When you near the official retirement age will the pension asset test have any impact on if you decide to buy or continue renting? With / without an imaginary extra million.
Given that I don’t know what the pension will be like in 25-30 years and also not knowing the rental market, housing market and (most importantly) my own mind then ;) my only truthful answer is - no idea. But let’s pretend I’m of retiring age right now. I decide to sell up most of my portfolio and buy a house. I’ll need to keep my assets under $250K to qualify for the full pension of just under $20K a year. And since I’m only allowed to earn max $84 a week extra before my pension is reduced that means I won’t be able to keep my dividend portfolio - too easy to go over. Let’s also pretend I have a perfect house that doesn’t require maintenance EVER - so no plumbing fixes, appliance upgrades, new fences or council rates (easily $5K a year in reality). That leaves me with around $1600 a month for bills and food. Compare that with now. I have no maintenance costs, just rent. I bring in avg $5000 a month less the rent of $2000 a month, leaving me with $3000’ish for bills and food. It's also sustainable for the foreseeable future. So no. Right now I would not buy a house so I could qualify for a pension :)
That because my own (paid off) house is the answer. I am 43 and never must worry or quessing what rental market will do in the future. I dont care. Why people dont geting it?? Look stories how old people are maxed out from rental market. Why anybody will risk?? Greetings from Finland!
@@landlord5552 : What is property tax like in Finland. My old retired neighbor is paying monthly property taxes + maintenance that would easily cover one bedroom apartment in a nicer part of tow than her house is.
Good choice in my opinion. While owning a home for a few years in the state of CA and sold last year, renting has now reduced my stress level so much. Obviously pros and cons to both but I don't think I will ever want to buy again. Now able to put way more money into my 401K and my budget is solid.
@@simmyt64 It can also be a financial burden. I had a plumbing incident that set me back almost $5K even with insurance. Oh then my insurer dropped me for filing the claim and had to pay triple in premiums to another insurer. Lots to think about when it comes to home ownership.
I agree with you, especially if you're single without kids. You're living for today and not shooting to be a homeowner in your 70s. Owning a house has been encouraged by the banking sector, which makes a lot of money from the housing market.
That is a really good explanation. I have been trying to justify to myself why I don't like the idea of a mortgage. I listened to this FX trader once explain that buying a house with a mortgage is crazy because you don't actually own an asset but have a liability (for 30 years in the example you mentioned). I like the 4 quadrant idea that you've used to explain this and it very clearly explains why buying a house will lead to you having a liability and reducing your cash-flow whereas investing the money in the stock market will give you dividend income. You're right about the "dead money"argument as well. We could say the same thing about paying for food --- you're actually helping the farmer pay his bills but then so what? You get a service or good in return. Thanks very much for the video.
Thanks people think if you just rent youre missing out on a dream of homeownership but to me I see the opposite. You can move around more easily with renting and just get rental insurance to protect you items. I'd rather stack my money invest and be debt free which I only have 1 debt right now no credit cards or car notes. There are some advantages in renting.
if you buy a house in a wise informed way, you can still move around by renting out the house and still have your properties pay for your rental liability if you have a job that keeps you moving around.
Being forced to pay a mortgage, property taxes, and insurance/association costs EVERY month for 30 years with no easy way out is absolutely miserable. And knowing that you are paying thousands upon thousands of dollars extra in interest is complete misery. You can't just stop, move back in with relatives, or get roommates. You are STUCK with all of the monthly burden for 30 YEARS!.....I will rent and be flexible and free as a bird always.
Being forced to pay a mortgage, property taxes, maintenance, and insurance/association costs EVERY month for 30 years with no easy way out is absolutely miserable. And knowing that you are paying thousands upon thousands of dollars extra in interest is complete misery. You can't just stop, move back in with relatives, or get roommates. You are STUCK with all of the monthly burden for 30 YEARS!.....I will rent and be flexible and free as a bird always.
In the end, it comes down to what you're comfortable with in your life today! Like Tracey, the position of being debt-free is appealing and less stress. In todays world, most people couldn't come up with $1000 if they needed it suddenly without borrowing or selling personal property. . . no thanks. And, in-the-end, no one gets out alive; and whether you die with a $500K home or $500k in a portfolio of some sort, it is still meaningless. Entrepreneurship is not near as meaningful as realizing that what you have is all that you want -- being content in whatever position you accept yourself in is PRICELESS.
As a doctor, and RUclipsr, I change hospital rotations every year. It makes more sense for me to rent than to buy for now, until I have a fixed hospital placement.
Tracey, I'm turning 22 this year and I want to be like you when I grow up! My lifestyle expenses to be mostly covered by passive income, none of the stress that comes with owning a property, and my assets to be producing income for me. That sounds like a bloody good life!
@@TraceyEdwards Thank you 😄 What was your career was before you started living off passive income? I'm very curious to know if it was a high paying one. Could you please make a video talking about your life before and after switching to living off passive income full time? How your usual schedule looked and what you with your time now? Thank you 💕
Wait till you're 60. Dumb renters like you never factor in the cost of paying rent for 60 plus years. You only calculate the cost of the life of a mortgage, never after it. A mortgage is paid for after 25 years. You're paying rent until the day you die with nothing to show for.
