| The Geometric Growth of Real Estate |
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| Written by Cody Scholberg |
| Sunday, 01 November 2009 21:04 |
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Linear growth is seen in stock, not geometrical growth. Geometric growth, unlike linear, is not a straight line; it is much faster. Those who take advantage of geometric growth, when it comes to their money, will be rich. This is what separates the rich and the poor. This is the one and only way to become rich, in fact. Anyone can take advantage of it.
Linear growth is seen in stock, not geometrical growth. Geometric growth, unlike linear, is not a straight line; it is much faster. Those who take advantage of geometric growth, when it comes to their money, will be rich. This is what separates the rich and the poor. This is the one and only way to become rich, in fact. Anyone can take advantage of it. The secret power we are talking about is the power of borrowed money, as this is the surest way of them all to get rich. The poor and middle class struggle because they are seeking always to avoid debt, rather than focusing on getting themselves into good debt. The richest people of all time built their fortunes with good debt; good debt is the force behind every one of their fortunes. You, too, can take advantage of this power. All you need to do is dive head first into the world of real estate. Real estate will allow you to buy with only twenty-percent down things that cost hundreds of thousands of dollars. Often, you need put nothing down. Both investments appreciate by six-percent after some time. The stock, then, has made us one-thousand, two-hundred dollars, while the real estate has made us six-thousand. Naturally, we will need to subtract what we owe the bank before determining what our real profits are. So, we take away the four-thousand, and we end up with eight-hundred more dollars than what our stock returned to us. Let us just say that both investments appreciate by six-percent. The stock will have earned one-thousand, two-hundred dollars, and the real estate would have earned us six-thousand. After taking away the four-thousand that we owe the bank, we're left with eight hundred more dollars from our real estate earnings: two-thousand versus one thousand, two-hundred. This is just a taste of the real fun of real estate. If the investments made eight percent, then real estate would have earned us four-thousand while stock would have made us one-thousand, six-hundred. This time, stock only earned forty-percent of what the real estate did. Real estate really does earn exponential growth. Assuming an eight-percent growth rate on a second investment, we will end up with twenty-one-thousand, two-hundred dollars in earnings from our stock, rather than the twenty-four-thousand we would have earned on our real estate. Of course, we will invest it all again. After buying twenty-one-thousand, two-hundred dollars worth of stock, and one-hundred-twenty-thousand dollars worth of real estate (which we borrowed ninety-six-thousand of at five-percent interest), assuming an eight percent earnings growth again, the stock has made us one-thousand, six-hundred and ninety-six dollars, but the real estate has earned us four-thousand, eight-hundred dollars. The stock has dropped to thirty-five percent of the real estate's earnings. The more time goes on, the higher percentage earned on capital invested in real estate. Stock, however, only grows linearly. To truly take advantage of other people's money, one must use real estate, the essence of capitalism. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Cody Scholberg, an expert of finance investment, writes for the Investment Properties Guide, a place to learn about investing and things such as how to pick your first rental property. |