3 ms·
Just because someone else is profiting from you doesn't mean you are wasting money. Let's say you save $100k. You can either buy a house, or put the money in t
by jeffdavis 10y ago
Just because someone else is profiting from you doesn't mean you are wasting money.
Let's say you save $100k. You can either buy a house, or put the money in the stock market. If you put it in the stock market, you get a return but that return ends up going to your landlord's profit. If you but the house you get no return but don't pay the landlord's profit.
In other words, it's an investment. If you believe that the RE market has better ROI, and don't mind being rooted, then go for it. If you believe the stock market has better ROI and you prefer to be mobile, do the stock market.
- HillaryBriss 10y agoAlso consider that dividend income from the stock market gets taxed each year before it can be reinvested. So, it does not compound as rapidly as the untaxed "yearly dividend" (aka price appreciation) of the house. OTOH, as you say, the easy mobility associated with renting can be quite valuable to some workers. It's like, "what opportunities and profits am I foregoing by being tethered to a house here in this job market?" etc. I think it's all very complicated and situation-dependent, as you point out. We need to predict the housing market, interest rates, the job market for our particular specialty, changes in tax laws etc in order to make an optimal decision. We're all forced into the role of economic forecaster just to make the most fundamental decisions about life.