Having a paid for house when you retire is the best financial advise. We purchased a new home about 15 years ago and we just now had to spend less than $10k to upgrade our heating/appliances etc. Our tax/insurance is less than a quarter of what our home would rent for right now. If you buy the right house in the right place, it's a no brainer that it's the best decision to own.
Your first point was enough for me to SMASH the like button! Unless one is living off the land and off the grid, we are all paying someone else's lifestyle by purchasing something/a service. Rent went towards me living somewhere for that time, shoot!😊
Fully agree, I have had houses and I have rented. I sold my house and invested the profits into the stock market, in a diversified portfolio as well as other assets. Love the flexibility to move to more anywhere in the world.
I agree with you on many of your points they say rent is a waiste of money but so is paying interest. People are up to there eyeballs in debt and they can't afford any extra activities because they are living like tightasses. But just remember that like property the stock market can also crash reducing divendend paid to you.
Not necessarily true. For example, during the recent GFC, the Australian Foundation Investment Company (ASX:AFI) did not miss a beat paying dividends at exactly the same level as always. Had you never watched the news, you would have been blissfully unaware there was a financial crisis going on and just carried on.
We honestly need more voices like yours dispelling the myths that everyone needs to be a homeowner and that primary residences are assets. I did the math a couple years back and learned that my home would have to be pretty cheap for it to be even relatively beneficial. My spouse and I have decided to buy a home that's no more than twice our annual income (most banks would qualify us for 4x that amount). But after taxes and maintenance, owning a home is more like having insurance (a somewhat guaranteed "rent-stabilized" dwelling in exchange for doing your own repairs). But we realized investing in stocks is the way to go. Retire with only property taxes and insurance to really worry about, and have hired help when we get too old. We wish we could've reached FI early enough to just rent wherever whenever indefinitely.
Bluntly, most people who talk about the benefits of renting are renters who cannot afford to buy. Usually, they have had a house before also. I, too, am in the same boat. I have had 3, now have none. RENTING - for the foreseeable future....due to financial restrictions. :) However, your explanation was measured and fair. I really enjoyed your video. I have no real bias either. I might have mentioned though, that the interest you pay for your house is an expense that is somewhat offset by the appreciation of the principal (house valuation). This investment is leveraged by the value of the house - an amount most average families can't leverage in the stock market. At the end of it all, the smartest decision has to be spending your money where it works hardest for you, after all things are considered. If you rent, and invest your change into the stock market, and are more profitable (%) than if you were to spend the same amount on a house, its seems only logical that its the smarter choice. Lastly, i really like that you mention the strain of having a mortgage. Not enough people consider the toll of pushing yourself to your financial limit. Everyone has a different threshold of what is comfortable and what is not, and our happiness in life should be held in the highest of regard :)
IntoTheMaze - hey Maze! Not necessarily true . living comes at a cost and purchasing a house comes at a high cost. Some people prefer to allocate the liquidity that would other wise go towards the cost of acquiring a house into other assets. Also consider the amount of debt that someone may incur when acquiring a house. This could potentially offset a person’s balance sheet into the negative. Our goal should be increasing equity, not buying a house, and the way we increase equity is by increasing assets and reducing liabilities:)
I own 4 properties. I rent them out. Own what you rent and rent where you live. The rent from the other properties pay for your life. Rinse and repeat. Me and my wife will rent. When we are tired of living there we will go somewhere else. No kids so more freedom to do what we want and where.
I prefer to rent. I own a place I rent out too. I see your point though, I can't afford the places I actually want to buy and want to live in...I still need a million bucks :D. Ideally I'd own a home and rent at the same time..I get bored of living in one place.
Unless you live in an area subject to natural disasters, like earthquakes un my case, and see your house value drop dramatically and no one interested in buying. We forget that we live in a world where nothing can be prevented.
Where I'm from we don't take on huge mortgages. We save and buy land or a seriously run down house to bulldoze. Then bit by bit we build the house. Neither of my parents are fans of long term, high interest, adjustable debt. The only loan I've ever taken out was low interest, non-adjustable, for 10 years. I had to default the last 3 years due to marital breakdown but eventually rebuilt my income to pay it off early. A lot of people can buy but can they sustain the monthly mortgage payment and the property tax and the maintenance for 25- 35 years. Nope. Especially not if the interest goes up drastically like in a financial crisis. I'm 40 this year and I have lived through three recessions. In the 90s when my parents had to take a pay cut, that whole 2007-2011 subprime/banking fallout and now Covid lay off and closures and profit losses. Luckily I was employed and renting with no adjustable interest debt. My current company had failed to pay the annual employee bonus for the first time since 1953. Let that sink in. Millenials are in no real position to buy unless they are in the top 10 percent earners and or their parents are funding their lifestyle as an investment. My parents are boomers who managed to build some intergenerational wealth to pass on to us millenials but the wealth they generated is still not enough to raise the next Gen Z and Gen Alpha. Half of my Millenial peers do not have children as they view them as unaffordable.
