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There was an analysis on HN not too long ago that extrapolated real estate and stock market valuations back 150 years or so and concluded that the return on inv
by rm_-rf_slash 9y ago
There was an analysis on HN not too long ago that extrapolated real estate and stock market valuations back 150 years or so and concluded that the return on investment for both were roughly at pairity.
Buy an index fund.
- leetcrew 9y agothe ROI for stocks would have to be significantly higher than the ROI from real estate for it to make sense for a working/middle class person to invest in stocks instead of the structure they live in. you need to pay for housing either way.
- jogjayr 9y ago> you need to pay for housing either way. Yes but you don't have to pay the same amounts. There's a reason "rent-or-buy" calculators exist.
- closeparen 9y agoThe insane levels of year-over-year appreciation/rent hikes make any calculator say "buy" in expensive major cities, regardless of the difference in cost today.
- jogjayr 9y agoCitation needed. That's not the case in the SF Bay Area, Manhattan/Brooklyn, Vancouver, or Toronto. The new tax bill's provisions to cap mortgage interest deductions has further tilted the balance against expensive houses.
- com2kid 9y agoOnce owned outright, a home also serves as insurance against economic downturns. Rent, 4 or 5 year economic slump and people are out of a home. Ownership doesn't lead to this. Even mortgages have more forgiveness for late payment than most rental agreements. Multi-generational property ownership also helps. Buy a good house now, and your kids/grand kids have insurance against economic downturns.
- dahdum 9y agoThat depends almost entirely on the rent to value in their local market, and is far more volatile than index funds. I rented a 1.3m home in CA for $3,500/month, made no sense to buy at that level other than a forced savings program.
- williw 9y agoAlso no tax incentives for investing in stock compared to real estate.
- lotsofpulp 9y ago401k, defines benefit pensions, HSA, IRA, 529 plans, etc. There are tons of government subsidies for the stock market, and not just via tax incentives.
- dahdum 9y agoWhat tax incentive is there for real estate other than the small SALT deduction? A mortgage is just leverage, you can similarly deduct margin loan interest (with no cap other than investment income IIRC).
- branchless 9y agoPeople don't typically have access to leverage for an index fund. Most debt is printed for purchasing land.