> As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (thou

> As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (though the tax shield might make it so). You misunderstood me, I said you would buy the $3M apartment, but I did not say you would buy it all 100% in cash. On the contrary, the standard approach is to put 20% down (~$600k) and pay the rest off with a 30 year mortgage at ~4% interest. The interest alone comes to ~$100k/yr and with principal and building common charges, the cost can easily near $200k. Your yield calculations fail to appreciate the leverage that exists in real-estate. Even in NYC, with a fast-growing real-estate market, market value rarely grows beyond 3%/year. So purchasing an apartment in 100% cash is almost certainly worse than renting and investing. However, few people buy in all cash (except for Russian oligarchs, and they have other issues). Most put down 20% and take loans on the rest. If you put down 20% on the apartment, pay 4% interest on the loan, and the apartment's value grows 3%/year, you net 11% increase on your initial down payment investment, making it attractive when compared to renting/investing.