I like it. I was a home owner with loan, and although i sold it for handsome profit, the bank make more money than me, now i‘m even happier to rent anywhere i like with more liquid asset in dividend stocks. 🙏 thanks
I am renting now because I sold my home recently to be closer to family. I can't wait to buy again. I hate renting. I was in my last home for a short period of time and I made 50k cash (after repairs and upgrades) off of it when I sold. Plus, I saved money because my mortgage was about $600-900 less than those renting in my neighborhood. I easily made/saved over 100k in less than 5 years. Buying was one of the best financial decisions I could make. The key is to be debt free THEN buy. I've ran cost analysis, opportunity costs and all of the other numbers and I always come up with owning being a better option.
Tracy I love this video. We lived the American dream, owned houses and after living that and understanding the real costs that go with that we are now investor and high cash flow driven. This helped me focus tighter on what our goals should be and high cash flow principles we live by.
Renting is better. When I die, I cannot take the home I worked so hard for with me. I love the freedom of picking up and go, not having to pay for repairs/maintenance, choosing the location and home I want to live in. Plus, I get to drive nice cars.
Very well put Tracey! Always remember folks , the basic accounting formula as per GAAP(general agreed accounting principle) Assets - Liabilities = equity In other words What you own minus what you owe equals ,what you have . Acquiring a mortgage will increase debt to income ratio and potentially reduce equity. Contrary to what a common myth , buying a house is a great way to build equity. Your 100% doing it the right way Tracey!
Hi Tracey , Great video! You have revealed the unspoken truth about home ownership & it's real cost. Most people never deduct their incurred purchase costs, interest, maintenance/upgrades, inflation etc., etc., etc... from the sale price of their home. It always amazes me that Aussie parents will often discuss how difficult it will be for their kids to get into the housing market but ironically will encourage them to purchase a house at the earliest opportunity without expressing their concerns of affordability or options such as rent vesting. Mortgage = There goes your best YOLO lifestyle!
FYI, Landlords earn between 3% to 15% net profit from their rental properties. If you don't understand this then go ahead, keep thinking to yourself you're living maintenance and property tax free in a rental property.
THANK YOU for making this video. Could you please do it again for 2021? That's what I've been thinking but all my friends are buying/have bought really expensive houses and that has made me doubt in my thoughts. But you are the ONLY person that makes sense to me. 🙏🙏🙏
Also if you are single and living in the big city rent a room that is all inclusive in the rent (hydro,internet etc.) and if possible no more than just another tenant accommodating apartment lesser the people less headache will be...also sell your car especially if you are in a big city no matter what make, what year it is a luxury to own it...I did this 2 thing renting a room, using public transit (for almost 10 years now) have a full time job and I saved tons of money
This video validates those who are struggling to buy their own property right now. But rent comes with their own stresses too. Since you don't own it it can be taken away from you at any time. Not to mention the stresses of finding a new (and decent) place to live without competing with many others. Rent is a physical burden rather than a financial one.
Hi Tracey. Just found this video - agree with your conclusions. There is an additional benefit of renting - one can more easily move to a new place. And of course, it is so nice to have the landlord fix and pay for upgrades to the home. Good for you & thanks for the insights.
Great video Tracey, I stumbled upon this same concept on accident, and as a result I agree with you; I was in the military, renting because I was only in the same city for 3 years at a time, even though I wanted to buy, and I invested 20 percent of my take home pay, into mutual funds and etfs. Now, years later, after getting an average of 10 percent returns for the last 15 years, I'm still renting but I have a huge passive income producing investment portfolio, that provides me MORE than my Officer pay in the military. So now, debt free, I can buy a home, CASH, in retirement. And still be debt free with 3 streams of income. Knowing me, I'll move, rent the home out, and rent again haha. This is such a foreign concept to most people, but when you realize how much you get back from NOT buying, it makes sense.
@@mine1685 Yes I have since bought a 3 bedroom home outright that has increased in value. I would strongly recommend renting, because you have more cash to leverage elsewhere, whereas a house can make you "house poor" with all of the upkeep if you are in a 30 year mortgage with property taxes. At this point I am considering renting my home out, taking a contractor assignment overseas, renting again and buying another property in about 8 years. Tracey knows what she is talking about, and these unorthodox methods can really put you in a good place down the road. Good luck to you!
An important part you eluded to. Liquidity. You can't just pull your cash out of a property if you need it when it's already paid to the bank and well and truly gone! Yikes! Some people see owning houses as an asset. No that's what they've been told to think. It's a liability, with having to put so much money into something that is constantly deteriorating and then there's your own time too. With stocks, it's the opposite, your money is working for you, people are working for you, nothing is physically deteriorating, and you don't have to spend your time relatively to manage it (except for your due diligence and homework!).
As a renter you have to allow inspections into your home. You get evicted when the owner wants to sell or move back in etc. You can't just leave you have to wait until the end of your contract lest you lose your bond. The real estate and landlord will always try to take the bond. You can't make modifications on your rented home.
Yep. Happened to my Wife and I in London, TWICE! So fed up with shitty landlords, horribly decaying buildings and houses, mould (holy Jesus, the mould, the effing mould!!), in promptu inspections out of the blue, etc. we just went and bought a flat that appreciated over £100,000 in just four years, plus the overpayments we made on it and the initial equity and the four years of repayments, allowed my Wife and I to buy a very big, beautiful beach side house in WA. If we had rented all this time and instead invested in the stockmarket, we could have lost a lot of our investment value or it could have remained the same and we would have never been able to buy our new house in WA. Also, our monthly repayment in London was LESS than the monthly rent for a single room!!!! Here in WA it is different I have to admit though, as rents here are ridiculously cheap compared to London and mortgages are higher as interest rates over there are just 2% or so while here, and only recently due to the RBA's rate cuts, are just over 3% which is a massive different in monthly repayments.
