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The real estate myth

Letter-writer Mark Vosylius totally missed the message of Bruce Yaccato’s column: real estate is not the most advantageous investment. A $200,000 investment in a home in 1988, old 25 years later (the average mortgage length) for $500,000, would net $270,000 (interest excluded), minus the $200,000 investment and six per cent real estate fees. This is a typical return.  The interest on that money —  remember rates were more than 13 per cent (and wildly fluctuating) — would be between $400,000 and $600,000.

for-sale

Renting a luxurious apartment, that interest would cover that cost and provide an excellent standard of living. And it gets better: you would have that invested money. An astute investor who put the same US$200,000 in Microsoft in 1988 would have US$38 million, before taxes. Of course, few have the ability and foresight to make exceptional investments, but buying a solid stock like Johnson & Johnson would be worth more than $4 million US. There are many other examples of companies that would be a better place for Vosylious to park his money. Young people need to challenge the investment strategies their parents followed. Life changes quickly and so should your investment mentality.

Resourec By : http://news.nationalpost.com/full-comment/letters-the-real-estate-myth

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