/biz/ - Business & Finance

Index funds are more liquid.

Presume houses increase 10,000% per second, but there is a 2% property tax per year. Your expected ROI after 50 years is -100%, or a complete loss of your initial investment.

Most people just use housing to leverage long the housing market, but that leads to foreclosures when the FED increases interest rates.

>>52772106
Build wealth in Index fund and then move to real estate when you want to hedge against inflation

BREIT seems like a good play rn

>>52772298
A good way to get exposure to both.

>>52772170
Definitely nice.

>>52772222
>>52772215
Would it make sense to be all in on index funds until closing in on retirement? From what I've read, index funds have outperformed real estate (except for boomer anomalies) in long term. So as one is about to retire from working a job, would it make sense to pivot into real estate (and dividends) for the cash flow?

>hedge against inflation
so would these next months be a good time to buy real estate as an investment? Lower price and only 20% down gets me 100% utility of the asset. So I could put 20k down on a 100k home and rent it out for the market rate of a 100k house, then refinance it if/when interest rates go down?

>>52772298
>so would these next months be a good time to buy real estate as an investment? Lower price and only 20% down gets me 100% utility of the asset. So I could put 20k down on a 100k home and rent it out for the market rate of a 100k house, then refinance it if/when interest rates go down?
1. You aint getting 20% down on investment properties
2. Remember that CRE rates are higher than normal mortgage rates
3. Hold cash in Treasuries until you see 7% cap rate NNN properties.

>>52772431
Meant for
>>52772398

>>52772431
>Hold cash in Treasuries
Which ones specifically? 13 week?

>>52772106
The returns on a fully paid house are insane.
If I had a million dollars. I would buy three houses and rent them out.

>>52773959
Or you could get $30k from divvy stocks without fixing a single roof or toilet

>Would it make sense to be all in on index funds until closing in on retirement? From what I've read, index funds have outperformed real estate (except for boomer anomalies) in long term. So as one is about to retire from working a job, would it make sense to pivot into real estate (and dividends) for the cash flow?
Real estate returns are measured wrong.
You buy a house for $100k.
You put 20% down which is $20k.
You put a tenant in the house and the tenant's rent is equal to your mortgage + expenses + vacancy, etc
The house appreciates 5% which is $5,000.
You only paid $20,000 into it though so your investment actually saw a 25% return that year.
That's really best case scenario though that just shows the objective of what someone is trying to achieve with real estate investing.
If you just buy the place yourself to live in it's kind of dumb IMO unless it's a really good buying opportunity.
What I mean is buying real estate in today's current market conditions is fucking dumb. You are legit buying basically the top of the market with a retarded interest rate that is going to absolutely suffocate you trying to make the payment each month.
Contrast that with crypto where the market is near bottom and the chance for 10x returns is still good.
I genuinely don't understand why anyone who doesn't have significant net worth would be betting on anything outside of crypto right now. Like I know people who are scraping $100k together to put down on a house and it's just like why the fuck would anyone do that?
At the end of the day none of it matters if you don't learn how to read a chart and what is going on in the macro picture.
Roboinvesting, set and forget it DCA into S&P500 is dead.
At a minimum learn whether you're in a bear or bull market and learn what the signs are for when that's changing. There's plenty of resources available. Invest the time and you will make 10x more money swinging crypto or leveraged ETFs than you will with some Boglehead bullshit

>>52773959
If I had $1mil liquid I would put $500k into dividends and treat it like a savings account so even if I fuck up I would never be dead broke.
I'd put the other half into crypto and swing for the fences looking to turn it into several million.
If things go right and I get my millions I'm dumping it into dividends and now lets say I've paid my taxes and I've got that $500k in dividends + another $2.5mil post tax money so I've got $3mil farming me $180k a year. Ok now I'm gonna go play mr real estate investor

>>52774696
>You only paid $20,000 into it though so your investment actually saw a 25% return that year.

I was waiting for someone to put it like this.
>>52774831
>If I had $1mil liquid I would put $500k into dividends
What if you were 25, 35, and 45 years old? Would your strategy be different? Would it make sense to take that 500k and put more into growth index funds? I think I've read and have backtested myself that growth have outperformed dividend on a long term scale. That dividend is more for when you are about to retire from your job and need cashflow.