This is what most people don't understand... You will be richer if you rent AND invest your money wisely. Buying a house to live isn't an asset, ESPECIALLY if you appl for a loan at the bank!
Good video. You point out what most do not - the actual cost of the house after 25 years, once interest is factored - almost 2x based on a 500k home - as well as payments the first years are paying down mostly interest.
You made me feel better. We tried to get a house and were out bid today. Feeling down in the dumps kind of but I also am scared to buy a home for all the points you mentioned. I love being financially free and being able to move around if I so wish. But our American culture makes it like if you don’t own a home you are unaccomplished.
Firstly this was a great video, Thank you. Main takeaway for me is dont buy a house unless u really have the financial means to do it comfortably. I dont want to own a House but have barely money left over monthly. I will Rent and invest in stocks until I make enough.
Buy house don’t listen to her, I’m 50 years old and Realestate is my life that haw I get reach. Home value grow in value, mortgage always stay the some while rent increase every 2 years. She is 100% wrong. Just buy as much you can afford don’t buy expensive home at first try to build equity.
ive always been very unusual. when people see home ownership as a joy, i just see it as a burden, too much responsibility and i like just being free and calling maintenance when i got a problem; i don't like to be tied down to a property and dont want to go through the hassle of renting it out, i just like my nomadic energy--homeownership is a chore but like i said i know most people love it
Great video. I wish I rented. My wife keeps trying to improve our house. I see it as a money pit. If we sold our house, our cash flow would go through the roof as I would buy dividend-paying stocks.
Can you please do an updated video for this 5 years on to see if your views are still the same, would be very interesting and beneficial to your subscribers.
You might be paying more in interest, but your home value is gonna also increase at the same time, usually more than 4%, so after you paid off your home, it's gonna be worth close to 1mil from 500k, 30 years down the road.
According to the Wall Street Journal, over the past 30 years, house prices have risen 3.6% annually, so a $500,000 house would be worth $1,469,961 after 30 years (which you paid $1 mill for).
There are definitely pros and cons to both. Form my perspective you have more expenses when you own your own home but you also get the advantage of gaining equity which is passive.
terrific points... I try to explain this to people but many just fail to understand it because they just are brainwashed to believe that home ownership is the key to wealth when it is clearly not.
She is right renting is better because when you in the house you can struggle financially but when your renting you can save more money and not struggle as much🏠
Makes ALOT of sense , thank you for your insight !! I was thinking of buying already pre qualified and after watching your video and several others I will definitely stick to renting and invest the money I would have spent on down payment, closing cost and so on !!?
@@randymcmanus8691 well here it is almost a year later and i bought a home actually in July of 2020. Move in ready and furnished i did have to replace the vapor barrier & roof shingles. Rent was 900 a month now its 1250 and up in my area SOO i decided to bite the bullet and buy!! Couldn't pass this little place up !! Rent is going up fast and i have a 30 yr fixed interest rate which is very low ,the home is CBS and been remolded except original bathroom. Im paying 740$ a month total with property tax , insurance , PMI because i only put 5% down wich is just over 100 a month but can be dropped after 2 yrs which will bring my total to 640 ish a month maybe less.
@@randymcmanus8691 it’s a little beach town south of Melbourne Florida on the Atlantic Coast. East of the railway and onto the barrier island is high dollar closer to the beach and beach/riverfront properties. . I’m considered west of town , west of the railway but only 3 miles from the ocean. I have a pond across the street maintained by the county. And it’s a one way in one way out older subdivision no through traffic. Great for walking and children playing!
@@randymcmanus8691 I lived in Brevard NC for a couple yrs I had 2 separate places in 08 & 09 I paid 700$ a month rent for a similar 2 bedroom 1 bath home. Have relatives in Peachtree NC and spent many xmas yrs and summers in Newland NC in the Mount Gleen golf course & community
Nicely done. I have not seen anyone get to the point like this. At some point buying a home just becomes a status symbol thing as all your friends buy and you want to keep up. A house is a great thing for facebook photos to soothe egos. Also most folks buy more home than they rent. While renting, folks rent a 1500 sq feet in the burbs, but when they buy they splurge on a 3500 sq ft home. in usa, in cold wether, you also have the headache of plowing the snow from driveway and also most folks mow a lawn. I would rather spend my weekend watching Netflix, having my investment portfolio compound than rake leaves and do more back breaking work around the home. I hate being a handyman and worrying about which contractor to call to fix the plumbing, or any appliance in the house. It might work if folks strictly bought a small house within their means. But most see a homeownership as a pride thing and want a super luxuriously large home compared to the little place they rented
We have all been BRAINWASHED into this get a job, buy your own home BS. Renting, capital release and reinvest is by a galaxy the better decision. And if you angle it right, you'll live and lease a car for FREE by virtue of your passive profits! No brainer.
