Sufficient salary ranges in and around Munich

1,017 posts in this topic

17 minutes ago, Lenny Nero said:

I agree with your last sentence. But you can only invest what you have (unless you borrow to invest, which might not be the brightest idea).

The example assumes that there is only 30k available for a down payment. That is the money one can invest today.

 

1) even with 30k, you would end up with 70k after 10 years.

2) if you can save to pay to the bank, you can also save to invest. So the actual amount available to invest over the 10 years is much higher than 30k. As an extreme example, if you reinvest everything you would spend on the bank (175k-30k)/10 years = 14.5k per year, you would end with 332k€ after 10 years!

Deduct the 48k from rent, and you still have 284k€, which is much more than the 150k€ apartment (or 187k€ if you consider a 25% appreciation).

 

As you see, buying is not always the best option. And this is before maintenance costs of the apartment! Using a 1% maintenance cost, you have to spend 1500€ x 10 years = 15k€ to maintain the apartment, which is something you don't need to do as a renter.

So your final value is lower, 187-15 = 172k€, even considering a 25% appreciation. Compare that with 284k€ and there is a big difference. Of course if you put in some tax consideration, it smooths it a bit, but still investing could be a much better deal.

17 minutes ago, Lenny Nero said:

And in case there was more cash available for a down payment the interest would also be lower.

Invalid argument. If you have more money upfront, you can also invest more.

 

 

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10 hours ago, MikeMelga said:

As you see, buying is not always the best option.

 

Investing is always a complex subject, depends on your wealth, liquidity, risk aversion and many other things, for example how stable your job is.

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12 hours ago, MikeMelga said:

Yeah, but in the meantime, you can take those 175k€ and invest. And that is what most people forget! You need to compare with what you would invest! As an example, the average yearly return of stock markets since 1926 was over 10%! 

 

Property is as well an investment.   Actually some of the properties we own have been incredible good investments, if I knew I would have bought more at the time.  There are a couple of ones that went 3x in price in 15 years and in the meantime we were collecting rent.

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13 hours ago, MikeMelga said:

Let's say you are cautious and invest just 50k. At an average return rate, you would have 130k€ in 10 years.

 

And you get to give 25% of your profits to the guvment.

 

There are no capital gains taxes if you sell a property after 10 years.

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23 minutes ago, fraufruit said:

 

And you get to give 25% of your profits to the guvment.

 

 

And on top of that investing in the stock market might require that you invest lot of time on it, so it is like having another job.  Which some people might not be interested in.  The only stocks I have are just long term investment chosen very conservatively because I am not interested in being up to date.

 

Investing in property once you have the money to buy it does not require more of your time if you outsource the admin and maintenance.  So it can be a truly passive income.

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21 hours ago, MikeMelga said:

150k + 9k (interest, 1.5%) + 5.2k (sell tax) + 3k (notar) + 0.75k Grundbucheintrag + 7k (agent) = 175k€

 

You can easily get under 1% interest rate for a mortgage loan. Also the agent is "optional". There are plenty adds from private persons. So 165k is well within reach.

 

21 hours ago, MikeMelga said:

Yeah, but in the meantime, you can take those 175k€ and invest. And that is what most people forget! You need to compare with what you would invest! As an example, the average yearly return of stock markets since 1926 was over 10%! 

Let's say you are cautious and invest just 50k. At an average return rate, you would have 130k€ in 10 years.

 

That is not how it works. You do not own 175k. You own only only 40k. The banks will charge you a 3.5% interest if for a personal investment as they lose the safety/leverage that the mortgage gives. So if you want to make an equivalent you have to assume that you invest 40k as a initial investment and 1000 Euro / month for 10 years. You chose as reference 1926. But things changed since then. Take the average of the last 10 years (a.k.a. "our time") and you will see that it is 6.8 %. But let's even ignore this and go with 10%. Using a compound interest calculator and assuming a 40k investment with 1000 Euro / month additional investment you will end up with something in the 314,833.68 for 160.000 Euro you invested in 10 years. 

