1. Opportunity Cost
Locking cash into a house downpayment means losing the opportunity to earn 7-10% annually in the stock market.
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Rent vs. Buy Simulator
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2. The Verdict βοΈ
Projected Total Net Worth after 30 years (Assets minus Debts):
If you BUY π
House Value - Remaining Loan
If you RENT π
Liquid Investment Portfolio
3. Economic Concepts π‘
2. Sunk Costs vs Equity
Rent is often called "throwing money away", but mortgage interest, property taxes, and repairs are also unrecoverable sunk costs.
3. Compound Interest
Renting only wins if you actually invest the difference. Over 30 years, consistent market investing snowballs massively.
4. Liquidity
Stocks can be sold in seconds if you need cash. A house is illiquidβtaking months to sell and costing 6% in realtor fees.
5. Inflation Hedge
A 30-year fixed mortgage locks in your housing payment, protecting you from inflation, whereas rent generally increases every year.
6. The Mobility Premium
If you move within 5-7 years, buying usually loses money due to closing costs. Renting provides the flexibility to relocate easily.