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Timing is everything in investing

If you had $200,000 to invest in either Apple stock, gold or SF real estate on 1/1/12 and sold that investment on 5/2/14, which would be the better investment?

  • Gold: -17% (bad timing)
  • Apple stock: 44% return
  • SF real estate: 114% return

By the way, the S&P 500 returned 48% over the same time period.

 

There are three big reasons why real estate dramatically outperformed the stock market, though both markets boomed:

  • Leverage: 35% home-price appreciation equals 175% appreciation of your 20% cash down-payment (before closing costs)
  • Big tax deductions subsidize home ownership costs
  • The capital gains exclusion on the sale of a primary residence

 

What is the moral of the story: timing is everything in investing.

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