 

Now let's take the apartment. The average apartment price increase in the last 10 years in Munich is 7.2%. According to all available information (real estate market research, DB real estate research ...etc) the grow will continue at least until 2022. This means that the real estate that today is worth 150k will be worth 300,630 Euro in 10 years. But let's be conservative and assume a 5% increase only. You still get 247,051 Euro . Now add on top of that the rent that you save for 10 years. Rent also increases over time but you can easily average a 400 Euro / month profit. 400 x 120 = 48000. 

 

So if we take the averages of the last years, the income alone from buying an apartment over stocks is higher. 

 

Also consider the real estate advantage over stocks: 

- Real estate holds on a crisis / market crash. With stock you can lose your fortune overnight. 

- You don't have to pay moving costs/look for another rent  because your landlord decided to raise your rent 20% every 3 years. 

- If in 10 years you need a large sum of money for an investment, your mortgage will provide a solid leverage to the bank whereas the stocks won't. 

- You always have to keep an eye on the stock market / news so you can potentially liquidate if shit hits the fan (e.g. time = money). On a real estate you buy and forget it. 

 

We can debate all day but at the end of the day, I think most people will agree that the real estate gives you overall a slightly lower profit at the cost almost no risk . Stocks are probably riskiest investment option (if you factor bonds, funds, ETFs). 

22 hours ago, MikeMelga said:

Wtf? Where did the 50k come from?? And you are ignoring inflation, btw.

 

We are just comparing networth of a real estate and stocks. 

 

OP, 

 

Sorry for thread highjacking. The moral of the story that the salary range should be enough so you can buy stocks or a real estate :)  

 

 

 

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29 minutes ago, WanWhiteWolf said:

Real estate holds on a crisis / market crash. With stock you can lose your fortune overnight. 

 

No you can't. I've weathered many crashes. If you don't sell then, you don't lose. Unless all of your holdings go out of business in one day which never happens so long as you are diversified. 

 

31 minutes ago, WanWhiteWolf said:

The moral of the story that the salary range should be enough so you can buy stocks or a real estate

 

The moral is do both and be even more diversified.

 

 

 

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Stock prices, bond prices (not yields), and real estate prices are positively correlated so they don't hedge one another.  

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11 hours ago, fraufruit said:

 

No you can't. I've weathered many crashes. If you don't sell then, you don't lose. Unless all of your holdings go out of business in one day which never happens so long as you are diversified. 

 

 

The moral is do both and be even more diversified.

 

 

 

 

Like everything it depends

 

I have property, that for some reason, the tenants trashed it, so I got new tenants, the tenants trashed it and so on - I was advised to sue them which I did, which cost a lot for the lawyers  -> I go nothing back  - and yes, the I used agents with a good rep to find the tenants and also tried myself. Now I have a nice tenant, who pays the rent on time etc. But for the time I was un-happy just to be paying out for repairs all the time. Other property I have, I had no problems at all.

 

Sometimes, when I buy shares, they go down. When they go down, you should always think, is it better to sell them at a loss and buy others that I might think will go up at a faster rate - its just a case of my judgment. Sometimes its better to accept the loss and invest in something else than wait maybe years for the original share to recover on the next boom. Sometimes its not.

 

And then there is the of Kodak, who in the 60,70 and 80's were a good share to hold, then they failed to understand how digital cameras would take over the wet film market  ( even thou they invented the digital camera ), they emerging from bankruptcy in 2013 - but even if they recover it will be decades before you might see them get to the position they had in the 1970's, if they make the right decisions. Digital Equipment Corporation(DEC), my favorite computer manufacture went bust in the 90's - great sadness, and I could not 'see' any value in facebook - that's investing for you.

