What can we finance?

My grandma used to say:

"You are right and I am at peace"

It would be about time here

Regards

Just one more time. Yes, of course, I am not completely invested in the stock market. Cash for emergencies is always there.

And no, I do ETFs passively. I buy more when I have the money. Otherwise, I ignore it. It brings real returns as I have described.

You should really do it yourself. Don't give it to the banks. There are bankers working there who "manage" that thing to ruin. For fees, of course.

You simply do not address any arguments, but only repeat your familiar calculations.

You even managed to have less equity in every period than in the previous period in both cases – only with the buyer the reduction is slower than with the tenant. However, the loan does not amortize. You have to realize yourself how absurd your approach is because of this?

Additionally, in your example, the tenant never invested the delta compared to the buyer’s rate in the capital market.

Yes, the tenant did invest in the capital market in this calculation, even with a utopian return of 6.8 percent.

What was not considered are later savings installments in the capital market. Both the tenant and the buyer make these. However, it was very much considered that the tenant invests the entire lump sum of equity at the beginning 100 percent in the stock market, which reliably yields 6.8 percent per year, safely and crisis-free.

Your assumption of a 6.8% dividend through savings on cold rent is, for example, extremely high. Nowadays, you can hardly rent out condominiums, let alone houses.

These are the figures from Musketier and two percent inflation. Musketier determined a factor of 22.2 in his residential area based on real listings.

And in case there are readers who are unsure: extremely unreliable figures are used here as well.

For example, price index is confused with performance index.

No, this statement from you is wrong. I specifically referred to the MSCI World GDTR. That is a performance index with reinvestment of dividends and the unrealistic assumption that no withholding taxes have to be paid. So the index is not realistically achievable.

Therefore also: 4.87 percent before withholding taxes, own taxes (capital gains tax), fund fees, order fees and before inflation.

1)
You buy a house with 100k equity and pay it off over 20 years until fully repaid. It cost you 580k – including all interest, reserves, investments, and the land.

You have received a dividend for 20 years in the form of saved rent. Converted to 20 years X% per year from 580k. In absolute numbers 20*X*580k.

This dividend has flowed into your repayment. You now have equity equal to the property value and continue to collect X*580k per year.

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2)
You rent. Your rent is lower than the loan payment. The delta is Y. Your equity is 100k.

You invest the 100k at Z% in the stock market. You also invest the delta Y every year there. You also reinvest the annual dividend of Z% there. You do this for 20 years.

Your equity after 20 years corresponds to the value of the portfolio.

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These two cases are to be compared.

Out of boredom, I just did this for you in Excel. 500k house, 100k equity, 400k debt, 1,875 euros rent (factor 22.2). House value and rent increase with inflation at 2 percent, so they remain unchanged in real terms. Debt: 2% interest, 2.5% repayment. Renters and buyers each have 2,500 euros per month available total for rent/loan and investment. 2,500 euros minus rent/loan is invested. These 2,500 euros also increase by 2 percent. The renter of course starts with 100k.

At 5 percent capital market return after taxes, the buyer ends up with 728,400 euros property value (real = 500,000), 248,400 euros remaining debt, and 506,000 euros in the portfolio. Net: 986,000 euros. The renter has 557,200 euros in the portfolio and that’s it.

Only at 11.3 percent return do buyer and renter meet at 1.42 million euros wealth after 20 years. This means return after taxes and fund fees, but before inflation.

If return is only 3.8 percent after taxes, the buyer has double the wealth after 20 years. Conversely, at 21.3 percent, the renter would have twice as much as the buyer.

The renter’s wealth position is therefore strongly dependent on stock market returns.

Back to the realistic 5 percent. Here the buyer wins with 986k vs. 557k. If inflation halves over the next 20 years, he still wins 882k to 627k. The wealth position is thus much less dependent on external factors.