Whoever holds the gold makes the rules
I hope you have a strong heart and low blood pressure in order to handle this pass week financial crisis. Who can imagine a 150 years old, Lehman Brothers would go bankrupt. I thought the US government said after Eron and Arthur Anderson crisis, they would have a stronger system to prevent financial crisis but once again, it's not the case. After all, the stock market is still 19% up comparing 5 years ago according to the news. Well, it proves to me that real estate is still the best place to invest. I randomly pulled out a 2 BR apt comparables appreciation between 2003 and 2008. This is my formula:
Appreciation based on purchase price: Appreciation over 5 years
based on 25% down pmt:
2008-2003(purchase price) _2008-2003(purchase price)
2003 purchase price 25% of 2003 purchase price
Downtown: 75% 301%
Burnaby: 67% 270%
Richmond: 96% 387%
New West: 83% 334%
Surrey: 128% 513%
I'm sure somebody doesn't agree the way I do my calculation but I do believe this is the most simple way to look at investing in real estate vs investing in stock market as a long term investors instead of being a speculators. I understand there's cost for owning real estate such as interest on your mortgage, property tax, monthly strata(association)fee, etc. Even if you discount all that from the above figures, the return is still far greater than investing in stock market and the most important thing is YOU take control, YOU are the President of your property. There's cost investing in stock too. I invest in stock only for the sake of the "Diversify" investment theory. However, when I look at the return, I'd rather invest in real estsate. To me, stock market gives you quicker small return in my opinion and trading excitement & it is easier to liquidate than real estate. However, when I speak to my long term investors, they all invest in real estate more than stock market. If you want to be safe, what make you think stock market is safer than stock market. My mentor taught me the golden rule "Whoever holds the gold makes the rules". Once your gold is in other people's hand, they make the rules. Owning real estate gives you total control whether you want to buy or sell. Owning paper money when you are only a small shareholder doesn't gives u any control at all. This is not the first time US giant company falls apart. You would think buying all the blue chips stock provide you a safety nest, think again! One last thing to remind ourselves is that there is no capital gain on our principal residents but there is no such principal stock exist.
When the general public is in fear or doubt, it is the best time for smart purchasers to come into the market to take advantage of the general public's fragile mentality.
