Investing in Real Estate

20% per year average.

J.R. wrote:

#1- That's not true. Individual stocks have much higher loads over time.

no. mutual funds trade much more often then individual investors do. guess who pays the comission and taxes when a mutual fund trades stocks? The people who own the fund. In addition to comission fees "no-load" mutual funds also tack on purchase fees, redemption fees, exchange fees, and account fees when you buy and sell. On top of that they tack on management fees and distrubution fees. With the exception of index funds total expences range from 0.5% to 2%. That is huge when you consider the compounding.

Furthermore, most mutual funds are leveraged. So the intrest is another expence.

On the otherhand you can buy stocks from a discount broker for less then $20 per trade. As long as you are trading more then 100 shares you are way better off.

buffet line wrote:

If you invest 10%, you bear the risk for the first 10% of a decrease in price, below that, you walk, and the bank/lender/guarantor/taxpayers if it's an S&L is at risk for the rest.

If you put all your money in, then you bear 100% of the risk of loss.

Now, which investment is riskier to YOU?

I will try to be short with this.

If you invest 100 grand in 1 property worth 100 grand and the value goes down 10%, you lose 10 grand but still own the property.

If you invest 100 grand in 10 properties worth 1,000,000 (10%) and the value goes down 10%, you lose ALL 100 grand .

Also having 10 times the properties is 10 times the work to keep them updated and rented for a small increase in income. If you have trouble renting some for even a short amount of time the bank will foreclose and you will lose everything.

Now which do you think is less risky for you?

Thanks for "helping" these lib arts people with a very very basic financial concept. Increased leverage = increased financial risk. End of story.

J.R. wrote:

20% per year average.

I'm still waiting to hear the name of one of these mutual funds that have earned 20% per year for 25 years.

As far as I am aware, the highest average return for any mutual fund over the past 20 years is 18.9%, for the Vanguard Health Care Fund. For diversified funds, the highest for 20 years is 17.5%, for FPA Capital Fund. I don't have figures for average returns over 25 years, but I doubt that any are over 17%.

.... wrote:

no. mutual funds trade much more often then individual investors do.

That is crazy.

To me, this shows that you have no concept of investing.

I have never ever once traded a mutual fund, and have not even once ever changed one.

I will repeat, take a few years to read over my previous messages.

(what a dimwit . . .)

J.R. wrote:

That is crazy.

To me, this shows that you have no concept of investing.

I have never ever once traded a mutual fund, and have not even once ever changed one.

I will repeat, take a few years to read over my previous messages.

no dumbass, mutual funds are a bunch of stocks that a the fund manager(s) trade on your behalf. the fund managers trade the stocks in the mutual fund much more often the most individual investors trade the stocks in their protfolios.

But that doesn't cost you anything when they do, takes no effort or time on your part, and you personally don't need to change the fund or do anything, nor every need to watch the fund or it's results, not even for years... dumb ass.

Anyway all this talk about "investing" in stocks, which is really just throwing your money away to investment brokers, or investing in mutual funds -- not through investment brokers but rather directly to the companies -- ON YOUR OWN, is simply a not very important diversion from what this thread is all about which is investing in real estate.

The best way to invest for your lifetime is in real estate.

J.R.,

We started discussing stocks and mutual funds because, in trying to make a case for real estate investing, you made false statements about the alternative of investing in the stock market. In your follow-up comments, you continue to show a remarkable lack of understanding about fundamental matters of stock and mutual fund investing. For example, you're still missing the point about costs associated with trading within a mutual fund portfolio (the major cost, by the way, is generally not the brokerage commissions, but rather the spread between bid and ask prices), and you still haven't come up with the names of any of the myriad of mutual funds that have allegedly generated 20% annual returns for you over 25 years.

Because people actually take advice from anonymous posters, it seems entirely appropriate that some of us point out that you don't know what you're talking about.

Oldguy,

What you really meant to say was that YOU have no clue of what I am talking about -- which was obvious to me from the very beginning?

This is basically the crux of the entire issue that we've been discussing, i.e. that I know what I'm talking about and you don't.

By the way, I've had several securities licenses and sold them for a number of years, this being some 20 years ago.

How about you?

And stop begging me to tell you what funds to invest in, because I'm not going to do that.

J.R. wrote:

But that doesn't cost you anything when they do, takes no effort or time on your part, and you personally don't need to change the fund or do anything, nor every need to watch the fund or it's results, not even for years... dumb ass.

Anyway all this talk about "investing" in stocks, which is really just throwing your money away to investment brokers, or investing in mutual funds -- not through investment brokers but rather directly to the companies -- ON YOUR OWN, is simply a not very important diversion from what this thread is all about which is investing in real estate.

The best way to invest for your lifetime is in real estate.

To your first point, do you think that the institutional trader trades stock for free? Who pays him? The answer is the mutual fund.

Secondly, I find it hard to believe that 98% of people who invest in the stock market lose money over the long haul. The way you describe it, people would be better off going to a casino then to the stock market.

Third when it comes to investing in real estate, most people lack the assets to properly diversify their investments and the ability to take a liquidity hit. To solve this problem, financial companies invented REITs. REITs make a diversified real estate protfolio affordable to investors. Secondly, many REITs are exchange traded. This means that you buy them through a stock broker. But, because they are exchange traded you have liquidity, that is the ability to convert your investment into cash quickly without losing money.

Since you are a real estate genius, then I am sure that you know that if you have bills to pay, no cash, and plenty real estate you are screwed b/c you will need to sell that real estate at a discount.

J.R. wrote:

And stop begging me to tell you what funds to invest in, because I'm not going to do that.

Becuase your funds are imaginary

J.R. wrote:

By the way, I've had several securities licenses and sold them for a number of years, this being some 20 years ago.

How about you?

Since 98% of your clients lost money, I'm guessing that you worked in a boiler room. I hope that they locked you up.

J.R. wrote:

And stop begging me to tell you what funds to invest in, because I'm not going to do that.

Oh, darn. I guess I'll just have to stay in the poor house forever.

Actually, I've invested in no-load mutual funds for many years, and know the field very well. In fact, I was one of the earliest investors in real estate sector funds, a couple of which really have returned more than 20% per year over the last ten years. (I realize that 20% per year over ten years isn't as impressive as your funds' 20% per year over 25 years. On the other hand, my funds actually exist; yours don't.)

ytrewq wrote:

Secondly, I find it hard to believe that 98% of people who invest in the stock market lose money over the long haul. The way you describe it, people would be better off going to a casino then to the stock market.

Well then it would be 100%, but at least you'd have free rooms, meals, and lots of fun to go with it.

ytrewq wrote:

Becuase your funds are imaginary

They are to you. :)