ESSAY QUESTION:
The following appeared in the personal finance section of a popular magazine:
“The average price of an acre of land in the United States is now 50 times what it was in 1970, and nearly 200 times what it was in 1920. The nation’s population is projected to keep increasing, even as the amount of land remains constant. Therefore, people who are approaching retirement should invest heavily in real estate in order to ensure their financial security.”
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
YOUR RESPONSE:
The author advocates people approaching retirement to invest heavily in real estate to ensure their financial security. To support this conclusion, the author points out that the average price of an acre of land has increased exponentially in past few decades. The reasoning of the argument is flawed because of few reasons which I will discuss further.
First, the author has assumed that due to demand supply mismatch the real estate prices will increase in future as well. However, demand-supply is not the only factor affecting real-estate prices. Real-estate prices are closely related to the strength of the economy, with prices going up in boom-time and crashing during depression. Author has not mentioned anything on how economy will span out in future.
Secondly, author has not compared the rise in real-estate prices with other investment options e.g. Stocks, Commodities, etc. If stock investment has given much more returns than real-estate investment then the author's claims are not valid since people can invest in other options than real-estate and hence achieve their financial security with less investment amount.
Thirdly, author has not mentioned the risk involved in real-estate investment. Since, people approaching retirement will have to depend on their savings, risk involved in real-estate investment has to highlighted appropriately. A high-risk investment might erode their prinicpal amount thereby, straining their financial security.
Finally, author has not mentioned which particular areas to chose for real-estate investment. The author's conclusion is based on average price of land. Not all land is worth investing e.g. desert land might not give appropriate rerturns, while an apartment bought in Manhattan might give decent returns.
In conclusion, this argument is unconvincing. To strengthen the argument, the author must provide a comparison of the other available investment options available, the risk involved in real-estate investment, the future outlook for economy and which particular areas should be looked while making a real-estate investment.
Pls comment how can I improve further.
Thanks
Amit
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