RRSP/RESP/Mutual Funds vs. Real Estate

February 17, 2020 | Posted by: Sherry Corbitt

I understand that investing in RRSP/Mutual Funds, TFSA, etc, makes sense for some people.

However, you are missing out on a huge opportunity since you aren’t leveraging someone else’s money and only earning interest on your own hard-earned cash. Real Estate gives you the opportunity to put only 20% of the total property value and let someone else pay off the mortgage 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/mth away into an RESP, RRSP, TFSA, Mutual Funds or Savings Account.

RRSP/RESP/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/mth would be the approx. cost to borrow a 
$100,000 Down Payment 
$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%? 
Mutual Funds/RRSP/RESP 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 to see if this is possible for you, just reply to this email.

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