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.
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.