I have a slightly different viewpoint from Brother Dayu, so I'll try to answer:
Assuming no inflation and rent does not increase, for the same wealthy individual, I will add one more condition: the initial capital is 6 million HKD.
- Renting in Hong Kong, with a monthly rent of 100,000 HKD, based on the most basic 4% annual return, the net monthly income is 20,000 HKD, while the rent to be paid is 80,000 HKD.
However, having 6 million HKD in cash means a significant opportunity cost. For example, in traditional investment options, if one buys QQQ, the average return over the past ten years has been 19%. Although 2025 has not ended, the average return has already reached 20%, so let's calculate based on 19%.
If the 6 million HKD does not reinvest, the monthly income would be 95,000 HKD; if reinvested, the income would be 99,000 HKD. Continuous reinvestment would yield even higher returns, easily outpacing the rent. This means that after 30 years, if compounded and continuously invested, the total income would be 1.108 billion HKD.
Yes, you read that right. If 6 million HKD maintains a 19% annual return, after 30 years, it would yield over 1.1 billion HKD in returns, assuming no withdrawals and reinvestment.
If, however, 100,000 HKD needs to be withdrawn every month for expenses, then by the 16th year, the account's assets would be depleted. But if there is an additional 500,000 HKD for support, or if one borrows 500,000 HKD for the first five months' rent, then after five months, with 6 million HKD at a 19% annual return, the net asset value after 30 years would exceed 36 million HKD, and one could still withdraw 100,000 HKD monthly to pay for rent.
This is just an investment in QQQ; if it were in $BTC or a more aggressive strategy, the returns could be even higher, though the risk to the principal would also be greater.
- Buying a large house worth 30 million HKD, with 80% financing, a down payment of 6 million HKD, means the down payment is entirely lost. Additionally, one would need to repay 100,000 HKD in rent each month. After 30 years, the total expenditure would be 36 million HKD. Assuming rent does not increase, the property value should also remain unchanged, resulting in the actual acquisition of a house worth 30 million HKD, with a total expenditure of 12 million HKD.
Selling the property would yield a total return of 18 million HKD.
Of course, all of this information is derived from purely theoretical and optimized data, meant for entertainment purposes. In reality, there would be more and larger variables. The main options are: 1. having cash as an opportunity cost, and 2. treating the house as a fixed income. How to choose ultimately depends on the individual.
If the capital amount exceeds 36 million HKD, there is essentially no difference. But for those with limited capital, how should they choose?
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