Renting Is A Better Investment – If The Debt Collector Calls

Financial wake-up call Renting Makes More Financial Sense Than Homeownership: Most people still believe that purchasing a home is a good investment, but I have to disagree. It is a good investment if it is bought as an investment (that is, used to maximize income) and not a place to live. I speak from experience. I own a house and the more I look at the costs of running it, I wish that I had rented instead. This is an interesting article that puts the numbers together on why buying a house isn’t as good of an investment as renting and placing the money into stocks:

I have something un-American to confess: I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as

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One Response to Renting Is A Better Investment – If The Debt Collector Calls

  1. CT says:

    The article about buying vs. renting misses a few big gotchas about renting and putting money in the stock market. First of all, it’s fairly easy to get a 300k loan at 5-6% interest with 30k down for a mortgage loan, but in order to use that 300k to buy stocks instead, you would need to use margin. Margin accounts require 50% down (150k) and charge much higher interest (9%+).

    Even if you have 300k in cash, you have to tolerate a lot of risk to put it all in stocks and get that 7% average return. The article is counting on the stock interest offsetting the extra cost of renting every year. It just doesn’t work like that. Some years you will actually post a loss on your stocks, which would mean you would either have to pull money out of your investment or pay the difference out of your pocket. Also, even in the best case scenario where you have enough earnings to pay your rent, you are losing out on the compounding effect normally associated with long term stock earnings because you are pulling money out of your investment to pay your rent.

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