Medium to long term investments: Mutual Funds Vs Real Estate
(May 15, 2017
)
You probably guessed what I would say based on my profession. Yes, the obvious answer is real estate, not just because I work in the industry, but because I practice what I preach.
About 10 years, I had a choice to make: either buy mutual funds and hope that they go up in value or purchase a tangible asset that could grow in value through leverage. Let’s use simple math and conservative numbers to make sense of what I am saying. ASSUME you have $50,000 to invest. You qualify to purchase a property worth $500,000. So do you invest in an intangible asset (mutual funds) or a tangible asset (property)? FOR SALE$500,000
MUTUAL FUNDS
Let’s assume the market goes up by 12% in 10 years. So by how much did each investment go up? FOR SALE$500,000
$500,000 + 12% = $560,000 [you made $60,000 in 10 years thanks to leverage]MUTUAL FUNDS
$50,000 + 12% = $56,000 [you made $6,000 in 10 years how sad L] In real estate, the appreciation is calculated not on your initial investment, but rather on the entire value of the asset when you purchase it – LEVERAGE IS YOUR BEST FRIEND! So you might be asking, what about risk? Both kinds of investments come with their inherent risks. With your Real Estate investments, you take on the responsibilities of being a landlord (sweat equity required) and the potential stress of a short-term shift in market value. As well, it’s imperative to remember that Real Estate is not a liquid investment – the state of the market will determine how quickly you are able to resell when the time comes. As for mutual funds, different risks emerge depending on the kind of security purchased by the fund. It’s widely understood that it is a risk that you can lose money with mutual funds. As well, it’s important to know that because they are securities - and not deposits - they are not guaranteed or insured by the Canada Deposit Insurance Corporation or any other governmental agency. In my experience, many investors do prefer the advantages and relative stability provided by their Real Estate investments, as well as the opportunity to leverage longer-term financial gains. Whether you choose to invest in Real Estate or in mutual funds, both kinds of investments require due diligence and research. I always advise my clients that any investment decision they make should be part of a larger financial plan – taking your whole financial picture into perspective! Want to know more? Be sure to reach out today – we can go over your options over coffee. My treat!
Cheers,
Karen BiffiProud mom & Realtor ®
About 10 years, I had a choice to make: either buy mutual funds and hope that they go up in value or purchase a tangible asset that could grow in value through leverage. Let’s use simple math and conservative numbers to make sense of what I am saying. ASSUME you have $50,000 to invest. You qualify to purchase a property worth $500,000. So do you invest in an intangible asset (mutual funds) or a tangible asset (property)? FOR SALE$500,000




Cheers,

Karen BiffiProud mom & Realtor ®
Categories

- All Entries (555)
- December 2017 (6)
- January 2018 (6)
- February 2018 (6)
- March 2018 (6)
- April 2018 (6)
- May 2018 (6)
- June 2018 (6)
- July 2018 (6)
- September 2018 (6)
- October 2018 (6)
- November 2018 (6)
- December 2018 (6)
- January 2019 (6)
- February 2019 (6)
- March 2019 (6)
- April 2019 (6)
- May 2019 (6)
- June 2019 (6)
- July 2019 (6)
- August 2019 (6)
- September 2019 (6)
- October 2019 (6)
- November 2019 (6)
- December 2019 (6)
- January 2020 (6)
- February 2020 (6)
- March 2020 (6)
- April 2020 (6)
- June 2020 (6)
- July 2020 (6)
- August 2020 (6)
- September 2020 (6)
- October 2020 (6)
- November 2020 (6)
- December 2020 (6)
- January 2021 (6)
- February 2021 (6)
- March 2021 (6)
- April 2021 (6)
- May 2021 (6)
- June 2021 (6)
- July 2021 (6)
- August 2021 (6)
- September 2021 (6)
- October 2021 (6)
- November 2021 (6)
- December 2021 (6)
- January 2022 (6)
- February 2022 (6)
- March 2022 (6)
- April 2022 (6)
- June 2022 (6)
- July 2022 (6)
- August 2022 (6)
- September 2022 (6)
- October 2022 (6)
Archives
- May 2023 (6)
- April 2023 (6)
- March 2023 (6)
- February 2023 (6)
- January 2023 (6)
- December 2022 (6)
- November 2022 (6)
- October 2022 (6)
- September 2022 (6)
- August 2022 (6)
- July 2022 (6)
- June 2022 (6)
- May 2022 (6)
- April 2022 (6)
- March 2022 (6)
- February 2022 (5)
- January 2022 (5)
- December 2021 (5)
- November 2021 (6)
- October 2021 (6)
- September 2021 (6)
- August 2021 (6)
- July 2021 (6)
- June 2021 (6)
- May 2021 (4)
- April 2021 (6)
- March 2021 (6)
- February 2021 (6)
- January 2021 (6)
- December 2020 (6)
- November 2020 (6)
- October 2020 (6)
- September 2020 (6)
- August 2020 (6)
- July 2020 (6)
- June 2020 (6)
- April 2020 (5)
- March 2020 (6)
- February 2020 (6)
- January 2020 (6)
- December 2019 (6)
- November 2019 (6)
- October 2019 (6)
- September 2019 (6)
- August 2019 (6)
- July 2019 (5)
- June 2019 (6)
- May 2019 (6)
- April 2019 (6)
- March 2019 (6)
- February 2019 (6)
- January 2019 (6)
- December 2018 (6)
- November 2018 (6)
- October 2018 (6)
- September 2018 (6)
- August 2018 (5)
- July 2018 (6)
- June 2018 (6)
- May 2018 (6)
- April 2018 (6)
- March 2018 (6)
- February 2018 (6)
- January 2018 (6)
- December 2017 (6)
- November 2017 (6)
- October 2017 (6)
- September 2017 (6)
- August 2017 (6)
- July 2017 (6)
- June 2017 (6)
- May 2017 (8)
- April 2017 (7)
- March 2017 (8)
- February 2017 (9)
- January 2017 (7)
- December 2016 (6)
- November 2016 (6)
- October 2016 (6)
- September 2016 (6)
- August 2016 (6)
- July 2016 (6)
- June 2016 (6)
- May 2016 (6)
- April 2016 (6)
- March 2016 (6)
- February 2016 (6)
- January 2016 (6)
- December 2015 (6)
- November 2015 (6)
- October 2015 (6)
- September 2015 (6)
- October 2013 (2)