Why are real estate and gold not good investments?

Investments can have two objectives:

1.Increase in capital employed (interest, return)

2.Preservation of the capital employed.

One of the riskiest ways to invest money is probably venture capital: you buy shares of a ridiculously small company for a relatively large amount of money and hope that in a few years this company has become so valuable that you can pay much more for your share. get out when you put in.That can work out perfectly if you were one of Amazon’s first shareholders 25 years ago, but in 9 out of 10 cases, venture capitalists don’t make a profit.

Exactly the opposite is the case when you invest your money in gold.You can’t do anything with gold, it doesn’t produce anything. Gold is actually so expensive only because there is relatively little of it. But this also means that gold cannot fail. It is also relatively unlikely that someone will find an immeasurably large source of gold that makes gold cheap. However, the price of gold fell by around 30 percent between 2012 and 2018, having almost doubled in previous years.

Real estate is somewhere in between.The construction of a biogas plant can easily halve the value of an adjacent house, the construction of an S-Bahn line from Munich to Landsberg am Lech causes real estate prices to go up there. Nevertheless, a property has an advantage over gold: you can use it. Someone who built a house on the outskirts of Munich 30 years ago can now look forward to a mighty increase in value – but which he can only realize if he sells the property today. In less sought-after neighborhoods, this may look different, but primarily you spend money on a property to use it.

Let’s say someone built a house 30 years ago for 100,000 euros.That’s 360 months. Let’s say he spent 180,000 euros on the house in the period (purchase price, loan interest, maintenance). Then the house cost him an average of 500 euros a month. And what does he have now? A house. This may now be worth 300,000 euros in Munich, but only 80,000 euros in a structurally weak area. But: He has lived in it for 30 years. Suppose that he had paid 400 euros a month in the time and put 100 euros into the savings book, then in 30 years he would have paid his landlord 144,000 euros and now would have 36,000 euros in cash – but no house. And let’s say that 30 years ago someone had built a house for 100,000 euros and has since generated 400 euros a month in rental income. Then, to stick to our simple example, he would still have to pay off 36,000 euros out of the 180,000 euros that the house cost him in total. In return, however, it belongs to him a house that is worth twice as much as his residual debt in the worst case, but at best ten times or 15 times.

I don’t know what’s bad about it.

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