Are you struggling with the decision to rent or buy your home?
This dilemma is a crucial part of adulting, and it often boils down to two intertwined questions.
Firstly, which lifestyle suits you best at this moment in your life?
This question is deeply personal and depends on various factors like your circumstances, preferences, and how much DIY you can handle.
However, the second question revolves around finances, and that’s where we step in to offer guidance and turn hypotheticals into concrete plans.
Is Renting or Buying Your Primary Residence the Smarter Money Move?
Building long-term wealth is our expertise, and historical data shows that both renting and owning a home can generate substantial wealth over time.
Homeownership allows you to build equity and recover the initial costs over time, while renting lets you invest the money you would have spent on buying and maintaining a property.
A recent study by a real estate investment firm analyzed 50 years of data to compare the wealth outcomes of renting versus buying.
Wealth after 30 Years
*Data shown for illustrative purposes only. Graph does not reflect Betterment’s fees or expenses.
The study slightly favors renting over buying, but both paths can lead to financial stability in the long run.
By investing wisely and saving diligently, you can thrive financially regardless of whether you choose to rent or buy.
How to Make the Most of “Renting + Investing”
Considering the median house price in America is around $415,000, let’s break down the upfront and ongoing costs of buying and maintaining a home.
Emotions play a crucial role in decision-making. If saving and investing this amount seems daunting, you might be better off renting for now.
Remember, your stance on the Rent vs Buy question can change over time, and that’s perfectly normal.
By crunching your own budget numbers and following a two-step strategy – saving upfront costs and regularly investing non-mortgage expenses – you can actively build wealth even while renting.
When the time comes to decide between buying a house or continuing to rent, you’ll be financially prepared and well-informed.
There’s no right or wrong answer; it’s about what’s best for you at that point in your life.