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In time we will always (or have already) move from parents home, to our new place. It could be a house, an apartment, a room in apartment, whatever, but this is our new home, our own territory.

So in this situation, quite often interesting question arises, whether to rent the apartment, or to buy one?

I will overview this situation from the bank loan view for the apartment buying, that would be much interesting, and i think, more close to reality.

Prices

I live in Estonia. All operations will be in US dollars, but converted from prices in Estonia.
$1 ~ 10 EEK

The average 2- 3 room apartment (50 -70 square meters) costs now around or $100 000.

The average rent for the same flat is around $400 in a month.

Bank Loan

Loan interest= 5%

The interest is dynamically calculated, depending on economics and the sum you still need to pay back. The longer the period- the bigger the sum will be, that you pay back.

For example:

If you take a loan where interest is 5%. And we need $100 000.

It is easily to notice, how much the interest is getting bigger, depending on for how long you have taken the loan.

Bank loan VS rent

So, the interesting part. I will assume the bank loan will be taken for 20 years. I must explain. In Estonia an average salary per person was around $1200 in a month. Now it is much smaller, because of the world financial crisis. If family has 2 adults, so they can manage to live nicely, paying the loan.

Conclusion

My personal opinion is. Buy a flat.

If you are not planing to go back to you parents home and have enough money, or wherever, but the apartment, or house. If you look at those tables, you can see how much money you will simply give away to somebody. It is like buying air balloons- they are nice, but useless.

The rented apartment does not belong to you, the owner can decide to throw you out (yes, and sometimes they give few days only to pack your stuff). You can not do anything inside (for example drilling a hole in a wall to hang a picture), and so on…

But when having a loan, you are the owner! You can do anything to you place, and this will be something like investing (7 years ago it was called an investment- to buy a flat).

And look around, the world financial crisis has dropped the prices way down!

What do you think?

Panic, world crisis has reached us. We are all doomed.

But wait, is everything really so bad? I don’t think so.

I would like to devote this article for those, who do not own businesses (here really not everything is good), but for everybody else. Who goes to work, who has dreams and family.

Look around! Because of the crisis:

• Prices for cars went down a lot! If you were planning to but a car, now is this moment to to that. Not only the buying will be cheaper, there will be some extras included (for example, alloy wheels, or xenon lights). In Estonia, the car dealers have a lot of offers. For example, if you would buy a Toyota Land Cruiser, you will receive small Toyota Yaris for free!

• Real estate. Prices down also. In Estonia, around 20%. Thinking about new flat, get one! But the banks will like to have 20%, 30% from price to be payed at once…

• Cheaper holidays! But we aware, it could be that in final destination you will stay for longer that you planned…

• But shares of good companies for really cheap price! I think this is the greatest possibility.

• Cheaper electronics, goods, furniture, and so on.

There are a lot of other examples. The crisis is a normal happening, and a great possibility. You should always look around the corner and act otherwise as the crowd. But do not forget to use your head, please.

Hey there.

I am very sorry not writing for a long time. Had some reasons.

Would like to share something personal, this is a blog, remember, personal blog.

At first! New 2009 has arrived! Yeah! Second, I have a new job. Third, i must begin to write my science work…

Now I am, I think, pure PHP programmer.  After 10 month of work in a small, but family like company, decided to change my workplace. Why? We always must be in a movement. The only thing i do not like, is to get up at 7:30 am. It is not so early, and the problem is not that I want to sleep. It is still so dark outside. And people, like zombies, going to work, to spend there 8 hours a day, 40 years of life.

I thought a little bit overhere. What would you better do, sit at home, thinking and developing your genious idea, or goind to work for 8 hours a day? Personally I think, that we should be working, until we have not our own business. But not working for 8 hours a day, a little bit less. Please, listen, i will try to explain.

Of course, we all must work, because we have to pay for house/apartement/car/university and so on. But! Working for somebody else, that will not change anything to you. You will be so exausted by that, so in the evening you would rather watch TV, than reading and developing yourself… Think about it. Do not waste your life, try as hard as you can to be independent.

I will explain everything more seriously, but for the end, some numbers.

I live in Estonia, average salary around 11 000.- eek.

1.- USD dollar  ~ 11.- eek

For our 40 years(until the pension?), working 8 hours a day, we will earn:

12 * 11 000 = 132 000.- eek in a Year

132 000 * 40 (years) = 5 280 000.- eek  This is around $480 000.-

This is a very small sum. Only 480k. Meaning you are not eating, buying anythig, going out. Are you satisfied with it?

This nice Lambo costs around $330 000.- You really want to work for someone, or at least try to do something?

5 topics to make it clear

It is recommended not to use emotions at all, when dealing with money. Clear mind should be used. Unfortunately, quite high percent of investors and traders are still losing money. They invest more and more money, when the shares are growing and selling when shares are falling. This strategy is not quite correct.
I will try to explain some topics in how to invest a little bit more effectively and in bad times keep as much money ‘alive’.

1. Do not react on everyday news.

   It is useless to react on everyday news. There is not a better possibility just not to touch invested money into good company, and wait to see the it growing.

2. Do not ignore your investment strategy.

   Make a plan, and follow it. This fill definitely maximize your income and minimize loss. This is quite difficult, because of the simple human nature- fear, that you will loose everything. Emotions will make all your great plan for buying a yacht disappear at once. Take it easy.

3. Panic because of the stock market fluctuations.

   Use this possibility instead of being part of it. The price goes down- buy good companies shares for low price! Remember, when everybody is selling - buy, and sell when everybody is buying ( the selling is mainly for traders, investors could use the cheap price to enter the market).

4. Refusing to invest into shares when market is down.

   The most successful investors were buying shares when everybody else were selling them. This is not easy at all. But isn`t it crystal clear- you are buying shares for low price, meaning they will give you back later much more. Of course, only good companies do…

5. Keep adequate resource distribution.

   You should regularly check your resource distribution. Meaning all your money is correctly disturbed, depending on your strategy, whether in shares, cash or funds. When shares price is falling, for example, you could decrease shares percentage in you capital.

Bush plan to ‘help’ financial market has failed. The reaction was momental.

At the moment :

S&P 500: 1 117.85  Change: -7, 84%

NASDAQ: 1 983.73 Change: -9, 14%

Oil price has dropped around 10%. But the oil is not so big problem. The prices will be held up, because the oil production will be lowered. Anyway…

USA has lost their hope? It was planned to give Paulson an immediate $250 billion to buy bad loans. So the credit flow to U.S. would be restored. Unfortunately, now the banks are on their own, and writing off other billions- is not an option anymore. If Bush hoped the tax payers will save economics, now nobody will do that.

But if we will look from another angle? Will it be really enough to cover the loans and restore economics. I don`t think so. The main idea is in ‘keeping the banks operational’ with minimal expenses at minimal price.

This will certanly not be a solution…