Korean Job Discussion Forums

[Tiger Beer]

Okay, okay.. the 'rich dad, poor dad' book turned to be quite controversial.. but anyone reading this book?

I'm about one-third of the way through it..

[Bulsajo]

Buy low, sell high?

Sorry I couldn't resist.
I am definitely interested in hearing about any practical RE investment tips anyone might have gleaned from this book or any other source.

[DanielP]

Rich Dad Rocks!

That book changed my life. I met Robert Kiyosaki and had the honor of spending a minute with him to talk about success. He is a great teacher, and I love that he's sharing what the rich know about money while the middle class don't and are paying through their noses for not knowing.

Daniel

[Hanson]

I got this one from my sister for Xmas and I'm reading it now.



It's got a lot of "buying a house for dummies" kind of stuff, which is great for a dummy like me. The author, David Bach, has been on Oprah to talk about "pay yourself first" and his techniques for personal financial success, which is basically a lot of common sense type of stuff, but it's also encouraging and walks you through the process step by step. I'm finding myself motivated to invest in a house back home, but that would open up, apparently, my Korean salary to Canadian income tax rates - soooo, no thank you.

How is "Rich Dad" different?

[Mister]

[4 months left]

Historically stocks have outperformed real estate but there are different advantages to both. Being diversified in both obviously cuts your risk.

Stocks vs. real estate: Where to invest?
Where is the smart place to invest your money?
By Sara Clemence
Forbes

http://www.msnbc.msn.com/id/8008639/

video link in the story - Debate between Stocks and Real Estate:
http://video.msn.com/v/us/msnbc.htm?f=00&g=d604a38c-fbfa-45ac-a740-5c060a5c2b53&p=Source_CNBC&t=m5&rf=http://www.msnbc.msn.com/id/8008639/&fg=




Updated: 4:11 p.m. ET May 30, 2005
NEW YORK - Where's a better place to put your money: the stock market or real estate? These days the accepted wisdom (at least at c0cktail parties) says to pick real estate. But is the accepted wisdom right?

It is � in the short term. U.S. real estate sale prices increased more than 56 percent from the beginning of 1999 to the end of 2004, as tracked by the Office of Federal Housing Enterprise Oversight, part of the U.S. Department of Housing and Urban Development. The S&P 500 index dipped nearly 6 percent during that same period.

But if you take a longer view � say 25 years � you'll find that the S&P 500 has actually stomped the real estate market, from Boston to Detroit to Dallas. From the start of 1980 to the end of 2004, home sale prices increased 247 percent. A pretty sweet deal, it would seem. Over the same period, however, the S&P 500 shot up more than 1,000 percent.

To be sure, pitting home sale prices against the S&P is an imperfect and less than highly sophisticated comparison, for a host of reasons. The stars have been aligned over the stock market for the last quarter century, even with the dot-com bust taken into account. And, there are limitations on the data � it's far easier to track stock prices, which are centrally traded, than home prices, which change hands in individual, and individualized, deals around the country.

Real estate is at another disadvantage here, because we're not taking into account potential income tax breaks. And, though dividends aren't included in the S&P 500, Jeremy Siegel, an expert in financial markets and economics at the Wharton School of the University of Pennsylvania, points out that a house pays a benefit that is not measured in its price. In other words, you can live in it. Rent free.

"That's like a big dividend," Siegel says. "When you take a look at a stock market index, a lot of the dividends are reinvested by the company. The dividend yield is much lower, but you get it back in capital appreciation."

"Some people today think they are going to get a tremendous increase in real estate investments," he says. "This illustrates the fact that your home is not going to do as well as stocks, because you're taking part of the return on housing services."

So you can't shack up in your shares of Microsoft or General Electric. Then again, you also don't have to buy a new roof for them or pay their condo fees. Plus, stocks are very liquid, says Laszlo Birinyi, president of Westport, Conn.-based financial consulting firm Birinyi Associates. You can sell out quickly, paying only a small fee. A house can take months to sell and cost several percentage points in commission.

[DanielP]

I completely agree with your post.

Only that, Robert Kiyosaki doesn't invest for capital gains. He invests for Cashflow. w.r.t. cashflow, in his opinion, Real Estate is best.

Daniel

[SuperFly]

Don't forget Robert Allen's Creating Wealth, which R.K. recommends in Rich Dad, Poor Dad. It's very detailed and basically a step-by-step blueprint for doing the investing. Very good book.

I wish I had brought it with me to Korea, but I had to get rid of a lot of books when we left, if I'd seen this thread then I'd have brought it for you T.B.

[4 months left]

Good article from Ben Stein

Ben Stein How Not to Ruin Your Life - A Home Truth about Real Estate Investing
Posted on Friday, January 19, 2007, 3:00AM
In 1978, my wife and I bought an adorable little condo near Palm Springs as a spot to relax and play with our Weimaraner dog, Mary.

It was a tiny place, but we loved it. We paid $100,000 or so for it. Four years later, we got bored with the place and sold it for about $125,000. That was in 1982.

