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Old 01-12-2008, 11:26 PM   #54
Radley77
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Join Date: Sep 2007
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Quote:
Originally Posted by Mike Oxlong View Post
It's really quite simple.

Numbers used for easy Math:
If you have 10,000 to invest:

$100,000 house
$10,000 down payment
$90,000 mortgage
Using your 4% rate
House is now worth $104,000
ROI is 40%


$10,000 spent on bonds
5.75% rate
Investment is now $10,575

Does that make sense?
Not quite (using the simple math):

$100,000 house
$10,000 down payment
$90,000 mortgage
Using 4% rate
Value is now worth $104,000
Less carrying costs at 7% on $90,000 = -$6,300
Equity = $7,700

Whereas:

$10,000 spent on bonds
5.75% rate
Equity = $10,575

Last edited by Radley77; 01-12-2008 at 11:34 PM.
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