Hear ye, hear ye! The trial case for renting a home begins! And what better way to begin than to debunk some of the common phrases out there! Introducing my co-millenial FIRECracker from millenial-revolution.com.
In case you haven’t heard of her, FIRECracker is a world-travelling early retiree. She used to live in one of the most expensive cities in Canada (Toronto), but instead of drowning in debt, she rejected home ownership. What resulted was a 7-figure portfolio, which has allowed her and her husband to retire at 31 and travel the world. Their story has been featured on CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance. To date, it is the most shared story in CBC history and their viral video on CBC’s On the Money has garnered 4.5 Million views!
Feel free to check out her website as she has a ton of nuggets to share about her amazing financial journey! One of the blog posts that stood out for me (and I really loved), was on her post on:
“Why Renting Will Make You Rich”
If you haven’t read it already, she throws you a lot of valid points that I surely use to defend myself when people come at me about renting our home!
“Renting is throwing your money away.”
“You’d be stupid NOT to buy a house.”
“Buying a house is the ONLY way to secure your future.”
These are all phrases I’m sure we’ve heard over and over again. From our parents, from our friends, from our coworkers.
@FIRECracker_Rev | millenial-revolution.com
Sadly, society taught us and made us believe that “renting is wasting money”, when in fact, it’s actually not! Well I’m here to stop the gravy train today — sorry to break it to you, but your house (the home you live in) is not a good investment.
The math doesn’t lie.
You still don’t believe me? Well, here I am to introduce Ben Felix, a fellow Canadian and portfolio manager at PWL Capital Inc. This guy is quite the guru especially when it comes to breaking down the numbers in detail!
However, I must say… even with the detailed breakdown of all these numbers, there’s just ONE BIG CAVEAT and takeaway for renting:
Renting is better than Buying ONLY IF you invest the difference!
And I mean REALLY INVEST THE MONEY (ie. stocks, bonds, index funds, GIC’s, etc…), not just park it in a regular savings account somewhere accruing a mere 0.050% interest — yes, sadly, that’s how low some of the big banks in Canada only gives you for having a regular savings account.
QUICK TIP: If you really don’t trust yourself to have the strict discipline to save and invest the difference every month, then not to worry, I have a great solution for you in my next topic:
The Power of Automation!
Even though I think buying a home to live in is a terrible idea, on the flip side (which I do appreciate from time to time), I do believe there is one underlying VALID REASON on why one should buy a home…
It’s a type of forced savings!
So should you choose to IGNORE MY ONE BIG CAVEAT ABOVE when renting a home… to those who absolutely won’t have the discipline to save and invest the difference at the end of each month, (I think you know who you are), then I say home ownership IS A MUST! Even though it’s not the best way to save, AT THE VERY LEAST, you will have something at the end of it all!
Well there you have it! Order in the court! Case closed!
