We had a very interesting discussion over the weekend and people debated if it was better to invest in property or to invest in Bitcoin. The argument was as follows :
1. Most people cannot afford to buy property, so they take a home loan at a Bank. The home loan is paid back with interest and some of these loans are spread out over 20 years to make it affordable to the person who takes out the loan. So, over that 20 years the house of $100 000 will cost you say $1 000 000. {$900 000 paid in interest}
The argument is also that the property has to increase in value, with more than $900 000 for you to say that it was a good investment AND you have to sell that property to get that profit.
2. The other side of the room said it was better to rent a smaller property and to invest the "savings" into something like Bitcoin, because your profit will pay for a bigger deposit or even a whole property in a few years time.
I think paying a high interest rate to a Bank is just as bad as paying rent to a Landlord, because you are getting screwed in both these circumstances.
1. Most people cannot afford to buy property, so they take a home loan at a Bank. The home loan is paid back with interest and some of these loans are spread out over 20 years to make it affordable to the person who takes out the loan. So, over that 20 years the house of $100 000 will cost you say $1 000 000. {$900 000 paid in interest}
The argument is also that the property has to increase in value, with more than $900 000 for you to say that it was a good investment AND you have to sell that property to get that profit.
2. The other side of the room said it was better to rent a smaller property and to invest the "savings" into something like Bitcoin, because your profit will pay for a bigger deposit or even a whole property in a few years time.
I think paying a high interest rate to a Bank is just as bad as paying rent to a Landlord, because you are getting screwed in both these circumstances.
Well, if you'd pay $900.000 intrest on a $100.000 loan over 20 years, you should switch banks immediately
I took a loan of 150.000 over 20 years when i bought my house 10 years ago, in the end i'll have to pay about 40.000 intrest, but i can deduct this intrest from my taxes, so in the end i'll pay about 20.000 out of pocket to loan 150.000 for 20 years (this are approximate numbers).
I'm a big fan of crypto, but i'd personally rather have a house to live in than a big fat crypto wallet... I guess i'm to oldfashioned
I do realise i can get a lot more profit when i would have invested all my money into crypto, but you can't live in your wallet...
Yea, the figures I used was just a thumb suck scenario and probably grossly exaggerated. Most people are not as lucky as you to deduct your home loan payments for tax purposes. You from Europe? / UK / USA / Asia / Africa?
Based on last years growth of over 800% in one year from my Bitcoin investment, I would have been able to buy that house from the profit I made in 1 year.
Some people are even saying that it would be better to save that money in a Bank at a fixed interest rate.
We all want to live in big houses that we cannot afford.
We are all Bitcoin enthusiasts here, however, Bitcoin is, let's face it, a high risk investment.
If you bought Bitcoin at 200$ (or 2$!) and sold at 19000$, the road to "big house" is easy. But most don't do that, exactly because they don't afford to do that.
And if you have to watch your investment scared that you may be losing money, like many who bought at 12k-19k last December, then you better stick on smaller goals.
The best approach imho is to achieve something stable you can afford with the traditional way, even a loan in the bank, and invest only some surplus "you can afford to lose" into crypto.
Of course, the bank loan doesn't have to be too big and nearly impossible to be paid. And then, whenever the crypto currencies grow big enough for your needs, you can pay the loan. This may happen in a year, or 10, or not at all. If the loan is paid with the help of crypto, then you can dream for something even bigger. One step at a time.
Their argument is, rent a smaller and more affordable property at a lower monthly rent as what you would have paid on a big house and invest the "savings" into high risk investments like Bitcoin.
They countered that with the argument that the home owner still have to pay for the maintenance of the property, so owning a house and paying a Bond was a stupid idea.