Now we have a place nearby that we enjoy, and were looking for a smaller place in which to put up our guests. By complete coincidence, a condo very similar to the one we sold in 1982 came on the market and I went to look at it. A lovely spot, to be sure. But the asking price? $345,000.

The Buts and What-Ifs

That means the house has kept up with inflation -- barely.

In fact, when I do the math, I realize that it hasn't fully kept up with inflation. Plus, the owner would have had to pay rental fees (it's on land leased from a Native American tribe), condo fees, taxes, and insurance. Granted, he would also have gotten the great pleasure of living there, but it wouldn't have been a great investment at all.

On the other hand, if the same person had bought the Dow in 1982, he would've made roughly 10 times the money by now, not counting dividends, which would have meant he would've made close to 20 times the money.

There are lots of "buts" and "what ifs" in real estate, to put it mildly. There are neighborhoods along ocean fronts, lake fronts, and in New York City and San Francisco where anyone would've made a fortune buying real estate in 1982.

Prices in some parts of Manhattan, along Florida's coasts, and in Malibu have gone up substantially more than in Palm Springs. Usually, the key to low real estate price growth is an abundance of land to build on, such as in Phoenix or the Palm Springs area. The key to high real estate growth is a prestigious neighborhood or an extreme shortage of space, such as ocean front in Malibu.

Taking Stock

Still, my wife and I bought our house in Malibu for $600,000 in 1990. It might have gone up by 150 percent since then, but in that span, the stock market has more than tripled on the Dow, counting dividends. Other indexes such as foreign stock indexes have gone up vastly more than that.

Now, more "buts" and "what ifs": There are long periods when the stock market doesn't make you much money. The S&P is still lower than it was seven years ago. Stocks adjusted for inflation lost about 80 percent of their value in the slump of the 1970s and part of the 1980s. So nothing is a slam dunk.

Professor Robert Shiller of Yale has demonstrated, however, that over very long periods homes barely keep pace with inflation. Stocks, over very long periods, beat inflation by a large margin. (Please remember that "over very long periods" part. You can easily buy at a peak and not see that peak again for many years. But barring war, you will see it -- and zoom past it.)

There are many, many good reasons to buy a home -- and a vacation home -- besides price. There's much joy to be had in living inside a house that's yours on land you own (or lease from the Morongo Indians). But as an investment, homes -- unless bought with an eye to scarcity or in prestigious neighborhoods, and even those sometimes don't work -- are to be lived in, loved, and passed on.

I myself love houses, and own a lot of them. I get immense joy from them. But for long-term gains, broad indexes (also called indices) of stocks are where you want to be.

A Living Investment

Again, I don't want to disparage real estate. As you know, I usually write about how to make money, usually by investing but sometimes also by improving your human capital. But spending money is also a part of life, and buying things you like and get a lift from is a big part of life. The only things I know of that can do both are homes.

Yes, I realize I wrote above that they weren't a great investment compared with stocks on broad indexes, and they're not. But they'll keep their value a lot better than cars or jewelry or clothing or trips to Hawaii.

They'll also give you a fabulous sense that you have a fortification against landlords, neighbors sending yucky cooking smells into your apartment, and a lack of control over your own dwelling.

Great, But Not Perfect

Maybe it's just me, but I get great joy from knowing that I'm within my own four walls, owned jointly only by little old' me and the bank. As far as I can tell, houses -- or condos -- are the only items you can both own and enjoy as a consumer good and also as an investment.

Moreover, if you land in the right neighborhood or hit the right swing in the cycle, they can even be a great investment. Now is a very nice time to start owning, with prices way down in most of the United States.

Again, you won't make as much in the long run as you would on stocks, but no one I know can live inside a stock, make love inside a stock, read a story to a child inside a stock, or lie in bed reading next to their dogs in a stock.

So, yes, real estate rules. It's a good, even great, investment -- just not the perfect investment.

http://finance.yahoo.com/expert/article/yourlife/21845

[DanielP]

Stein is right, Real Estate is not the perfect investment.

However, according to RK, it's not about the investment, it's about the investor. If you have the perfect investment, and the investor doesn't know how to use it or profit from it, it doesn't matter how perfect the investment is.


Daniel

[Cheonmunka]

There are some people who I have knocked into over the years who have had to sell their other assets to pay for stock gone bad. I've never met someone personally who had to sell their house because it went bad by depreciating 50%. But, stock investors who lost 50% I have.

[Wangja]

[SuperFly]

Tiger,

A friend of mine is donating that book I mentioned in my above post to WTB today. I thought it was a great book for giving the reader exactly what he/she needs to be successful in real estate. You may want to check it out. He's on his way down there right now. Just a heads up...in case you missed my earlier post....RK actually tells you in R.D.P.D to buy this book if you want the finer points and it provides a blueprint - actually tells you what to do, step by step. Good book. Good luck man.

[mack the knife]

Everyone should read Bach's Smart Couple Finish Rich. It is PRICELESS.

[Son Deureo!]