>>52774696
>At the end of the day none of it matters if you don't learn how to read a chart and what is going on in the macro picture.
The only tangible thing I see is that that federal reserve rate is raised every month and that demand isn't crushed yet.

>>52774696
>Roboinvesting, set and forget it DCA into S&P500 is dead.
I've been cash since December of last year (except for fomoing a little in March) and haven't began to DCA, but why do you think DCA strategy is dead?
>leveraged etfs
I've been eyeballing SQQQ. The big narrative is tech pullback but since everyone is saying it tells me that it's going to swing wildly for the pros to capitalize on. How long would you hold SQQQ (3x inverted QQQ)?

>>52774696
also the real estate "bubble" we have seen recently is only concentrated in a few areas and is subjected to strong recency bias. if you looked at the real estate market across the whole usa across and included data from the past 100 years real estate as investment has struggled to keep up with inflation. there likely would have had to been an element of "luck" with your property getting gentrified if you actually wanted to see a better return than index funds.

>>52772106

>>52774696
>You only paid $20,000 into it though so your investment actually saw a 25% return that year.
correct, that's leverage.
>f you just buy the place yourself to live in it's kind of dumb IMO unless it's a really good buying opportunity.
correct
>I genuinely don't understand why anyone who doesn't have significant net worth would be betting on anything outside of crypto right now
incorrect. you have no idea what will happen, and no insight by staring at a rainbow graph. you only think it will go up because that's what it did in the past for some reason, and anyone investing in crypto is simply betting. everyone here autistically staring at graphs are most likely a combined net negative.

>>52775331
>Would it make sense to take that 500k and put more into growth index funds?
at the end of decades of investment, dividends would pay out more, whereas if you're "stuck" with a growth stock you have to sell pieces of your nest egg to live. if you invest in dividend growth on the other hand, you'll get dividends without having to sell your egg

>>52775908
I've done 20 year back tests with QQQ vs ATT, INTC, and other dividend stocks and the index fund won. Unless I have no idea how to use the backtest tool. Have you tried it?

Housing you can live in and fuck your tenants wives when they come up short on rent.

>>52774517
Park 1 million in OXSQ, get $10k a month.

>>52774517
>>52776028
>>52774831
Look at it this way.
>3 houses rented out
>$2k a month for rent
>6k total a month
>12 months
>72k a year
>fuck single moms when they can't pay up

>>52776317
>3 houses rented out
>>$2k a month for rent
>>6k total a month
>>12 months
>>72k a year
>>fuck single moms when they can't pay up
Look at it this way
> eviction moratorium
> rent caps
> Sorry landlord, i'm not paying this month. Sure you can evict me, but those proceedings won't start up again in a year. Maybe if you pay me $4k to leave I won't wait you out while your mortgage payments become past due.
Blah blah blah "Vet tenants" blah blah blah.
Look anon, I get it, real estate is a great asset and having some rental properties is a good idea but I wouldn't keep it all in one basket.
Here's a list of 500 highest yielding dividend stocks you can buy right now:
https://www.marketbeat.com/dividends/high-yield/
Look for stuff that's under 20%. Anything higher than that is unsustainable, or a 1 time pay out.
So anon, look at it this way
> $1 million cash
> Put in OXSQ, OXLC, BGS, IEP, etc
> Make ~$100k a year
> Don't have to deal with shitty tenants and fucking deadbeat women.

>>52772106

S&P 500 is a fucking meme, it's too weighted towards FAANG stocks

>>52776671
but they made bank over the last 10 years

>>52776317

A house that rents for 2k or 24k/yr is gonna be 500k most places. Investing 500k you can withdraw 20k. The house will require you pay 5k/yr property tax, at least 3k/yr in maintenance, and the 24k is taxed at ordinary income levels. You can depreciate your house and deduct some expenses true. But it’s also less liquid and much more headache than owning index funds. If you use leverage with houses you can come out ahead if the market is in your favor but you can also get screwed. Shitty tenants and leftist politics can completely ruin your investment. You can’t really chill as much with housing like you can with stocks. If you have a career with a high income ceiling you’re better off putting your time into that as opposed to landlording

>>52775933
You're taking an index fund and comparing it to individual stocks, which is a mistake. I would say try SCHD, but its relatively new. You would also have to calculate DRIP. VTI will be greater than SCHD over 30 years, but when VTI is paying $20k in dividends, SCHD will be paying a few hundred thousand that you can either pull from or reinvest.