I think your perspective is great and exactly what i have been doing .Everyone keeps pushing me to buy , yet i make a whole additional income from my investments which consist of mainly high end P2P lending , crypto lending , and a few other things .I try to tell people that because of my cash flow from interest i could borrower and have that pay down mortgage , i still have a way to go before im very cash flow rich so it was so nice to hear you talk on this and i feel even more convinced im on the right track.
I liked the video. 2 points I'd mention. 1. When you referred to paying 1 million for the 500 k house, this isn't really a true representation of the asset because after 30 years I guarantee that house is also worth over 1 million dollars. 2. I really liked your list of wealth and I 100% agree. I earn a higher than average wage yet I purchased a townhouse worth 350 k. It gives me somewhere nice to live but keeps most of my cash flow open for use in the stock market. I think you're right in that most people stretch for these expensive large properties while being cash flow poor which helps them in their retirement but not so much today. Only advantage is that their wealth likely grows faster as long as they don't sell as they'll never be taxed on their gains which continue to compound unlike dividend income.
You are so right same with me I live out to my room a small room and I rent and I leave out to my van and I have no debt I'm debt-free and I have money in my pocket every day if I want to take a day off I'm on vacation I can you come do that when you own a house a lot of people think cuz I don't have to have money that was off so renting is not a bad that money it is great to rent as well depending on the person but me I love renting I'll never ever ever buy a house again myself... And I too am debt-free
Completely agree with you in terms of home ownership for living and paying interest. You haven’t considered the option of not selling and renting out your house. I own 3 houses in Auckland and if I need to move I just buy and rent out my old place. It creates exactly the same feeling and flexibility of renting but with ownership. Plus not to mention the about of borrowing leverage you get from the bank. And the actual cost of buying is far cheaper if you rent the place to assist in your mortgage.
Your one smart cookie Tracey, had three homes sold up a couple of years ago before the next decade of interest rates rises now pay rent and save baby save will buy a small house with cash when interest rates are high houses cheap.
I think maybe a good alternative is to have as a good mix in to your investment portfolio as is humanly possible....that could include stocks and shares, bonds, pension plan, regular savings account, and yes maybe also an investment property or 2 if your finances will stretch that far. Hedge your bets and do not put all your eggs in one basket is my motto.
Great video and I agree with your points. Seems like if your even considering buying homes for investing than you have to be able to pay cash to avoid the interest fees. Lastly, it seems to be an insecurity thing when you tell people you rather rent and they look at you funny cause your going against the general thought of wanting to buy a home.
Dear Tracey, I agree with you on the high cost of owning a house. A house is a liability not an asset. It depends of the country you live in and the housing market if it makes money or worth owning it. The stock market is in a bubble now, same as the housing market. Both will correct eventually. I rent and build my savings in precious metals. Hard assets are not income producing ones but you can combine the two. Also cryptocurrencies, classic cars, art are a good way to mitigate risk just to mention a few. I will buy a house if the market crashes by 75-80% only. If it never happens then it is better for the people.
You said a house is a liability, not an asset. You are absolutely completely 100% wrong. A house is an asset. Your thinking is wrong. I repeat, a house is an asset.
Fantastic and thought-provoking video. I have watched it a number of times. I moved from South Africa to Melbourne a number of years ago and am still renting and find most are property (home ownership) obsessed here. Lots of pressure to own. Thank you. If you don't mind me asking, are you still renting today?
@@TraceyEdwardsHi Tracey, I'm in the UK and in a similar situation as the commenter above where there's just so much pressure from everyone to buy. I'm still ignoring all the pressure as I like the freedom of renting. But I was wondering if you have real estate as part of your portfolio in one way or the other? i.e. while you rent where you currently live, do you own other property which you rent out, or do you own REITs, or anything else like that? Trying to figure out if I'm missing out on something by not owning or being invested in real estate in one form or the other, and how best to approach adding it to my portfolio if I choose to continue to rent the roof over my head 🙂 thanks for any insight you could share
I like your financial concept. Please tell me how do you determine what percentage of your Monthly Income would best suit your "Rental Budget "? Thank you, God Bless
I must say that there is one aspect of renting that many see as a huge burden but if you adapt accordingly eliminates it entirely, and that is not being a consumerist hoarder of useless or excess possessions. If you live minimalist you can move out in an hour and a single car load....
I'm looking back in your archive and found this video. Very informative - Thank you, Tracey. BTW, the video was posted 5 years ago and you look very rejunenated. wow
When you near the official retirement age will the pension asset test have any impact on if you decide to buy or continue renting? With / without an imaginary extra million.
Given that I don’t know what the pension will be like in 25-30 years and also not knowing the rental market, housing market and (most importantly) my own mind then ;) my only truthful answer is - no idea.
But let’s pretend I’m of retiring age right now. I decide to sell up most of my portfolio and buy a house. I’ll need to keep my assets under $250K to qualify for the full pension of just under $20K a year. And since I’m only allowed to earn max $84 a week extra before my pension is reduced that means I won’t be able to keep my dividend portfolio - too easy to go over.
Let’s also pretend I have a perfect house that doesn’t require maintenance EVER - so no plumbing fixes, appliance upgrades, new fences or council rates (easily $5K a year in reality).
That leaves me with around $1600 a month for bills and food.
Compare that with now. I have no maintenance costs, just rent. I bring in avg $5000 a month less the rent of $2000 a month, leaving me with $3000’ish for bills and food. It's also sustainable for the foreseeable future.
