401k vs Investing in a House EGR 403 Team 3 James Coats Summarizer Melanie Marin Techie Chris Mui Organizer Type of project Personal Investment Find future worth Fixed Input Scenario 25 year old engineer Single his entire life Beginning Salary 52 000 4 Avg yearly increase Owns his current house and wants to know what is a better investment Personal Investing Option 1 invest in a secondary house to rent out Option 2 invest in a 401k Option 1 invest in a secondary house to rent out Initial cost of house 530 000 Location Phillips Ranch Pomona Monthly rent 1 900 Increase at half of inflation rate Assume 3 inflation Option 2 invest in a 401k Money invested is equal to the amount invested in the house yearly Down payment was split by 30 years and invested in the 401K yearly Assume a constant 401K rate Summary Option 2 Investing in the 401K is the better investment 401K 4 300 000 House 879 000 Sensitivity Analysis 401K balance equals the house balance 878 757 77 when 401K yearly rate is 0 003 House balance equals the 401K balance 4 345 194 19 when the house appreciation is at 7 9 URL s rentals realtor com rentals eloan com payscale com
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