Mark Twain for everyone!

I love Mark Twain.

There are so many quotes by him all over the internet but this one really resonated with me.  When you actually find out why, your life changes instantly.

@mjassal

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Which is a better investment: Real Estate vs. Stocks

What is a better investment, buying real estate or investing in stocks?  

I grew up in a family and culture where getting a house is the best thing you can do for yourself. I used to think that to until recently. I decided to crunch the numbers on this and share with you what I learned. I live in NY so I will be using NY real estate numbers. I used calculators from mortgagecalculator.org and bankrate.com (which I think are the best ones out there).  Lets start with the house.

House – $500,000

20% Down payment: 100,000

Interest rate:  4.25% (25 yr loan)

Loan: $400,000

Monthly Payment: $2,687.79

Total Interest Paid: $250,085.72

Total Tax Paid: $156,250.00 (1.25%)

Total cost after 25 yrs of owning a house: $806,335 + $100,000 (down payment) = $906,335

Remember this is just straight cost of the house with no maintenance, repairs, etc. Now you fully own your house and it just kept up with inflation or maybe not. You have to ask yourself house worth $906k after all of this time? Depends on the housing market at that time. Now lets take a look at putting your money in the S&P 500 index fund. I will be using the same numbers.

Vanguard S&P 500 index fund – $100,000

Compound interest rate: 11% (since 1976 this is what the fund has returned, on vanguard.com)

Total Expense ratio: .05% (very very low cost and low turnover)

Total fund value after 25 yrs: $1,342,666 

Now lets say that you start with $100,000 and put in only $600 a month. If you think 11% is too high I have showed you other %’s as well.

At 11%: you will have: $2,272,937

At 10%: you will have: $1,862,379

At 9%: you will have: $1,527,040

At 8%: you will have: $1,253,319

At 7%: you will have: $1,030,013

At 6%: you will have: $847,913

At 5%: you will have: $699,452.

This is how much cash you will have that is liquid at your disposal. There is a big difference here of about 400k and that is just stopping at 25 yrs. If you let your investment grow and live after 25 yrs without putting a dime into it it will skyrocket.  If you left it in for just another 5 years your total in the index fund will be $2,255,139. I highly doubt the house will be worth that much. That said, I do think buying a house at the right price is great since its yours forever and you can leverage it as well for a loan, etc. But as an investment it does not compare to the value of stocks at all. If you want to invest in real estate without being a landlord because you think its better than stocks you can just invest in a REIT index fund. Remember, all these numbers are just math not an opinion! 

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Manpreet Jassal

@mjassal

Jordan Belfort’s best quote

I am watching Jordan Belfort’s (the real Wolf of Wall Street) straight line persuasion dvd’s just to be better at sales and marketing. I love reading and watching videos like this or anything that brings more value in my life. I came across this quote while watching his videos and I truly love it because it’s so TRUE and I had to share:

The only thing standing between you and your goal is the bullshit story you keep telling yourself as to why you can’t achieve it. – Jordan B

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Manpreet Jassal

@mjassal

What is an “inverse paranoid”?

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Reading Jack Canfield’s “The Success Principles” again. Came across the famous William Clement Stone (May 4, 1902 – September 3, 2002). He was a businessman, philanthropist and New Thought self-help book author. I think he had one of the best new thought I have read this year.

Here is an excerpt from Jack Canfield’s book:

“My earliest mentor, W. Clement Stone, was once described as an inverse paranoid. Instead of believing the world was plotting to do him harm, he chose to believe the world was plotting to do him good. Instead of seeing every difficult or challenging event as a negative, he saw it for what it could be something that was meant to enrich him, empower him, or advance his causes.

What an incredibly positive belief!

Imagine how much easier it would be to succeed in life if you were constantly expecting the world to support you and bring you opportunity.

Successful people do just that.”

Don’t you love this? I do!

Manpreet Jassal
@Mjassal