Well, since you asked to point out flaws:Applesmack wrote: ↑ I've been seeing a lot of people saying that millennials should invest money in the stock market rather than real estate but I just don't see it. I looked at market data for the last 50 years and it seems real estate is a FAR better investment than the stock market. If I consider hot markets like Toronto, then this standard house bought in 1967 for $27k sold for 2.3 million today:
https://www.thestar.com/business/2017/0 ... sking.html
That's just an insane inflation adjusted gain... But maybe that is an exception because the Toronto and Vancouver real estate markets are really hot? So I took a look at Ottawa, which is my home town. For the Ottawa market, if I bought a house for 19k in 1967 it would be worth over 370k right now. Those gains are WAY above inflation (19k in 1967 would be 135k today with inflation)..
http://www.agentinottawa.com/1956-present-prices.php
In comparison the inflation adjusted rate of the S&P isn't actually that great:
http://www.simplestockinvesting.com/SP5 ... eturns.htm
$4 in 1967 becomes $7 today after inflation. That is a gain of 75%, compared to the 174% inflation-adjusted gain of the Ottawa housing market and Ottawa is by no means a hot housing market...
Infact, if we consider the power of leverage (houses are leveraged investments) the gains get even larger.
So to me it seems bad advice that the stock market is a better investment than real estate in this day and age. Can anyone point flaws in my logic here? I mean sure I didn't consider the full history of the real estate vs housing market, but I think 50 years is plenty of time and easily cover the investment time-frame of an adult up to retirement.
1) Did you use that chart in the link for your comparison? It ends at 2010, not 2017.
2) Did you use the blue line (starting ~$4 in 1967)? That is the index price return excluding dividends, you need to look at the orange line for total return including dividends.
Orange line went from ~$9 to ~$600 from 1967 to 2010 when that chart ends. That's 6500% return.
Where did you get $4 to $7 from?
If I use your 135/19 = 7.1x inflation number the $9 starting dollars is $64. $600 is still over 800% inflation-adjusted gain.
That trounces your 174% inflation-adjusted return on a house.
EDIT: Oh, I see you used the 3rd chart. Blue line $4 to $7.
Orange line matters. $8 to $55 = 587% inflation-adjusted total return.
Again, that's also just til 2010.
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