How to become a millionaire - even with bad advice.
Invest five dollars a day at 8% interest over 42 years and, presto, you’re a millionaire. That’s it. Easy enough and, quite frankly, a pretty solid plan compared to most investment options available today.
I recently read an article in The New York Times about a Wall Street stock broker who claimed it makes more sense to rent than to own a home. She surmised that with the annual costs of maintenance and improvements, insurance and the generalized “fact” that real estate has been the poorest return in investments since 1908 renting simply makes more sense, for her. The few items she failed to mention was that she lives in Manhattan and is single. If I were single, a smart stock investor and living in Manhattan I would possibly choose to rent as well. But, for the majority of the U.S. population, we have full time jobs other than as stock brokers, a family and we don’t live in Gotham.
I think what bugs me the most about reading articles such as these is that it further clouds already murky waters. With so much negative news about where the “national” real estate market is, or is possibly heading, home buyers are suffering from information paralysis. Just like investing in stocks, the real estate market is relative to the areas which are performing better than others. To make a blanket statement about either one is simply foolish. And, just like stocks, the real estate market is cyclical and there are good times and bad times. Maybe the biggest difference is that you can’t curl up with a good book, create life-long memories with friends or have a birthday party for your five year old in your portfolio.
After glancing over the most recent real estate activity report for Bluffton, South Carolina it would be hard to say the area is suffering the negative effects being squawked about for the “national” real estate market. Oddly enough, there is another area near the Atlantic which has reported a strong real estate market over the past year – Manhattan.
Posted: May 14th, 2007 under Bluffton real estate, Market conditions.
Comments: 4
Comments
Comment from Christoph Schweiger
Time: May 14, 2007, 11:20 pm
Generalizations and the lack of balance of contrary points of view make me hate the media. Real Estate has been good to me, without investing in Real Estate I would not be where I am today. The first home my wife and I bought made us a bundle and we lived in it for 3 years. We kept that home and bought the next door neighbor’s house to move up and rented out our first home. We renovated both homes and created lots of memories before we sold them both and moved on to our dream home……on the other hand I did not make nearly as much in the stock market and almost lost my shirt….
Comment from stacey
Time: May 15, 2007, 8:58 pm
I usually try to not let these articles bug me, but there is a level of separation from the “real world” in these articles. Generalizations become all-encompassing fact, and it makes the task of serving a client just that much more difficult. People are getting paid, after all, to write stories to generate advertising. If the top few spots at The Blog Toplist are any indicator, the supposed doom and gloom of real estate gets a lot of attention.
Comment from Toby & Sadie
Time: May 23, 2007, 2:49 pm
Generalizations. Ahh the great “equalizer” of all people. All blondes are dumb, all Mexicans love tacos, all boxers are hyper.
And the problem has become that generalizations are not only being believed outside the community but by those in the community as well.
Also now to remember that our media attempts to be adversarial, so they have to find a financial planner that is contrary to what is viewed as the norm.
Is buying a home a great investment? Maybe. It depends on the situation. My wife and I “lucked” into our current home and like Christoph we could make a nice chunk of change if we sold it. However, we didn’t purchase it as an investment but rather as a liability and a home. Our house has equity — but it like potential, it is only “good” when you harness it properly.
But then I’m a little different.
Comment from stacey
Time: May 23, 2007, 8:05 pm
Sorry Toby & Sadie, your comment was filtered as spam. It’s actually a little ironic ( I know that it’s not the best use of irony, sorry.) since I think Toby was the one who mentioned the use of the filter a few months back. It has caught 1,850 spam comments so far. This was the first which was not actually spam.
Anyway, I agree with with the fact that the investment aspect of buying a primary home should be regarded as a secondary consideration. However, the market in Bluffton is made up of possibly 40% second or even third homes. Most of these buyers are from a business background and they tend to focus on the homes as investments.
I guess that plays on the mind set for the agents in the area.
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