It depends on how you look at it. National price data from the Canadian Real Estate Association shows that over 30 years, stocks made 8.5 per cent per annum and houses 5.5 per cent. At first glance that would mean that Stocks are better than Real Estate as an investment. But that is not the full story. That is not even half the story. When comparing the 2 you cannot just consider the increase in the market. First, you have to live somewhere. It is hard to live in a stock. If you are going to invest your money into the stock market you have to factor in the rent you will pay. Next, there are no capital gains taxes on the increase in value of your principal residence. Next, it does not take into account that you are paying down your mortgage. Next, if you buy a revenue property someone else is paying for it. Also, now you have 2 mortgages being paid down. Next, if you buy the right revenue property you have positive cash flow. Lastly, the banks will finance a large portion of your purchase. When is the last time a bank financed 75% of a $400,000 stock purchase. Once you have multiple revenue properties you now have multiple people paying down your debt on multiple properties. That is how you create wealth. By the way this is a fabulous time to buy a revenue property. Give me a call and let me show you how we can help.
The Conscious Investor
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