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Posted by Tom Blue on November 10, 2008 under Companies, Investing | Be the First to Comment

I was just doing some research and found the following;

The S&P 500 has grown on average 7% a year since it inception in 1970
Berkshire Hathaway has grown on average 26.5% a year since going public in 1977.  The median home price has grown on average 6.5% a year since 1972.The median California home and San Francisco home price has grown on average 8% a year since 1972.I took a look at 3 of the oldest and most well known Mutual Funds; Putnam(PINVX), Vanguard Wellington (VWELX), and Fidelity(FFIDX). None of them averaged more than 3% a year.Currently a AAA Insured Tax Free Municipal Bond in Florida gets 4.5% a year.

Conclusions:
I am sure that over the long haul the right thing to do is buy a home. If you got a fixed loan of 6.5% on $1M home you would end up paying $2.3M over the course of 30 years. At the end of that 30 years your house should be worth $6.2M. After you figure out how much you would pay to rent somewhere over 30 years and the write offs you will end up getting about 6.5% on average over the 30 years.  If you have over $4M to invest, a tax free muni bond would earn you more than investing in the S&P.

New Questions:
How much can you put back in your IRA? E.G. If you made $500K a year how much can you put back tax free?When someone takes over for Buffett is there any way Berkshire could do half as well(13%) as they have the past 30 years? That is great question.Like “they” say, it seems that the ideal situation would be to have some diversity in bonds, stocks, and real estat