[fintstone]

It depends on upon your tolerance for risk and for pain.

An index fund would probably pay the highest return for the least pain (purely passive).

Rental real estate would be great in certain markets, but to make the same return, one would have to leverage the money more (20% down on $1M or more of property) and put up with tenants, crappy property managers, etc.

Or diversify. Put some of the money into both.

I split my investments into both...although I really do not leverage my money in single family real estate much anymore (most are paid off...so instead of 5-10% investment in each, it is 100% now) ...so I would really be better served to pull money out of those properties and invest it in the market or use it to leverage more rental. I would if younger but am not as risk or pain tolerant as I once was. When you have nothing, you have nothing to lose.