Help me with your view on this debate I have with a friend. If you have $2m today, whats the bath path to most wealth over a 30 year period?
- Invest in Property (Residential or Commercial) – assuming a net yield of 6% with inflation aligned rental increases (say 2% pa). Also assuming 50% borrowing and the rest the $2m cash (so property portfolio would be $4m worth)
- Invest in an ETF (S&P500, Nasdaq or Total World) – assuming a 9% return pa avg
What would you do?
If Someone Gave You $2 Million Today, How Would You Invest It? Property vs Shares
byu/shanewzR ininvesting
Posted by shanewzR
34 Comments
VOO
Etf, for me, I like the “quick” liquidity of S&P for example
I prefer stocks over property imo. 2 main reasons being property taxes every year. Stocks are more liquid as well.
But it’s good to have a little of both. The more diversification the better.
One of the main factors to consider is that with $2m cash (assuming a 80% LVR) ration, you could buy $10m worth of property if you could demonstrate your ability to repay the loans. Property is all about leverage, which usually isn’t as easily achievable in other investments. Or used to be. These days there are a lot more geared products available.
In property, you can then also use equity as security for new property.
Drugs and hookers
All in OPEN
Not property.
All on red. I mean, VOO.
SCHG
no RE for me.
Bitcoin
If I really wanted exposure to real estate, I’d just buy REITs – preferably on an IRA.
So I would invest the $2M in taxable (low cost indexed ETF’s) and rebalance my entire IRA for that REIT exposure (if I wanted excess exposure to real estate for whatever reason).
Property investing (buying properties, probably super leveraged) is straight up a terrible way to invest. The principal reason for this is:
There are orgs doing exactly this but they have 100x the resources and experience. These are called REITs.
You think 2 mil, maybe leveraged to 10 mil, is a lot? Most REITs are in the 10s to 100s mil range with many at 1b+.
Thinking that you manage properties better than these guys is like trying to build a truck in your backyard and thinking that buying parts for that is better than investing in pacar or Ford (depending on size of truck).
Sure, you can get lucky with specific properties. You can also get lucky in the lottery.
I don’t care how wrong I’d be for doing it, but right away I’m spending 200k on building a new house I already have the planning and permissions for, but the pandemic messed up the actual start of the construction and ever since I don’t have the means to build it. My mom is retired now and needs a good place to live.
The rest will go into ETFs.
It would be divided up in purchasing a house in a HCOL area likely under a 1 million then using the rest to build a decent stock portfolio
I already have over $2M invested in VTSAX (mutual fund version of VTI). I’d throw the new $2M in there as well.
No real estate for me. I want passive income, not a job dealing with people in the RE industry.
$1 million in US, $1 million in international
Large piece of land with trees. Keep working and over time I’d build a house and move there with my family. Probably north island NZ. Set up a long term plan for a solar array.
You are putting the cart in front of the horse. What are his financial goals? Making the mostest return is not a defined financial goal. The goals and timelines define what the best course of action would be.
I would put this in front of a fee for services financial planner over a bunch of yahoos on the internet (no offense intended to my fellow yahoos). Not only will he get a proper plan for deployment, but the financial advisor would bring up a whole bunch of critical things you or your buddy don’t even know should be addressed.
I’m not into investing by buying real estate. It takes a lot of effort to manage and I just don’t see the upsides of it.
Property, that sell fried chickens!
$500,000 in QQQ , $500,000 in REITs , $500,000 in CD , $500,000 in selling puts/covered calls
1. Buy a house at the right price. I prefer an older (20-30yr) house that needs some updates and is priced slightly under market. 2300-2900 sqft, minimum 3 bdr, 2 full bathrooms. Spend about 20% of the house value on updates over the next 3 years. Let’s assume that costs $500k. This will eliminate your rent costs.
2. Put about $500k into Gold indices or gold bars. Normally I hate gold but right now it’s looking good as the US government continues to devalue the dollar
3. Put about $800k into an Market Index fund, I prefer VOO. Dividends from this should be sufficient to pay most of your monthly bills
4. Spend a significant amount of time learning to day trade and use the remaining $200k to day trade after 1 year of practice. Swing trading or Growth Investment are also viable ideas, the point is to do something a bit more risky and more lucrative
Are you asking if paying interest is better than not?
Why are you only levering the property? Why can’t you do the stock with the same 50% leverage? I’d go with stocks on leverage.
When in doubt, do both. Concentration is king to build wealth (mostly) and diversification is king to maintain wealth (mostly).
$1.2m in property, $400k in the market. Rest in a turnkey business like a laundromat or car wash.
50% BTC 50% voo
No way would I buy property, I don’t want another job.
Property. I need a bigger house and I couldn’t get one around here for less than 1.2 or so. Then I’d use the rest to pay off my existing mortgage, do some remodeling, and rent out the place I’m in.
Quality of Life >>>>> Financial Optimization
The latter is only valuable insofar as it enables the former.
bonds
Shares!
Vtsax vtaix, vtblx
Strc