So no. Right now I would not buy a house so I could qualify for a pension :)
That because my own (paid off) house is the answer. I am 43 and never must worry or quessing what rental market will do in the future. I dont care. Why people dont geting it?? Look stories how old people are maxed out from rental market. Why anybody will risk?? Greetings from Finland!
@@landlord5552 Finland is likely very different to Australia where we have some of the most expensive housing in the world.
@@landlord5552 : What is property tax like in Finland. My old retired neighbor is paying monthly property taxes + maintenance that would easily cover one bedroom apartment in a nicer part of tow than her house is.
@@landlord5552 thank you for your comment and you answered my question if I should rent.
I’ve been going back and forth about buying and i have come to the conclusion i don’t want the responsibility
Congrats!
Same!
Good choice in my opinion. While owning a home for a few years in the state of CA and sold last year, renting has now reduced my stress level so much. Obviously pros and cons to both but I don't think I will ever want to buy again. Now able to put way more money into my 401K and my budget is solid.
Don't shy away from responsibility
@@simmyt64 It can also be a financial burden. I had a plumbing incident that set me back almost $5K even with insurance. Oh then my insurer dropped me for filing the claim and had to pay triple in premiums to another insurer. Lots to think about when it comes to home ownership.
You are a smart woman. I'm young. I won't be fooled into ever buying a home. You point out literally every flaw with owning. Cheers from the states.
I agree with you, especially if you're single without kids. You're living for today and not shooting to be a homeowner in your 70s. Owning a house has been encouraged by the banking sector, which makes a lot of money from the housing market.
That is a really good explanation. I have been trying to justify to myself why I don't like the idea of a mortgage. I listened to this FX trader once explain that buying a house with a mortgage is crazy because you don't actually own an asset but have a liability (for 30 years in the example you mentioned). I like the 4 quadrant idea that you've used to explain this and it very clearly explains why buying a house will lead to you having a liability and reducing your cash-flow whereas investing the money in the stock market will give you dividend income. You're right about the "dead money"argument as well. We could say the same thing about paying for food --- you're actually helping the farmer pay his bills but then so what? You get a service or good in return. Thanks very much for the video.
Thanks people think if you just rent youre missing out on a dream of homeownership but to me I see the opposite. You can move around more easily with renting and just get rental insurance to protect you items. I'd rather stack my money invest and be debt free which I only have 1 debt right now no credit cards or car notes. There are some advantages in renting.
if you buy a house in a wise informed way, you can still move around by renting out the house and still have your properties pay for your rental liability if you have a job that keeps you moving around.
People renting now are basically paying for a new roof every year on top of the the mortgage. Wouldn’t want to be a renter today
Being forced to pay a mortgage, property taxes, and insurance/association costs EVERY month for 30 years with no easy way out is absolutely miserable. And knowing that you are paying thousands upon thousands of dollars extra in interest is complete misery. You can't just stop, move back in with relatives, or get roommates. You are STUCK with all of the monthly burden for 30 YEARS!.....I will rent and be flexible and free as a bird always.
@@areguapiri comment of the year!!!
@@areguapiri Yeah, rent is not an obligation LOL
Being forced to pay a mortgage, property taxes, maintenance, and insurance/association costs EVERY month for 30 years with no easy way out is absolutely miserable. And knowing that you are paying thousands upon thousands of dollars extra in interest is complete misery. You can't just stop, move back in with relatives, or get roommates. You are STUCK with all of the monthly burden for 30 YEARS!.....I will rent and be flexible and free as a bird always.
In the end, it comes down to what you're comfortable with in your life today! Like Tracey, the position of being debt-free is appealing and less stress. In todays world, most people couldn't come up with $1000 if they needed it suddenly without borrowing or selling personal property. . . no thanks. And, in-the-end, no one gets out alive; and whether you die with a $500K home or $500k in a portfolio of some sort, it is still meaningless. Entrepreneurship is not near as meaningful as realizing that what you have is all that you want -- being content in whatever position you accept yourself in is PRICELESS.
good point
👍🌹Eckhart Tolle Approached 🌈😃 thank you for spreading wisdom and positivity around the world 🌎
Renters don't have debts? Do tell
As a doctor, and RUclipsr, I change hospital rotations every year. It makes more sense for me to rent than to buy for now, until I have a fixed hospital placement.
Tracey, I'm turning 22 this year and I want to be like you when I grow up! My lifestyle expenses to be mostly covered by passive income, none of the stress that comes with owning a property, and my assets to be producing income for me. That sounds like a bloody good life!
Having positive cash flow is the best financial decision I ever made. Good luck! 💕
@@TraceyEdwards Thank you 😄 What was your career was before you started living off passive income? I'm very curious to know if it was a high paying one. Could you please make a video talking about your life before and after switching to living off passive income full time? How your usual schedule looked and what you with your time now? Thank you 💕
Wait till you're 60. Dumb renters like you never factor in the cost of paying rent for 60 plus years. You only calculate the cost of the life of a mortgage, never after it. A mortgage is paid for after 25 years. You're paying rent until the day you die with nothing to show for.
