Jul 25 2022, 09:59 AM
QUOTE(bogletails @ Jul 24 2022, 09:17 PM)
Anyone FIRE without owning a house? Is it doable? Reason why I want to ask this is because I think house is a terrible investment, it won’t appreciate already compared to 2008 time due to property oversupply. Plus, have to pay mortgage interest which is 2x the house price, no rental yield due to own stay. 1 mil house need to pay almost 2mil after 35 years.
If let’s say we have 1million capital, instead of buying a house. Can’t we just put it to the equity market? US index fund, ASM, EPF etc and let it work? Assuming a conservative 6% average annual return from S&P500, 1 million capital will yield 60k a year or 5k per month. Then use part of the passive income to pay rent at whatever place we like. The remaining use for daily expenses or reinvest it.
Can this method work?? Why I never hear people talk about this before? Rent in Malaysia isn’t too expensive anyway. 2-3k can get a decent place.
You are missing a crucial point imho . If let’s say we have 1million capital, instead of buying a house. Can’t we just put it to the equity market? US index fund, ASM, EPF etc and let it work? Assuming a conservative 6% average annual return from S&P500, 1 million capital will yield 60k a year or 5k per month. Then use part of the passive income to pay rent at whatever place we like. The remaining use for daily expenses or reinvest it.
Can this method work?? Why I never hear people talk about this before? Rent in Malaysia isn’t too expensive anyway. 2-3k can get a decent place.
You said assume that we have 1 mil capital .
So in this scenario , you also said IF scenario A u buy a house , you will need to pay 2 mil incl interest in 35 years . But just after that you said , instead of buying that house why not invest in index funds and etc . The crucial point is , why do you need to get a housing loan if you have 1 mil ? You can buy the house outright . That means there's no interest .
Secondly , you can actually do both at the same time , you may put 150k as d/p for the house , finance the rest . And with 850k you may invest it in any funds or epf and etc that you like . Just a food for thought . Im not saying that you should buy a 1 mil house ya . For me personally , a 400k small terrace on the outskirts is good enough .
Thirdly , the way i look at it is , in your scenario B , you said to use your passive income from the 1 mil capital invested in funds and etc to pay for your rent . But in this case , doesn't this "rent" become the "interest of housing loan " in scenario A ? It just has a different name but in effect , there is a set amount of monies leaving your pocket just the same .
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