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.

But factoring in the interest it’s really a different story isn’t it? I see many people talk about property without without talking the total interest payment. For 35 years mortage , the interest is actually higher than the house price you purchase. Interest is More than the cost of house.

Also can the house consider as asset if you stay inside it? It sounds like a liability to me. No cashflow generation and might stay stagnant for very long time. If the capital is invested in equity, at least in the long term got positive 6-7% per year. vs mortgage interest rate which is negative 3-4%.

If this is 2008 we talking about, it’s a no brainer to buy property. But I realize after 2013-2015 property macam stay stagnant and not much appreciation at all, very slow. But at the same time S&P500 growth is doubled… so is current situation still same as last time?

I think this is quite oversimplified things. Haven't calculate about the opportunity cost.

So I use an example here to explain

Scenario 1:
Imagine you buying a 500k house.
Downpayment: 50k
Monthly payment: 2k
Maintenance/furniture/tax/Reno: 1k
At the end of 35 years, you paid 840k total.
House value maybe at 1million. (Seriously house price I see quite stagnant already. This 100% return i think already optimistic)
This haven't include renovation, furniture, maintenance, taxes.

Scenario 2:
You put the 50k in index fund.
Monthly DCA: Rm1500
Pay Rent: 1500
At the end of 35 years @ 6% growth
Your portfolio size still got 2.5million

(Quite conservative already since average return of S&P500 is 8% for past few decades)


Yes rent may increase but I don't think it's going anywhere that is too high. And the compounding return from index fund can cover it.


Using this 2 example, 50k initial capital + 3k monthly payment

In Scenario 1 you end up with a house but zero cash.

In scenario 2 you end up with 2.5million in index fund. 6% return means you get 150k per year (or 12500 monthly passive income) l can continue to pay rent to homebuyers. Or I can choose to buy a 1million house and still have 1.5million.

Sorry some typo: scenario 1 already include maintenance and Reno cost

Which post are you replying? A bit confused

[quote=cempedaklife,Jul 28 2022, 09:41 AM]
didnt read all. not sure why suddenly turn to kids giving money to parents.

I have seen enough of people spending money lavishly while their parents save like a beggar, I've seen the mindset of people on money when there is no commitment. i don't want that.

Have you seen something in the opposite? Kid save like a beggar and do Fire while parent spending money on random sales from FB live all the time. That's what I am facing right now. They are still working in early 50s and doing quite ok financially. But they have this addiction of buying stuff they don't need, almost every week. I didn't give much to them because i know it's far better to invest it for future use rather wasting it to random salesperson on FB.

Sometimes I feel like in a dilemma. Not giving feel bad, giving also feel bad. But I do tapao food all the time ya. that's my only contribution. Am I a charsiew?

[quote=bogletails,Jul 28 2022, 10:29 PM]
[quote=cempedaklife,Jul 28 2022, 09:41 AM]
didnt read all. not sure why suddenly turn to kids giving money to parents.

I have seen enough of people spending money lavishly while their parents save like a beggar, I've seen the mindset of people on money when there is no commitment. i don't want that.

Have you seen something in the opposite? Kid save like a beggar and do Fire while parent spending money on random sales from FB live all the time. That's what I am facing right now. They are still working in early 50s and doing quite ok financially. But they have this addiction of buying stuff they don't need, almost every week. I didn't give much to them because i know it's far better to invest it for future use rather wasting it to random salesperson on FB.

Sometimes I feel like in a dilemma. Not giving feel bad, giving also feel bad. But I do tapao food all the time ya. that's my only contribution. Am I a charsiew?

[/quote]

Sorry for the bad formating. I was reply to post above. Not sure the quote failed.