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"Rich Dad" does seriously advocate real estate, not to the exclusion of those other options but certainly above them. Real estate stands out mostly because of
by T-hawk 15y ago
"Rich Dad" does seriously advocate real estate, not to the exclusion of those other options but certainly above them. Real estate stands out mostly because of the leverage that a mortgage can provide: you can control the income and appreciation of a $250,000 asset with only $50k of actual capital. You can't get 5-to-1 leverage on stocks or other such passive investments.
That said, real estate is certainly no magic bullet. You certainly take on risk, of depreciation and vacancy time and deadbeat tenants. And it's hard work to keep a property maintained or expensive to hire someone to do it. It's not for everyone. These are the points that "Rich Dad" doesn't make and must be included for a balanced perspective.
- thematt 15y agoYou can't get 5-to-1 leverage on stocks or other such passive investments. Not exactly true. Derivatives have significant leverage, often times way more than 5-to-1.
- spqr 15y ago"You can't get 5-to-1 leverage on stocks or other such passive investments." You can get much more than that. For one example: buy the 30 Year Treasury Bond Future. A single futures contract is for a value of $100,000 but will cost you margin of $4,185. That's nearly 24 to 1! See here: http://www.ccstrade.com/futures/US/margin/ http://www.ccstrade.com/futures/US/margin/
- fleitz 15y ago5 to 1 margin on stocks is not hard to achieve, it's just more risky than 5 to 1 on a mortgage because your position is marked to market where as mortgages are not marked to market, but are much more illiquid.