 

Various companies big and small make decisions that cause them to fail, its the job of the investor to try and spot the share that are going to make money and move money around to get them, but that's the risk as we all know.

 

 

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4 minutes ago, yesterday said:

 

Like everything it depends

 

I have property, that for some reason, the tenants trashed it, so I got new tenants, the tenants trashed it and so on - I was advised to sue them which I did, which cost a lot for the lawyers  -> I go nothing back  - and yes, the I used agents with a good rep to find the tenants and also tried myself. Now I have a nice tenant, who pays the rent on time etc. But for the time I was un-happy just to be paying out for repairs all the time. Other property I have, I had no problems at all.

 

A bad tenant can be a real nightmare.   Fortunately we rent our properties in countries where landlord insurance exists, not sure why it does not exist (to my knowledge) in Germany, the land of the insurances.   They are expensive, they cost around 1 month of rent a year, but they cover every loses in case you get a bad tenant, including the rent they don't pay, damages to the property, legal costs to evict them, etc.   And since they have to accept the tenant they do the financial checks on them.

 

In 25 years of renting several properties we had only one bad tenant, and we had no insurance so it was costly and painful.  Since there we never rent without insurance.

 

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Stock and property are both manipulated by the Government and Central banks.

 

The problem with stocks is that the central banks pumped so much money (via QE) into the stock market, no one knows what is a fair price anymore.

 

Would the Government and Central Banks allow another crash?

Would it restart the printing press if there was one?

 

 

 

 

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1 hour ago, RenegadeFurther said:

Stock and property are both manipulated by the Government and Central banks.

You forgot to add investors, homeowners, renters, corporations, climate change, population age, natural disasters, et. al.

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16 hours ago, WanWhiteWolf said:

 

You can easily get under 1% interest rate for a mortgage loan. Also the agent is "optional". There are plenty adds from private persons. So 165k is well within reach.

Can you assure 1% for the next 10 years? No? So don´t count on it.

 

16 hours ago, WanWhiteWolf said:

 

 

That is not how it works. You do not own 175k. You own only only 40k. The banks will charge you a 3.5% interest if for a personal investment as they lose the safety/leverage that the mortgage gives. So if you want to make an equivalent you have to assume that you invest 40k as a initial investment and 1000 Euro / month for 10 years.

Read my post. I did not say you have that money upfront. All my calculations were done starting at 40k€ and adding up every year the amount you would pay to the bank.

 

16 hours ago, WanWhiteWolf said:

You chose as reference 1926. But things changed since then. Take the average of the last 10 years (a.k.a. "our time") and you will see that it is 6.8 %. But let's even ignore this and go with 10%. Using a compound interest calculator and assuming a 40k investment with 1000 Euro / month additional investment you will end up with something in the 314,833.68 for 160.000 Euro you invested in 10 years. 

Looks much better than a house investment, as I mentioned.

 

16 hours ago, WanWhiteWolf said:

 

Now let's take the apartment. The average apartment price increase in the last 10 years in Munich is 7.2%. According to all available information (real estate market research, DB real estate research ...etc) the grow will continue at least until 2022. This means that the real estate that today is worth 150k will be worth 300,630 Euro in 10 years.

There is a clear house bubble in Munich, rents cannot increase 7% for decades, while salaries increase 2-3%.

 

16 hours ago, WanWhiteWolf said:

But let's be conservative and assume a 5% increase only. You still get 247,051 Euro . Now add on top of that the rent that you save for 10 years. Rent also increases over time but you can easily average a 400 Euro / month profit. 400 x 120 = 48000. 

 

So if we take the averages of the last years, the income alone from buying an apartment over stocks is higher. 

You forgot maintenance. Still, stocks are still higher return.

 

16 hours ago, WanWhiteWolf said:

 

Also consider the real estate advantage over stocks: 

- Real estate holds on a crisis / market crash. With stock you can lose your fortune overnight. 

