otc
Stylish Dinosaur
- Joined
- Aug 15, 2008
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Interesting. The S&P 500 Index closed at 135.75 on 31 Dec 1980. It closed at 1257.64 on 31 Dec 2010.
Dividend adjustment is needed over that period. I had looked at Jan 1, 1980 to Dec 31, 2010 which is about 28x, starting at Dec 31 is more like 21x
It is true though that real estate lets you invest with way more margin than anybody would give you to buy stocks...but the effect of that benefit is removed if you hold the investment until the mortgage has been paid off. Then you have paid the full value plus whatever the bank thought the time value of the money they would be accepting 30 years later was worth.
If you can make a small down payment, and sell at a significantly higher price in a few years (where you have barely paid down any principle), then the real estate investment becomes a little personal LBO.