I know, I know, I know… I must be crazy to think that a home is a terrible investment, but it is! Studies have shown that investing in the stock market over a 30 year period for example (which is the typical length of a traditional mortgage) will come out on top over owning a home for the same period of time!
I stumbled upon a great blog post by CNBC, in which Peter Mallouk, a certified financial planner, makes the argument against home ownership.
And he’s not alone! On that same blog post, self-made millionaire Ramit Sethi also shares his thoughts on why buying the home you live in is usually a terrible idea! That’s because most people don’t factor in the phantom costs when buying a home.
Now, let’s get one thing clear: I’m NOT saying don’t buy real estate, because that’s NOT what I am saying!
My family and I are still very much invested into real estate; hence, why we still own a few condos that we rent out! What I’m trying to say is that…
You shouldn’t buy a home; You should buy a house!
There’s a difference! If you buy a home, it’s a lifestyle choice. If you buy a house, you’re buying a business!
This is practically why you should stop and think about how you really define assets versus liabilities!
Multi-millionaire Grant Cardone said “Rent where you live and Own what pays you income.” This quote really stuck with me and has a lot of truth in it! I mean look at this quick sample calculation below…
You come out on top by Renting & Investing!
If you need the basis of the idea, be sure to read one of my favorite personal finance books out there — Rich Dad Poor Dad by Robert Kiyosaki. In a nutshell, this book changed our lives! After learning the other side of the coin, the big key takeaway — RENT! And YES, we are proud renters!
However, there’s just one BIG caveat for renting which we’ll talk about that more on my next topic:
The Case for Renting a Home
