What can we finance?

The performance of MSCI World GTDR over the last 20 years was 4.87 percent per year

If you include the bursting of the DotCom bubble and the 2008 financial crisis? You don't have to...

And again: If you see your own house as retirement provision, you can only buy something from the value increases if you sell. If you continue living there, you can only offset rent savings against lost gains. If property values rise faster than rents over a long period (as is currently the case), the return through rent savings actually gets worse(!), not better. Then you almost have to sell and rent somewhere if you want to get something from your retirement provision.

That's right. And who wants to sell their house at 80 +x and rent somewhere? That’s pretty depressing near the end of life, I think. Also: If you build such a cardboard house as a young person, maybe in your mid-30s, you definitely have to invest quite a bit of money in maintaining its value over the following decades so that the "house" doesn’t rot away under you in the meantime.

That's right. And who wants to sell their house at 80 +x and rent somewhere else?

That's how it is.

And because that's the case, the returns on owner-occupied single-family homes are rental savings and they do not depend on the value of the house, but on the level of rent. All these calculations with value increases of houses and land are totally pointless for retirement properties in which one wants to live oneself.

And that's what I mean: If you understand that, you also understand that from a purely economic retirement planning perspective, owner-occupied single-family homes are simply not good investments. You can shuffle numbers back and forth in balance sheets x times now, it doesn't get any better.

Unless you sell during a boom, can realize the value increases as cash, and move into an age-appropriate rental apartment. Then the concept works (and that requires luck). Everything else is delusion.

Whoever understands this can build to their heart’s content, because that person will have no unexpected awakening. The luxury and comfort of one’s own four walls is not an economic category.

How do you come up with the idea that you can decide for everyone here that the house must never be sold? Oh man..

Of course, it is a viable option to sell the house in your late 40s or early 50s when the kids have moved out. It doesn’t have to be during a boom either, Musketier has already gained well over 100,000 euros in value appreciation, so in the coming years it can only go sideways.

If you only take the savings on rent as a return, then please compare it with German government bonds. This return is absolutely safe.

So for Musketier 1200x12/300,000 = 4.8 percent. Plus 2 percent inflation/rent increase results in a rock-solid return of 6.8 percent if we exclude house sales in our model. It’s better than a daily money account and even less risky.

And then such nonsense about how you beat the market because you can foresee crises.. kindergarten..

And then some blah blah about how you beat the market because you can foresee crises.. kindergarten..

I would find this afterword somehow less cheeky if you had at least calculated correctly before...

a) pays significantly more than 300k. That is the house price without interest and without maintenance costs up to the day of full repayment. So not (1200*12)/300k but (1200*12)/(300k + x).

b) You continue to build up maintenance reserves, which you have to subtract from the rent savings

c) You first have to calculate the time of repayment, where you are above the comparative rent with rate + reserve, as a negative series development with compound interest.

I knew exactly that something like this was coming now. I find it funny.

You are mixing two things here. First, the decision whether to acquire the asset house at all. It has a 6.8 percent secure return and costs 300,000.

Completely independently of that is the financing of the asset. That is a second financial decision, which on its own can have a positive or negative net present value. So, I pay 2 percent interest to get 6.8 percent secure return. So, what do I do? Hmm..

You can mathematically save on maintenance for 10-15 years. The first 5 years are anyways under warranty, afterwards, according to common opinion, it starts at about 2.50 - 3.00 euros per sqm per year. Was it 125 sqm? Accordingly, then 350 euros per year.