I agree
Having a paid for house when you retire is the best financial advise. We purchased a new home about 15 years ago and we just now had to spend less than $10k to upgrade our heating/appliances etc. Our tax/insurance is less than a quarter of what our home would rent for right now. If you buy the right house in the right place, it's a no brainer that it's the best decision to own.
If you can pay it off cash you are correct
So is having enough funds in your portfolio to buy a house with cash when you retire - if you choose to.
You must be a boomer.
Your first point was enough for me to SMASH the like button! Unless one is living off the land and off the grid, we are all paying someone else's lifestyle by purchasing something/a service. Rent went towards me living somewhere for that time, shoot!😊
I'm in the same situation. I had a house, it was nice. Sold it. True cash flow and freedom from a stock portfolio is amazing!
Finally an Aussie financial budgeting channel!!
Ikr
One of my fave channel about finance!
Fully agree, I have had houses and I have rented. I sold my house and invested the profits into the stock market, in a diversified portfolio as well as other assets. Love the flexibility to move to more anywhere in the world.
I agree with you on many of your points they say rent is a waiste of money but so is paying interest. People are up to there eyeballs in debt and they can't afford any extra activities because they are living like tightasses. But just remember that like property the stock market can also crash reducing divendend paid to you.
Not necessarily true. For example, during the recent GFC, the Australian Foundation Investment Company (ASX:AFI) did not miss a beat paying dividends at exactly the same level as always. Had you never watched the news, you would have been blissfully unaware there was a financial crisis going on and just carried on.
Messrs. Dividend Aristocrats would beg to differ.
I would beg to differ. Home ownership even as a landlord is HIGHLY risky!
@@scottd1342 there has been a problem in the economy well before the news decided to start reporting it. Look at the numbers
We honestly need more voices like yours dispelling the myths that everyone needs to be a homeowner and that primary residences are assets. I did the math a couple years back and learned that my home would have to be pretty cheap for it to be even relatively beneficial. My spouse and I have decided to buy a home that's no more than twice our annual income (most banks would qualify us for 4x that amount). But after taxes and maintenance, owning a home is more like having insurance (a somewhat guaranteed "rent-stabilized" dwelling in exchange for doing your own repairs). But we realized investing in stocks is the way to go. Retire with only property taxes and insurance to really worry about, and have hired help when we get too old. We wish we could've reached FI early enough to just rent wherever whenever indefinitely.
You explained that perfectly. Great to find another person on the same page as us. Subscribed. Not sure how I missed your videos.
This was a year ago but I needed to see this at this point in my life lol. New subbie
Bluntly, most people who talk about the benefits of renting are renters who cannot afford to buy. Usually, they have had a house before also. I, too, am in the same boat. I have had 3, now have none. RENTING - for the foreseeable future....due to financial restrictions. :) However, your explanation was measured and fair. I really enjoyed your video. I have no real bias either. I might have mentioned though, that the interest you pay for your house is an expense that is somewhat offset by the appreciation of the principal (house valuation). This investment is leveraged by the value of the house - an amount most average families can't leverage in the stock market. At the end of it all, the smartest decision has to be spending your money where it works hardest for you, after all things are considered. If you rent, and invest your change into the stock market, and are more profitable (%) than if you were to spend the same amount on a house, its seems only logical that its the smarter choice. Lastly, i really like that you mention the strain of having a mortgage. Not enough people consider the toll of pushing yourself to your financial limit. Everyone has a different threshold of what is comfortable and what is not, and our happiness in life should be held in the highest of regard :)
IntoTheMaze - hey Maze! Not necessarily true . living comes at a cost and purchasing a house comes at a high cost. Some people prefer to allocate the liquidity that would other wise go towards the cost of acquiring a house into other assets. Also consider the amount of debt that someone may incur when acquiring a house. This could potentially offset a person’s balance sheet into the negative. Our goal should be increasing equity, not buying a house, and the way we increase equity is by increasing assets and reducing liabilities:)
I own 4 properties. I rent them out. Own what you rent and rent where you live. The rent from the other properties pay for your life. Rinse and repeat. Me and my wife will rent. When we are tired of living there we will go somewhere else. No kids so more freedom to do what we want and where.
I prefer to rent. I own a place I rent out too. I see your point though, I can't afford the places I actually want to buy and want to live in...I still need a million bucks :D. Ideally I'd own a home and rent at the same time..I get bored of living in one place.
Unless you live in an area subject to natural disasters, like earthquakes un my case, and see your house value drop dramatically and no one interested in buying. We forget that we live in a world where nothing can be prevented.
Where I'm from we don't take on huge mortgages. We save and buy land or a seriously run down house to bulldoze. Then bit by bit we build the house. Neither of my parents are fans of long term, high interest, adjustable debt. The only loan I've ever taken out was low interest, non-adjustable, for 10 years. I had to default the last 3 years due to marital breakdown but eventually rebuilt my income to pay it off early. A lot of people can buy but can they sustain the monthly mortgage payment and the property tax and the maintenance for 25- 35 years. Nope. Especially not if the interest goes up drastically like in a financial crisis. I'm 40 this year and I have lived through three recessions. In the 90s when my parents had to take a pay cut, that whole 2007-2011 subprime/banking fallout and now Covid lay off and closures and profit losses. Luckily I was employed and renting with no adjustable interest debt. My current company had failed to pay the annual employee bonus for the first time since 1953. Let that sink in. Millenials are in no real position to buy unless they are in the top 10 percent earners and or their parents are funding their lifestyle as an investment. My parents are boomers who managed to build some intergenerational wealth to pass on to us millenials but the wealth they generated is still not enough to raise the next Gen Z and Gen Alpha. Half of my Millenial peers do not have children as they view them as unaffordable.
