Real estate vs mutual funds!

[Thomas Beyer]

Caution that ETF strategy / robo-advisor only works well in trending markets and liquidity falls apart when you want to exit the position. In oscillating markets, ETF strategys will likely underperform.

Stock market always oscillate unlike RE which fluctuates only very slowly, not weekly or daily or certainly not minute-by-minute like stocks, but the degree of oscillation or volatility varies. It can work in your favour too when buying on dips.

Volatility is measured by the VIX, the volatility index and the old adage is: When VIX is high its time to buy, when VIX is low it’s time to go.

ETFs generally fairly liquid but of course losses might be exaggerated !

Thomas Beyer, Asset Manager, Investor, Author, Father, Mentor www.prestprop.com

==> Check out our latest RRSP or TFSA eligible two year investment with a 40%+ yield target at www.investoliver.ca

 

[Edison Reis]

Great discussion !

Like any backyard party, I love a wide spread of different foods and schnapps..... I use the same approach to our investment strategy.

Even knowing I love and trust REI, being bound by “my full time day job” and within a higher taxation bracket (and a company matching RRSP) putting a big chunk of my paycheque into RRSP becomes a must.

I have been pulling as much money out from my employer’s RRSP provider and investing myself into into REITs, MICs and ETFs and this smorgasbord has been great. (they are still inside the RRSP umbrella hence allowing me to grow it faster while deferring the taxes)

You can only have a full pizza (financial wealth or freedom) if you add all the different slices !

Note: by now you also know that I love food.


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[Chrisgeorge2365]

So tonight I went to dinner with a friend of mine and he had a woman with him that sells mutual funds. We were discussing mutual funds compared to real estate. She was trying to tell me that real estate doesn't perform as well as mutual funds. I told her I totally disagree . I gave her an example that I can only buy $100,000.00 of mutual funds with a $100k and I can buy a million dollars of real estate with $100k. She was telling me that mutual funds make you 12% on average every year. I told her I have a hard time believing that.
So when I got home tonight I decided to run some numbers on her assumption using my investment out of my pocket for what I put into my real estate portfolio .
So I bought my first multifamily in 2002 . Since then I have purchased 8 multifamily and 2 commercial buildings and I have only put about 280k out of my pocket and the rest I financed. So running her assumption my 280k making 12% every year compounded comes out to about 1.7 million over 17 years.
So my real estate portfolio is worth about 20 million today being conservative. So that is why I am a firm believer in real estate.
I tell everyone that I would buy real estate any day before mutual funds. This is to me the proof in the pudding .
That is just my situation . I am sure there are others in real estate that even have done more than that with that kind of money.
I say to everyone keep investing smartly and the properties will bring you to wealth and you will be able to quit your day job.

Interesting to read. I found this really useful. Thanks

 

[Rickson9]

Comparing apples to oranges always seems to come out apples if the storyteller likes apples

 

[Pack]

I agree with you. The real estate market always showed us how safe it is and how fast we can reinvest our money. The median home value in dollars or any currency it's not going to fall. For example, after the whole covid situation and the lockdown, we realized the real estate is increasing its value. On top, I was never struggling during quarantine that I could become broke. On the other hand, almost any other type of investment can let you down. Almost anyone might steal a bank, and it can liquidate and so on.

 

[Thomas Beyer]

RE is not “safe” either when too levered or income too low.


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[Mitch 6711]

I agree comparing apples to oranges. The ETFs I own I buy with one click. The real estate I own and rent requires my time and energy on fairly regular basis.


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