Mutual Funds vs. Real Estate

We understand that investing in Mutual Funds via an RRSP, RESP or TFSA, makes sense for most people but you are missing out on a huge opportunity since you're not leveraging someone else’s money but only earning money on only your hard earned cash.  Real estate gives you the unique opportunity to put in an initial investment of 20% of the total property value while someone else pays off the mortgage & household expenses for you.

Here is a breakdown & the numbers don’t lie...

In order to show the difference, we need to compare apples to apples.  In this example we will assume you are putting $400/month away into mutual funds inside of an RESP, RRSP, TFSA.

Mutual Funds

$400 investment each month

12 months/year

15 years

4% annual return on investment

$98,436 = Total Savings After 15 years

Real Estate Investment

$400/month would be the approx. cost to borrow a $100,000 down payment.

Let's assume a $400,000 mortgage

= $500,000 Investment Property

15 Years Of Ownership

4% Annual Appreciation

= $900,471 after 15 years

Mortgage remaining after 15 years = $246,189

Equity created in property $654,282-$100,000 (Initial down payment)

$554,282  = Total Equity After 15 years

$98,436 vs $554,282 (560% Higher Return on Investment)

But What if...

Real Estate only appreciated 2% instead of 4%? & the Mutual Funds return was 8% instead of 4%?

= $138,415(Investments) vs. $326,795(Real Estate)

188% Higher Return on Investment

I’m not saying investing in real estate makes sense for everyone, but it does for most.  If you want more information on investing in real estate, reach out to any one of our fabulous mortgage experts!

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