Investing 102

[Woody]

I have to disagree somewhat with the advice on real estate, especially if you are talking about San Diego. Real estate will not stay flat over the long term in San Diego. I live in San Diego and can give you a real life example on one of the houses that I purchased. In 1994 I bought a house with a $30,000 down payment. Sold in 2006. My annual compounded return equates to 29% per year. That would be very hard to beat in the stock market, unless you happened to have put all of your money in Apple. When I bought in 1994, the market sucked and no one wanted to own real estate, just like today. The market stayed flat for a few years, but took off in the late 1990's. I would say now is a very good time to invest in real estate in San Diego, especially with mortgage rates at historical lows.

You might argue that my timing was perfect and I sold at the peak of the bubble. That is probably true, but while the value of the house is lower today, I still would have made a 15+% annual return if I had held and sold today.

Sure you have to make mortgage payments and pay taxes on the home, but don’t forget those are tax deductable and part of the payments are going towards paying down the mortgage.

I don’t disagree that investing in dividend stocks is a great idea, but personally, I would make my first investment in real estate assuming you are planning to locate in San Diego and remain there for the long term.

[Rybar]

Originally Posted by Woody

I have to disagree somewhat with the advice on real estate, especially if you are talking about San Diego. Real estate will not stay flat over the long term in San Diego. I live in San Diego and can give you a real life example on one of the houses that I purchased. In 1994 I bought a house with a $30,000 down payment. Sold in 2006. My annual compounded return equates to 29% per year. That would be very hard to beat in the stock market, unless you happened to have put all of your money in Apple. When I bought in 1994, the market sucked and no one wanted to own real estate, just like today. The market stayed flat for a few years, but took off in the late 1990's. I would say now is a very good time to invest in real estate in San Diego, especially with mortgage rates at historical lows.

You might argue that my timing was perfect and I sold at the peak of the bubble. That is probably true, but while the value of the house is lower today, I still would have made a 15+% annual return if I had held and sold today.

Sure you have to make mortgage payments and pay taxes on the home, but don’t forget those are tax deductable and part of the payments are going towards paying down the mortgage.

I don’t disagree that investing in dividend stocks is a great idea, but personally, I would make my first investment in real estate assuming you are planning to locate in San Diego and remain there for the long term.

Good point, Vancouver, BC, Canada is very similar.

I know of alot of Italian construction companies that are local that are building and developing in San Diego. That is really good news for you.

Up here there's a huge influx of cash and investors from Asia buying real estate and prices just keep going up and up to the point where crack shack homes in certain parts of town are $1 million or more. I have more than doubled my money on my home if I sell. But I think GW is preaching the slow and steady investing approach here. Real Estate investing is timing and holding as well.

[GregWeld]

My point about real estate vs investing is that your primary residence is NOT an investment. It's overhead/cost... and it's a time proven fact that the stock market outpaces ANY other investment including real estate.

If you want to invest in real estate as an INVESTMENT -- that is an entirely different discussion. I own commercial and residential investment properties. But they are INVESTMENTS not my primary residence.

My point to the original question was to invest the most he can since he's young - and put as little down as possible in his primary residence. Since everyone has costs of living somewhere - just make it that. And make some money in the invested assets.