A friend was telling me that he is getting into investing, cryptos, etc. But he is renting an apartment as far as I know. Is this a wise use of money, bros?
Isn't it a bit absurd to invest in financial markets if you don't have a house?
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
The leverage only matters if you will flip the house for a profit prior to your mortgage full term. If you just want to buy and live in the house as nearly all people do, leverage isn’t a factor
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
Also, there may be fiscal considerations?
You pay taxes on your investments returns, but you don't pay taxes in the rent you save. Am I right? -
You mean, like 95% of purchasers do? The average duration of a mortgage loan is about 5-7 years in most areas.
Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
The leverage only matters if you will flip the house for a profit prior to your mortgage full term. If you just want to buy and live in the house as nearly all people do, leverage isn’t a factor
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You mean, like 95% of purchasers do? The average duration of a mortgage loan is about 5-7 years in most areas.
Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
The leverage only matters if you will flip the house for a profit prior to your mortgage full term. If you just want to buy and live in the house as nearly all people do, leverage isn’t a factor
How much of that prepayment is due to refinances? Honestly IDK, but refinances are a significant factor.
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
The leverage only matters if you will flip the house for a profit prior to your mortgage full term. If you just want to buy and live in the house as nearly all people do, leverage isn’t a factor
You're ignoring the fact that homeowners can cheaply tap their equity. Yes, interest expense for in-home improvement uses is no longer deductible, but leveraged gains can still be taken advantage of.
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Not at all. A personal residence isn't really an investment. It usually doesn't make any sense to buy a house until you know you will be in one location for 5+ years, but you should be investing as soon as you start to earn money. The two things aren't really related.
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Housing is essentially a low return asset. Think a bond. Housing is a good choice if you are very risk averse or not a sophisticated investor. That’s not a dig at you and it’s a great choice for the vast majority. In most housing markets you would have lost money relative to paying your rent and putting the difference (relative to your mortgage, tax, and maintenance costs) into some simple SP500 index fund over the standard 30yr mortgage
Are you factoring in the leverage that a mortgage affords you? It's not like I can go to my bank manager and ask for a low interest rate loan to invest in the S&P.
The leverage only matters if you will flip the house for a profit prior to your mortgage full term. If you just want to buy and live in the house as nearly all people do, leverage isn’t a factor
Huh? That's just not true. When you purchase the house you will be leveraged. Over time, if you pay of your mortgage your leverage will decline. However this does not change the fact that a) Your leverage is quite high initially and b) that you can simply re-mortgage and your leverage will go up.