Investing in Real estate vs the market : which would be better

[Lowexpectations]

Apple would be worth 4.6mm AMZM 7.2mm

[hikernut]

Good returns could be found lots of places, not only in the FAANG stocks.


$400K put into Disney would be worth around $2M today. Visa, around $3M. Starbucks, around $5M. Just a few examples.

[NewbieHere]

Originally Posted by mathjak107

going back to 1987 when i started out my home was 169k . that home is worth 650k today .

not bad until once again you look at the same 169k in the fidelity insight growth model of plain ole fidelity funds which is more than 4 million today .

you could subtract out all the rent and taxes and buy multiple homes today .

on the other hand the commercial property we bought in manhattan by central park has returned much more than that in just 13 years .

so real estate is very location sensitive and your home you live in is very different than an investment property

But you didn't put down $169k did you? If you put down $20k, then it's $400k gain from $20k.

[mathjak107]

we paid cash back then , from the sale of a co-op we bought as an insider .

we then refinanced the house and bought an investment property since we couldn't get a loan on an investment co-op back then in 1987 .

but even so , it is just a straight up comparison of the same money put in to the two different investments . either one can be leveraged . the markets on margin and the property with a mortgage .

[mysticaltyger]

Originally Posted by k374

I know someone who in 2009 bought a home for $600,000 and he put $400,000 down on it at the time and took out a mortgage for $200,000. The 400k represented most of his savings and the only other investments he had to his name were his 401k which had around 150k. He was 38 years old at the time. He still thinks that was the best decision as he had a mania of having a house paid off.

In retrospect I see that if he had invested the $400k in the market he would've tripled it by now to $1.2 million. His home is currently valued at $800k so it's gone up a bit but not as much as the market.

If you were in his shoes how would you do this differently?

I generally view a house you live in as more of a consumer item than an investment. Sure it has some value, but it has a lot of ongoing costs that homeowners underestimate or forget about.

I don't know where he lives, but if it's not a super expensive metro area, I think 600k is overkill.

That said, he falls in the range of sensible as far as finances go. He made a big down payment on a house. He can likely afford to contribute a lot to a 401k and other outside investments.

Most of good personal finances is just avoiding the dumb things such as taking out too large of a mortgage, which he avoided.

He had an ok, if not fabulous amount in his 401k that he can continue to build on.

So even though it wasn't the best decision, he is still financially sound--and probably more sound than most people in the same income bracket as him.