Comment by mothballed

Comment by mothballed 4 days ago

I used a lot of the money I could have 'saved for retirement' on a house instead. Given how fast housing prices have risen and the compounding issue of the cost of rents, I'm not sure I'm too far behind. If you look at REITs, which combine the value of housing appreciation with increased values of rents, they are beating stocks in general over the period I've been working.

You might actually be worse off saving for retirement, at early career stages. Of course, some will point out retirement savings are tax protected, but so are modest capital gains on primary residence.

https://i2.wp.com/financialsamurai.com/wp-content/uploads/20...

Pooge 4 days ago

> You might actually be worse off saving for retirement, at early career stages.

A very well-diversified, international fund usually performs at 8% annually which is far more than you would get holding REITs (or worse, properties themselves). What you invest for (e.g. education, retirement, projects) is irrelevant as long as your time horizon allows for crash recoveries (measured in decades at worst and months at best).

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mothballed 4 days ago

REIT is largely a reflection of property appreciation plus rents, which is the opportunity cost of not owning your own property. The link I posted was showing an 8+% return once accounting for both over the a 20 year period that doesn't even include the recent COVID era price explosions.

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- Pooge 4 days ago
  
  > The link I posted was showing an 8+% return
  If I'm not mistaken, they usually pay at least 3% dividend which is added to your salary. ETFs don't trigger any tax as long as you don't sell. And I didn't check but REITs probably have higher annual fees.
  
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  mothballed 4 days ago
  
  I was using REITs as a proxy for the value and opportunity cost of buying your housing rather than investing in a retirement account. If you actually buy REITs this breaks down because REIT capital gains are taxable, while residence capital gains on a primary residence of modest value are not.
  It was not my intent to convey you should buy REITs instead of a place to live.
  After early career this breaks down though, because the tax advantage are only good for primary residence modest value homes, it's not a strategy that can be continually employed.
  
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ZeWaka 4 days ago

> 8% annually
Historically, yes - but the last 5 year average has been ~14% (I guess it's like ~9% if you're adjusting for inflation). I think 10% is a bit of a better number these days.
That's not to say I couldn't be eating my words when the market crashes tomorrow, however.

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