Same with real estate. In Spain house prices dropped to half! A recession does not reduce stock exchange by more than 30%.

 

16 hours ago, WanWhiteWolf said:

- You don't have to pay moving costs/look for another rent  because your landlord decided to raise your rent 20% every 3 years. 

He cannot raise 20% every 3 years.

And you forgot that if you buy a house and you need to move because of a new job, you have to sell your house and lose probably 8-10% of its value.

 

16 hours ago, WanWhiteWolf said:

- You always have to keep an eye on the stock market / news so you can potentially liquidate if shit hits the fan (e.g. time = money). On a real estate you buy and forget it. 

If you keep an eye on the market, you can easily outperform the market. The 10% were on average, counting on people who don´t look at the market. I´m doing much, much better than that.

 

 

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1 hour ago, MikeMelga said:

I´m doing much, much better than that.

 

You claimed you made 30% returns for 2 years in the stocks market.  If that actually happened you were most probably just lucky.   No one can keep those returns steady for the long term.   Until we have quantum computers.

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7 hours ago, Krieg said:

 

You claimed you made 30% returns for 2 years in the stocks market.  If that actually happened you were most probably just lucky.   No one can keep those returns steady for the long term.   Until we have quantum computers.

 

No, I've made 30% per year! But I buy and sell 5x-10x per month, I read lots of technical reports every day and a lot of general news.

I'm sure I cant maintain this forever and I am also considering reducing my investment, as a global recession might be looming.

 

 

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9 hours ago, MikeMelga said:
 

No, I've made 30% per year! But I buy and sell 5x-10x per month, I read lots of technical reports every day and a lot of general news.

I'm sure I cant maintain this forever and I am also considering reducing my investment, as a global recession might be looming.

 

 

 

that's good

 

Maybe you can help others here, with this super high performance investment strategy, by telling us  how you do it ??? - I mean which markets are the best ones to invest in like ( UK, US, European ) which technical reports you are reading ? what are the important factors determining your decision to buy and sell ?

 

As I only buy shares every couple of months, and do not make any where near 30 %, but enough - and yes I agree the markets are historically high at the moment, and there could be a mini-to-major correction coming - but maybe not

 

 

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15 minutes ago, yesterday said:

 

that's good

 

Maybe you can help others here, with this super high performance investment strategy, by telling us  how you do it ??? - I mean which markets are the best ones to invest in like ( UK, US, European ) which technical reports you are reading ? what are the important factors determining your decision to buy and sell ?

 

 

 

A lot depends on who is in the White House. A businessman in the white house is a good thing for the markets which is why after Trump the markets rose. If Bernie Sanders gets in the white house a more anti business candidate the markets could go into reverse. Also the Trump Tax cuts played a significant role in the markets rising. 

 

Markets are now not dictated by their balance sheets but by Government intervention whether it is QE or Tax Cuts.

 

With a US presidential election next year I doubt that Trump will allow the markets to crash before 2020. 

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guys, sorry to be party-pooper, and no disrespect or whatsoever, why don't you get a room (aka another thread)? 

last page+ is not relevant to the topic's idea, or at least I fail to see the connection. 

 

regards 

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Dear all,

 

I have got an offer to go back to Munich for 90K€/year+12% yearly bonus.

 

I once lived Munich from 2006 in 2011 and in 2010 I made 91K€ including bonus so I am wondering whether this offer is aligned to actual living costs in Munich. 

 

I have a family of 3 + 1 unborn baby soon to come and frankly speaking I have no idea about current costs of flats and kindergardens.

 

So the ultimate question is: 90K€ or 100K€ (assuming that the bonus is always achieved fully) is enough for running a family of 4?

 

thanks

 

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3 hours ago, Theruinsofbeverast said:

So the ultimate question is

                                               why do people ask such open-ended, non-specifics, over-generalized questions?

 

and, second, if the answers all say "no", are you going to decline the offer, give up your search and stay in Italy?

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