>>52775839
It's called a calculated risk. Yes I look at charts and make decisions based on them. I can apply everything you're saying about crypto to real estate so it's a moot point.
>>52775331
>What if you were 25, 35, and 45 years old? Would your strategy be different? Would it make sense to take that 500k and put more into growth index funds? I think I've read and have backtested myself that growth have outperformed dividend on a long term scale. That dividend is more for when you are about to retire from your job and need cashflow.
That's why I would bet the other half ($500k) on crypto. I'd be keeping something aside in the dividend portfolio so I don't end up like one of these guys who got rekt via FTX and lost it all. Take the big swing with crypto, it if blows up you've still got that $500k in dividends, that's the strategy. At this stage in my hypothetical strategy I am merely using the dividend portfolio as a high yield savings account. I would liquidate it if a better opportunity came around, for example let's say you know a serious entrepreneur who is doing a raise for equity in their new project. Maybe that's something you'd want to take a bite at and depending on what the capital requirements are you may not need to liquidate your entire portfolio, let's say the minimum is $250k for some equity. If the numbers make sense and the deal looks good that's something I'd take a bet on because it's going to be long term cash flow and it's outside the volatility stocks, crypto, or real estate which all have at least some correlation.
Again, the point of that dividend portfolio is just a way to preserve some cash. If you want to go with S&P500 instead, that's fine I don't think it makes enough of a difference to really matter, dividend portfolios just tend to be less volatile and we're effectively using this as parking money while we wait for some better opportunities and hoping our crypto bet pays off.

>>52775418
I think the strategy is dead because
A) I think the average investor has evolved and become more educated about market conditions, taking profits, and risk management than previous generations
B) I think we're probably going to see a choppier market for a while and less of the 'up only' people have been used to.
I think the time for SQQQ was when you sold in December. Nice job on the timing but you may just be better off holding the cash and not fucking anything up for the time being. I think we're pretty close so good job so far.

>>52776317
How much are you paying for these houses because that's kind of the most important part.
Either way there isn't really a great way to frame this IMO. When all these books about real estate and index fund investing were written there was no crypto, there was no 3x leveraged ETF, the average person didn't have access to shorts, longs, call/put options. A lot has changed.
The biggest issue with buying houses in cash is the opportunity cost.
If you buy a $500k house to rent it you but you're worth $5mil liquid it doesn't really matter.
If you're a Chinese citizen trying to get your money out of the country so the CCP can't take it from you, then yeah buying a house all cash is better than losing it all to the government.
But if all you have is $500k and you spend that on a house to rent it out for $2500/month (6%) before expenses, that just sounds like a bad deal man especially for the headache of dealing with tenants. If I'm getting 4-6% on something it better not be calling me to complain.
Moral of the story is always consider opportunity cost.

>>52777562
>I can apply everything you're saying about crypto to real estate so it's a moot point.
except real estate has actual inherent value needed by everyone to meet their basic needs, whereas shitcoins are highly speculative pump and dumps. you're basically trying to peer into the matrix and determine what future actions people will make based on their past actions while expecting to find rationality. i'm not sure how far you can really calculate that risk, so i think it's easy to fathom why the typical person doesn't want to put their accumulated life's work into the next rug pull.

>>52777858
And you're not going to grow your net worth at a meaningful rate by taking nothing but low volatility trades. Which is why I added the caveat of 'significant net worth' to the original post you quoted me on.
Real estate is such over hyped bullshit and I'm sick of how it gets pushed to everyone via consensus formed through ridiculous tropes like 'you're just throwing away money on rent'. Like that one in particular really pisses me off because it's so much more complex and nuanced than that. Real estate in the form of primary residence as the biggest portion of the net worth (positive or negative) is only appealing to people who literally don't know what else to do with their money.

>>52772106
You need one of those to live in. And no. You can't just live in the woods. It's illegal.

>>52772215
>Presume houses increase 10,000% per second, but there is a 2% property tax per year. Your expected ROI after 50 years is -100%, or a complete loss of your initial investment.
Lol?

