Learning, Sharing, and Teaching > Real Estate and Landlording
Rate of Return on Everything: A 150-year History
SeattleCPA:
Apologies if someone has already pointed to this link and I missed it. But there is a really interesting research paper available at link below that talks about rates of return for 16 different countries for equities, housing, and then riskless assets.
Really interesting stuff--maybe especially for real estate investors since it shows historically unleveraged real estate has produced the same return as equities but with about half the risk:
https://www.frbsf.org/economic-research/files/wp2017-25.pdf
The other thing, really interesting to anybody who tries to employ modern portfolio theory to their investing, is that it looks like housing and equities are not very correlated.
HawkeyeNFO:
123 pages....I'll wait until one night when I can't go to sleep.
tralfamadorian:
--- Quote from: HawkeyeNFO on January 16, 2018, 07:38:25 AM ---123 pages....I'll wait until one night when I can't go to sleep.
--- End quote ---
Compared to the GOP tax bill, this is akin to The Count of Monte Cristo.
Personally, I found it really fascinating. Thanks for posting it @SeattleCPA !
I'm surprised this thread hasn't gotten more replies. This kind of data is usually like catnip to the more detailed oriented MMM folks...
In particular interest to me is Chart 7 on pg. 25, which separates out capital gain for real estate, rental income, capital gain for stocks and dividend income along with the standard deviation for each and the percentage of the gain for each asset class allocated to each.
The standard deviation of 0.75 for yearly rental income of 5.33% specifically is interesting as it could be the basis for an argument that a diversified real estate portfolio could be a suitable, if not preferable, bond alternative.
The second area that grabbed me was Figure 9 on pg. 30 on the average cost of running a housing investment as both a percentage of house value and percentage of rental income. The data was surprisingly consistent (looking at the US) over a 100 year time frame.
SeattleCPA:
--- Quote from: tralfamadorian on January 16, 2018, 05:53:07 PM ---
--- Quote from: HawkeyeNFO on January 16, 2018, 07:38:25 AM ---123 pages....I'll wait until one night when I can't go to sleep.
--- End quote ---
Compared to the GOP tax bill, this is akin to The Count of Monte Cristo.
Personally, I found it really fascinating. Thanks for posting it @SeattleCPA !
I'm surprised this thread hasn't gotten more replies. This kind of data is usually like catnip to the more detailed oriented MMM folks...
In particular interest to me is Chart 7 on pg. 25, which separates out capital gain for real estate, rental income, capital gain for stocks and dividend income along with the standard deviation for each and the percentage of the gain for each asset class allocated to each.
The standard deviation of 0.75 for yearly rental income of 5.33% specifically is interesting as it could be the basis for an argument that a diversified real estate portfolio could be a suitable, if not preferable, bond alternative.
The second area that grabbed me was Figure 9 on pg. 30 on the average cost of running a housing investment as both a percentage of house value and percentage of rental income. The data was surprisingly consistent (looking at the US) over a 100 year time frame.
--- End quote ---
The study is really interesting. Per my wife, I had a strange smile on my face the entire time I was reading it.
P.S. High point for me was seeing how poorly correlated equities and housing are.... MPT here I come.
tct:
Interesting. Thanks for sharing.
Navigation
[0] Message Index
[#] Next page
Go to full version