I agree it is a silly premise.
However on a point of fact, there is no difference between the difficulty in getting a bank to pony up 200k to bet on shares and getting an index to allow you that sort of margin. The whole point of the attractiveness (in good times) of investing in property is the relative ease of gaining leverage.
Yeah, but if I could go back to 2001 I’d take with me the historical prices of Apple shares. From a starting account of 100 euros you could make a million pretty soon. Then maybe if I was smart enough I’d buy 5 houses in D9.
I wasn’t responding really to 2Gaffs Philip Dick-esque scenario, but rather the widely propagated belief on this site that the only consideration in evaluating an investment is yield. Saving money in a high interest account or investing in shares may arguably offer greater yields than property, but they lack (for ordinary people anyway) the capacity to leverage up.
Leveraging is what makes people rich. Of course it can make people poor too!
Fair enough. But there is a way to invest in equities and effectively borrow money. Buying an at-the-money option on the DAX is equivalent to the bank loaning you money to invest in a 100% capital secure tracker bond where the returns are linked to the performance of the DAX.
Yes. There are of course plenty of equity vehicles which allow for gearing. But I would question whether their risk profile or ease of accessibility would make them applicable to the ordinary Joe.
However, that was not the point I was trying to make. I was simply asking people to bear in mind that sometimes an investment with a lower yield-rate can be a better investment than one with a higher rate.
Since you’re going back in time, why stop in 2001. Go back to the 70’s at least. Hell go back to the 20’s to the foundation of the state.
What kind of dumb question is it? If you could know in advance how every asset class was going to perform over a 6 to 7 year period would you buy one that performed very well? What’s the alternative? Crisps?
It sounds like what you’re really trying to do is get some bears to admit that they regret not buying in 2001. Why don’t you just ask that?
In 2001 knowing what I did then, about houses and more importantly about myself and work etc, I decided not to buy. Do I regret it? Absolutely not.
I’ve had the opportunity to work in various different places and rarely be more than about 30 mins from work, usually much less. I’ve gotten a chance to spend almost 2 years working in the states.
And now I can live right beside the dart line in something that is definitely not a shoe box, bigger than most shoe stores in fact. About 25mins from kitchen table to office desk. I just tried working out how much this place would cost to buy, it made my eyes water. I’d need to shell out about 150K up front and my monthly repayment would still be way way more than my rent. And I wouldn’t have a nice handyman who drops by for free to fix things that go wrong.
Don’t worry, I’m watching the prices. If I can get a place this good for a price that makes a hell of a lot more sense than it does right now then I might jump. But the price would pretty much have to half.
Otherwise I’ll just rent it for enough years to save up enough to buy it for cash and effectively get it for half price because I don’t have a mortgage.
Non, je ne regrette rien. Come back to me in a few years. I’ll be singing the same tune.