Home is where the heart is… but what about the money?

by | Mar 14, 2016 | Life Fulfillment & Retirement

If you are like many people, your home is important to you. It’s your space – where you relax and rejuvenate, where you create memories with family and friends. But what role should real estate (your home, rental or vacation property) play in your overall financial picture?

The following chart compares the growth of an investment in Canadian residential property and the growth of two well-known equity funds – Trimark Fund and Trimark Canadian Fund.

Real Esate Growth vs. Trimark Fund Chart

Click the chart for a larger view. *Source: www.invesco.ca

When you compare the growth of real estate – even in the hot markets of West Vancouver and Toronto North, it is not even close to the growth in value of the equity funds over the same period of time. That is true even when you take into account the relatively weak performance of the Trimark Canadian Fund over the past 10 years.

Trimark Fund Perfomance Feb 29-2016

 

 

 

 

As noted above the cost of property taxes and maintenance have not been considered, nor has the rental income or equivalent benefit to you if the property was your principal residence. Income tax has not been factored into the calculation.

The growth of the Trimark funds is reported after fees (portfolio management as well as service and advice) but before tax on the sale proceeds.

While real estate is considered a conservative component of a long-term life plan, it’s important to balance the lifestyle benefits of homeownership against the security that comes from a diversified investment strategy.

Stay tuned for our next blog in which we are going to explore this in more detail using various assumptions so that you can look at the bottom line after tax.

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