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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
WHY DO WE TORTURE OURSELVES?
Stocks vs. Real Estate. Real Estate vs. Stocks.
http://www.millionairenowbook.blogspot.com/
1. It s not one OR the other. A Wealth accumulation plan contains both asset classes. Wealthy individuals invest in both.
2. Most financial planning experts would agree that you would be ill advised to buy stocks on margin (borrowed funds for leverage).
3. Most would also say, and I am one, that buying real estate without leverage (borrowed funds) makes little sense.
4. So, when comparing absolute returns of the S&P 500 vs. the returns of an 80% leveraged real estate portfolio, then you can decide which has the better long term record of wealth creation.
5. Please keep another point in mind when analyzing returns over time: According to the Frank Russell and Co, the manager of managers, the S&P 500 (10.2%) and the average fund manager (12.2%) has outperformed the average investor (2.7%) over the past 30 years. Why? Because, individuals who handle their own accounts tend to make too many moves and at the wrong time greatly retarding long-term performance. The point being that unless you own managed funds or index funds, you will not achieve any where close to the returns used in research reports comparing stocks to real estate.
6. THERE IS ONLY ONE WAY TO INFLATION-PROOF YOUR RETIREMENT: Real Estate Ownership
7. I WAS RECENTLY ASKED....
THE QUESTION: What is your exit strategy on real estate?
MY ANSWER: (and, I had to think about it for a sec) - DEATH
footnote: INVESTING IN PRIVATE (not liquid) OR PUBLIC REITS (and related funds) IS NOT INVESTING IN REAL ESTATE. THEY ARE STILL SECURITIES (paper assets), DESPITE WHAT A BROKER OR PLANNER IS TELLING YOU. THEIR RETURNS MOST CLOSELY CORRELATE TO SMALL CAP VALUE STOCKS.
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