Geometrical Real Estate vs Linear Stock
Tuesday, 27 October 2009 07:42
Author: Cody Scholberg
If you invest in stock, your money will grow. Your money grows like a line, linearly. However, is will never grow geometrically. Geometric growth is much faster than linear growth. Anybody who takes advantage of geometric growth will be rich. Geometric growth separates the rich and the poor; it is the secret force of capitalism. In fact, there is no other way to become rich. If taken advantage of, it will make anyone rich.
If you invest in stock, your money will grow. Your money grows like a line, linearly. However, is will never grow geometrically. Geometric growth is much faster than linear growth. Anybody who takes advantage of geometric growth will be rich. Geometric growth separates the rich and the poor; it is the secret force of capitalism. In fact, there is no other way to become rich. If taken advantage of, it will make anyone rich.
This hidden power is the power of borrowed money; this is the surest way to get rich. The middle class and poor struggle so much because they spend their lives trying to get out of debt, rather than trying to get as deep as they can into it. If they tried to get deeper into it, they would be rich. The difference is, the rich get into good debt, which is something that the poor and middle class do not know much about.
Those who made the biggest fortunes in the history of this earth did so with borrowed money.
If you are wondering how you, too, can tap into this secret power, you need look no further. Your answer lies in real estate. Real estate is the motherland of borrowed money. In the world of real estate, all you need is 20% of what you want to buy. Sometimes, you need as little as zero; banks are more than eager to give you the rest.
When compared with stock investment, the advantages become quite clear. Twenty-thousand put into stock versus a twenty-thousand down payment on a one-hundred-thousand dollar piece of property is a fine comparison. For simplicity sake, the bank is charging five percent on the loan.
After some time passes, both the investments, for simplicity sake, have increased by the same amount: six percent. The stock, therefore, has made us one-thousand, two-hundred dollars, and the real estate has made six thousand. Of course, you'll need to subtract the four thousand that you owe the bank for use of its money, but that still leaves you eight hundred dollars ahead of the stock's earnings.
Our stock has made us only sixty-percent of what our real estate has. The real estate made us ten percent return on investment, but the stock only made us six. Now, you tell me which the better investment is.
Our real estate has earned us far more; the stock only earned sixty-percent of what the real estate has, which is equivalent to six-percent on our original. The real estate made us ten.
This is just a start. If our investments made eight percent, the real estate would have won by an even bigger gap; the stock would have earned only forty percent of what the real estate had.
On a second investment that earns eight-percent also, we will end up with much more from real estate yet again. On a third investment with again eight-percent interest, the stock will have earned us only thirty-five-percent of what the real estate did.
The more time goes on, the higher percentage earned on capital invested in real estate. Stock, however, only grows linearly.
In order to really take advantage of other people's money, one should use real estate, the essence of pyramiding; geometric growth is the fundamental principle of capitalism.
If you invest in stock, your money will grow. Your money grows like a line, linearly. However, is will never grow geometrically. Geometric growth is much faster than linear growth. Anybody who takes advantage of geometric growth will be rich. Geometric growth separates the rich and the poor; it is the secret force of capitalism. In fact, there is no other way to become rich. If taken advantage of, it will make anyone rich.
This hidden power is the power of borrowed money; this is the surest way to get rich. The middle class and poor struggle so much because they spend their lives trying to get out of debt, rather than trying to get as deep as they can into it. If they tried to get deeper into it, they would be rich. The difference is, the rich get into good debt, which is something that the poor and middle class do not know much about.
Those who made the biggest fortunes in the history of this earth did so with borrowed money.
If you are wondering how you, too, can tap into this secret power, you need look no further. Your answer lies in real estate. Real estate is the motherland of borrowed money. In the world of real estate, all you need is 20% of what you want to buy. Sometimes, you need as little as zero; banks are more than eager to give you the rest.
When compared with stock investment, the advantages become quite clear. Twenty-thousand put into stock versus a twenty-thousand down payment on a one-hundred-thousand dollar piece of property is a fine comparison. For simplicity sake, the bank is charging five percent on the loan.
After some time passes, both the investments, for simplicity sake, have increased by the same amount: six percent. The stock, therefore, has made us one-thousand, two-hundred dollars, and the real estate has made six thousand. Of course, you'll need to subtract the four thousand that you owe the bank for use of its money, but that still leaves you eight hundred dollars ahead of the stock's earnings.
Our stock has made us only sixty-percent of what our real estate has. The real estate made us ten percent return on investment, but the stock only made us six. Now, you tell me which the better investment is.
Our real estate has earned us far more; the stock only earned sixty-percent of what the real estate has, which is equivalent to six-percent on our original. The real estate made us ten.
This is just a start. If our investments made eight percent, the real estate would have won by an even bigger gap; the stock would have earned only forty percent of what the real estate had.
On a second investment that earns eight-percent also, we will end up with much more from real estate yet again. On a third investment with again eight-percent interest, the stock will have earned us only thirty-five-percent of what the real estate did.
The more time goes on, the higher percentage earned on capital invested in real estate. Stock, however, only grows linearly.
In order to really take advantage of other people's money, one should use real estate, the essence of pyramiding; geometric growth is the fundamental principle of capitalism.
About the Author:
Cody Scholberg, a recognized expert of real estate, writes for the Investment Properties Guide, the one and only guide to investing and buying your first rental property.
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