>>52777987
>Real estate is such over hyped bullshit
i agree, it's the boomer investment. renting isn't nearly as bad as people make it out to be, when homeowners still have to throw money down the drain with property taxes, interest, maintenance, hoa, etc. It's better as a pure investment if you rent it out, but as a primary residence, the upfront cost of owning a home, including the opportunity cost of investing a down payment into something else, is pretty high. But, trying to add significant net worth by investing a significant amount of money into crypto is highly risky. you might as well start a successful business since that's really the only meaningful way to add significant net worth.

>>52778221
It's a calculated risk, and regarding business.not everyone has the ability or desire to create and run a business. I think it's great if someone can and I agree with you that if that's what they'd like to do it should take priority over investing in crypto or stocks or whatever. My advice to most people is to take advantage of this window of opportunity in crypto and the returns available. If it was a sure thing the returns wouldn't be so attractive but with some risk management and taking the time to actually study charts I think the opportunities are much better than what can be found elsewhere. Risk appetite is going to be different for everyone but I think with the proper tools and education crypto becomes a lot less scary or illegitimate.
I am genuinely so happy that the general public consensus is switching back to 'crypto is a ponzi, crypto is dead, crypto is a scam, etc' because I'm about to take a really big bet that the sentiment is going to shift once again and people are going to start FOMOing in like crazy.
I think the economy is going to get absolutely crushed, I think people are going to get wiped out, and I think once that happens there will be a renewed optimism as the Fed begins to lower rates and markets rally and business picks up again.
You seem like a reasonable guy though and I appreciate that we can disagree and find common ground on some things that we do agree on. I hope you make it anon.

>>52778650
good luck anon, i hope we make it.

>>52772106
bitcoin
>cant live in the blockchain
thats where you are wrong

>>52772106
Index fund because it's liquid, I can move wherever I want and take it with me, and I don't have to deal with wagie tenants or risk that I can't find tenants.

Also real estate is overvalued because of Boomers with a master serf fantasy, meaning future expected gains are low or negative.

would it be dumb to go all in $SCHID?

>owning a home is dumb because you pay property taxes, interest, maintenance, hoa, etc
>*rents a home and pays the lanlords property taxes, interest, maintenance, hoa, etc*
Remters are the dimbest cucks in society I swear.

>>52777816

Investing in housing is good if you’re very handy and live close by to your properties, if you are good at finding undervalued properties, if you’re good at screening tenants, and the market is booming which will magnify your gains using leverage.

One other reason is if you’re Uber wealthy and starting to worry about wealth preservation/diversification

>>52779630
You should actually try running the numbers some time.
>>52779700
The market isn't booming, the market boomed, and now it's going to blow.

>>52772106
>Picking just one
NGMI

>>52781434
I did and the numbers tell me renting for more than a year is foolish. You should be buying and selling.
>T condo fag and it still makes more sense financially to own it than rent.

the apartments I lived in that I almost bought are still doing jack shit and its been almost 7 years since I lived there. If I had bought one I'd be bagholding a crab with maintenance issues. houses are somersaulting here but apartments have done nothing. houses start at 600k and thats for an old pile of shit that needs 20k in maintenance each year. no thanks.

>>52779630
>>52782084
you should definitely own your own home, but investing in further properties vs other investments is a more open-ended question

I think rental income is significantly more stable than being in markets, assuming you;re not catering to the lowest common denominator, but there's also significant opportunity cost

>>52774696
>At the end of the day none of it matters if you don't learn how to read a chart and what is going on in the macro picture.
How to get good?

>>52772215
Ask me how I know you dont own any property.

>>52779019
>schd
That's what I'm doing in my Roth IRA, but I'm pretty new
>>52778650
Is the best bet to stick with eth and btc? Those seem like they are pretty much guaranteed to be relevant again, but their market caps are huge already.

>>52772106
Well real estate can literally go down so no to that
I have no idea where people have gotten this magical idea that HOMES ONLY GO UP
It must be the boomers trying to upsell their bags I swear

>>52782084
>>52782333
See >>52775626
You lose money if you choose to buy the home you live in, given the opportunity cost. Unless you buy a duplex or rent out the rooms. It's different as a pure investment if you have tenants paying for your investment.

https://www.realtor.ca/real-estate/25048311/189-bedford-crescent-sarnia

What do you guys think might see if it sits for a few months and pick it up around 240

>>52774696
Boglehead gets shilled hard by everyone but I keep thinking its boomer shit that isnt the best strategy anymore.