Let me start off by saying that the principles of analyzing those three types of investments might be the same, managing them is not. Contrary to what you may have heard, real estate is not a passive investment. The other two very much are, especially if you structure them correctly.
With that said, what got me to write this was a recent Fortune article penned by Warren Buffett. In this article he goes through his investment analysis for two real estate deals. He's only done 3 in his life, not counting his personal home.
In the article he describes the analysis in general principled terms so that we can see the parallels between that investment and securities. When you invest in any of the above investments, there are certain things you need to look at. Price, cash flow, and growth. Those three factors determine your rate of return. How much cash will you get? How much you paid to get that cash and also will the asset be worth more in the future or not.
Now Buffett says that the future price appreciation should not be a consideration, and if you do then you're speculating. I would agree with that, but I would also have to say that it must appreciate in value. Or else the return from the cash flow must be adequate enough to compensate the investor for it's eventual decline.
Note, that gold (or any other commodity for that matter) is not included in this investment analysis. That's because gold doesn't put off cash. Actually it's the opposite, it eats your cash. In this regard Robert Kiyosaki and Buffett would agree. While Buffett may not agree with his marketing techniques, I think they both would agree that if you have an investment that isn't throwing cash your way, then it's not worth owning.
-CC
With that said, what got me to write this was a recent Fortune article penned by Warren Buffett. In this article he goes through his investment analysis for two real estate deals. He's only done 3 in his life, not counting his personal home.
In the article he describes the analysis in general principled terms so that we can see the parallels between that investment and securities. When you invest in any of the above investments, there are certain things you need to look at. Price, cash flow, and growth. Those three factors determine your rate of return. How much cash will you get? How much you paid to get that cash and also will the asset be worth more in the future or not.
Now Buffett says that the future price appreciation should not be a consideration, and if you do then you're speculating. I would agree with that, but I would also have to say that it must appreciate in value. Or else the return from the cash flow must be adequate enough to compensate the investor for it's eventual decline.
Note, that gold (or any other commodity for that matter) is not included in this investment analysis. That's because gold doesn't put off cash. Actually it's the opposite, it eats your cash. In this regard Robert Kiyosaki and Buffett would agree. While Buffett may not agree with his marketing techniques, I think they both would agree that if you have an investment that isn't throwing cash your way, then it's not worth owning.
-CC
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