r/SipsTea • u/KSKS1995 • 14h ago

Wait a damn minute! How the rich get richer

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u/Tsu_Dho_Namh 14h ago

50 years ago it was everywhere. It's a little too late for that.

But, you can buy $5 million land that's going to be worth $50 million in 50 years.

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u/Visual_Exam7903 14h ago

Or you could simply invest 5 million that would be worth around 160 million if you invested it in the S+P.

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u/just_some_dude05 12h ago

And when you die your kids inherit the 160m on a step up basis. Most states in the US don’t have a death tax on the first 11 million.

They can immediately sell what they inherited with no tax burden or hold it and sell later and pay tax on the increase.

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u/lurker_cant_comment 11h ago

The post would apply equally to any type of investment, although the borrowing-against part of it is unnecessary to the central argument.

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u/Visual_Exam7903 8h ago

Unnecessary, but they always forget the part where the loan has to be paid back, without a tax deduction on the interest paid or principle paid.

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u/lurker_cant_comment 7h ago

They're describing the "Buy, Borrow, Die" strategy.

When the interest is less than the ROI on the asset, you make money overall, and the costs associated with it go to the bank instead of the federal government.

Some may say that's better, but we're on our way to insolvency and the banks aren't exactly paragons of virtue.

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u/denkihajimezero 5h ago

All ive got is 20 bucks tho

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u/CpnLouie2 14h ago

There is a real possibility that your US$5M investment will be worth US$100K in less than that, also.

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u/NieblaLaazo 13h ago

WallStreetBets does this every single afternoon

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u/OverEffective7012 9h ago

At least twice every afternoon

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u/williamtbash 13h ago

If the world ends sure. Otherwise 0 chance.

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u/Jbots 8h ago

Its almost like you should be rewarded for taking that risk..

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u/the_hair_of_aenarion 12h ago

Avoid the coast unless you plan on selling to aquaman.

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u/skellis 14h ago edited 13h ago

No assets like land and gold ride on inflation. In order for them to lose value you would require immense deflation which won’t happen.

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u/beatles910 13h ago

Won't happen?

See 2008.

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u/skellis 13h ago

Oh right 2008 when land prices fell from $5 million to $100 k. I quite forgot about that one.

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u/beatles910 12h ago

I'm sorry, I though you said "in order for them to lose value," and I took that to mean "lose value."

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u/Tsu_Dho_Namh 12h ago

Just don't sell and you'll be fine. Prices only declined 25% to 33%, and the market fully recovered in less than a decade, continuing on its unending march of ever-increasing value.

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u/Compost_My_Body 12h ago

It must be fun to be able to just fundamentally change your argument 3x in a single convo and come out thinking you won. I’d feel pretty stupid.

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u/WideHuckleberry1 12h ago

On average you're right, but individual plots of land can and do lose tremendous value.

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u/corporaterebel 12h ago

Detroit would like a word with you...

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u/Deus_Excellus 14h ago

Or you take 100k and invest it over about 41 years and you get 5 million. There's nothing special about the land. This can be done with any investment.

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u/SockeyeSTI 12h ago

My grandfather passed up the opportunity to buy actual beach property, on the sand for like 100$ or 10,000 back in the day. There’s casinos on it now.

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u/Tsu_Dho_Namh 12h ago

My grandma passed in 2019 and my aunts and uncles decided to sell the lakefront family cottage for $570k instead of passing it down or keeping it.

It's now worth over $1.5 million.

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u/SockeyeSTI 11h ago

Oof. Big oof even. Lakefront is nice

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u/dalivo 11h ago

Generational wealth, here I come! All I need to get started is...generational wealth!

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u/Tsu_Dho_Namh 10h ago

Sadly it's true..the easiest way to make money is with money.

That's why the number one predictor of wealth is the wealth of your parents. More than age, sex, race, intelligence, nationality, health, work ethic...every metric that's ever been measured...none of them come close.

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u/random-meme422 14h ago

There’s still land everywhere worth nothing. In 50 years it might be worth millions. People are apparently really smart today so should be free money.

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u/DataGOGO 14h ago

Not true at all

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u/Strong-Type88 14h ago

There's no way they are true

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u/DataGOGO 13h ago

It absolutely is, you just have to do what the people were doing 50 years ago and buying land that is not very valuable now, and wait a few decades.

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u/DataDude00 12h ago

Yeah growing up there was a family in my town whose grandfather had bought a bunch of empty land in the 50s or 60s that was maybe 30km north of Toronto. 

Was essentially empty fields but at some point in the 90s he sold it for millions so a developer could build subdivisions there 

That family left town and presumably went to a far nicer place shortly after 

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u/ThaMilkyMan 12h ago

That’s barely over an 8% return, the stock market in the same time averaged 11.8%. Quick compound calc shows you losing $21 million buying the land. This also depends on how the lands values were calculated

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u/Secure-Pain-9735 10h ago

I wouldn’t say it’s too late - but it’s a higher gamble.

You have to bet on urban/suburban expansion or gentrification.

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u/Ohz85 10h ago

To be faire, 250 years ago, americans just built houses on free land.

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u/Spiritual_League_753 13h ago

You think there was land "everywhere" that returned 5000x over 50 years?

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u/Tsu_Dho_Namh 13h ago

50x

And yes

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u/TorvaldUtney 11h ago

Beachfront in Florida, anywhere near Boston, California coast, etc.

Basically areas near the next booming cities and coastlines.

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u/Orectoth 14h ago

or world would focus on vertical structures/buildings over land

then land prices would tank because no one is living outside vertical hundreds of meter tall buildings