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by coldtea 3521 days ago
>After all, renting has a guaranteed zero ROI.

A guaranteed zero ROI is better than a negative ROI which you can get with buying a house (e.g. the house you can resell it drops due to the market and you can't afford the mortgage for some reason...)
1 comments
standel 3521 days ago
negative ROI on investment is the risk component of your investment. This is true of any investment. Stock being certainly higher risks than housing and still people invest a lot in stocks.

But I should have said renting is a sunk cost. There is no investment component at all in renting.

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kdamken 3521 days ago
Stock being certainly higher risks than housing and still people invest a lot in stocks.

I would say low cost index funds are a much lower risk investment than a mortgage. They also have the advantage of being very liquid in the case of actually needing your money. Rent is not a sunk cost, this is a common misconception.

There are many good reasons to buy a home, but do not think of it as an "investment". Compared to other investment options, it's a pretty terrible one.

I highly recommend reading this article to learn more - http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrib...

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jpetso 3521 days ago
You could also look at it the other way and say you have sunk costs either way, either on rent or on running costs for your (owned) property: mortgage interest, property taxes, maintenance, opportunity cost for your down payment.

The question is how do you invest the extra leftover money: in home equity tied to the property with running costs, or in other investments (stocks, bonds, your own business)?

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