, both assets are “on the chopping block.” Assuming that real estate assets are equal to stock values in a hypothetical divorce, which one should spouses focus on? Is it worth prioritizing one over the other?

The Stock Market is the Clear Winner Based on Historical Data

Although many investors sing the praises of real estate, the US stock market has routinely beaten it throughout the years. In fact, the contest is not even close. The median price of a home back in the 1980s was about $47,000, and today, that value has risen to about $380,000. This represents a healthy gain of about 800%. On the other hand, the S&P 500 has risen by over 3,000% during that same period. In other words, you would have $1.4 million if you had invested that $47,000 in a basic ETF back in the 80s. 

Time Is Ticking for Many Spouses

However, most spouses do not have the luxury of waiting 40 years to experience gains of 3,000%. In fact, many go through “gray divorces” during their senior years – and they barely have a single decade left to enjoy life before passing. In this case, it may not make any sense to prioritize stocks over real estate. In fact, a senior may desperately need a roof over their head after divorce. This highlights one of the key advantages of real estate over stocks. Real estate has more real-world utility compared with stocks. One of the benefits of owning real estate is that you can actually use it to keep yourself warm and sheltered from the rain. In contrast, you can’t really achieve much with shares held in a digital trading account. 

The Power of Dividends for Seniors

Dividend-paying stocks are very popular among seniors – and for good reason. As the name suggests, these stocks pay out regular sums of money – and this passive income can be incredibly important for retirees. However, it may also be attractive to a wide range of other individuals – including working-age Americans. 

Young divorcees may love the idea of receiving monthly dividend payments. These payments may allow them to focus more on parenting and enjoying life. It may even give them a chance to retire early. Dividends may also represent a vital form of support for disabled divorcees or others who cannot work – such as stay-at-home parents. 

Achieving Balance

Of course, it is always possible to enjoy the best of both worlds. Divorcees could walk away with a mixture of real estate and stocks without having to choose one over the other. For example, a spouse might sell a $1 million home and use their 50% share to purchase both a small condo and dividend-paying stocks.