I like it. I was a home owner with loan, and although i sold it for handsome profit, the bank make more money than me, now i‘m even happier to rent anywhere i like with more liquid asset in dividend stocks. 🙏 thanks
I am renting now because I sold my home recently to be closer to family. I can't wait to buy again. I hate renting. I was in my last home for a short period of time and I made 50k cash (after repairs and upgrades) off of it when I sold. Plus, I saved money because my mortgage was about $600-900 less than those renting in my neighborhood. I easily made/saved over 100k in less than 5 years. Buying was one of the best financial decisions I could make. The key is to be debt free THEN buy. I've ran cost analysis, opportunity costs and all of the other numbers and I always come up with owning being a better option.
If you are debt free and have reserves
Tracy I love this video. We lived the American dream, owned houses and after living that and understanding the real costs that go with that we are now investor and high cash flow driven. This helped me focus tighter on what our goals should be and high cash flow principles we live by.
Such a good video. I’ve never heard it explained in the concept of house rich but cash poor. Food for thought. 👍
Makes perfect sense to me. Thanks for explaining.
Thanks, Candyce!
Wonderful insights! Thanks for sharing!
This was INCREDIBLY helpful! Thanks!
Brilliant breakdown! Thanks for the perspective.
You are brilliant thank you! I was already planning to buy and you changed my mind
Thank you!! Needed this. Youre advice is so pure and honest and I appreciate the honesty.
Thanks for the great explanation, really changed my perspective on owning a house. Great video!
Renting is better. When I die, I cannot take the home I worked so hard for with me. I love the freedom of picking up and go, not having to pay for repairs/maintenance, choosing the location and home I want to live in. Plus, I get to drive nice cars.
Nice, I like your thinking. Also you have the option of moving overseas and stretching that dividend income even further.
Very well put Tracey! Always remember folks , the basic accounting formula as per GAAP(general agreed accounting principle)
Assets - Liabilities = equity
In other words
What you own minus what you owe equals ,what you have .
Acquiring a mortgage will increase debt to income ratio and potentially reduce equity. Contrary to what a common myth , buying a house is a great way to build equity. Your 100% doing it the right way Tracey!
This really did help! Love the fact it isnt my responsibility to fix something that gets broken.
you know what, I never really thought about it like that. That makes a lot of sense
Love, love, love this!! Finally, someome who makes some sense. Subscribed!
Hi Tracey ,
Great video! You have revealed the unspoken truth about home ownership & it's real cost. Most people never deduct their incurred purchase costs, interest, maintenance/upgrades, inflation etc., etc., etc... from the sale price of their home. It always amazes me that Aussie parents will often discuss how difficult it will be for their kids to get into the housing market but ironically will encourage them to purchase a house at the earliest opportunity without expressing their concerns of affordability or options such as rent vesting. Mortgage = There goes your best YOLO lifestyle!
FYI, Landlords earn between 3% to 15% net profit from their rental properties. If you don't understand this then go ahead, keep thinking to yourself you're living maintenance and property tax free in a rental property.
Very good and simple advice.Thank you.
THANK YOU for making this video. Could you please do it again for 2021? That's what I've been thinking but all my friends are buying/have bought really expensive houses and that has made me doubt in my thoughts. But you are the ONLY person that makes sense to me. 🙏🙏🙏
Good advice, fellow renter! 💥👍👍
Also if you are single and living in the big city rent a room that is all inclusive in the rent (hydro,internet etc.) and if possible no more than just another tenant accommodating apartment lesser the people less headache will be...also sell your car especially if you are in a big city no matter what make, what year it is a luxury to own it...I did this 2 thing renting a room, using public transit (for almost 10 years now) have a full time job and I saved tons of money
wow I though I knew whats better but now i have learned from you. Thanks for educating us.
This was a great video. Simple and informative.
This video validates those who are struggling to buy their own property right now.
But rent comes with their own stresses too. Since you don't own it it can be taken away from you at any time. Not to mention the stresses of finding a new (and decent) place to live without competing with many others. Rent is a physical burden rather than a financial one.
Hi Tracey. Just found this video - agree with your conclusions. There is an additional benefit of renting - one can more easily move to a new place. And of course, it is so nice to have the landlord fix and pay for upgrades to the home. Good for you & thanks for the insights.
She talked about that.
Great video Tracey, I stumbled upon this same concept on accident, and as a result I agree with you; I was in the military, renting because I was only in the same city for 3 years at a time, even though I wanted to buy, and I invested 20 percent of my take home pay, into mutual funds and etfs. Now, years later, after getting an average of 10 percent returns for the last 15 years, I'm still renting but I have a huge passive income producing investment portfolio, that provides me MORE than my Officer pay in the military. So now, debt free, I can buy a home, CASH, in retirement. And still be debt free with 3 streams of income. Knowing me, I'll move, rent the home out, and rent again haha. This is such a foreign concept to most people, but when you realize how much you get back from NOT buying, it makes sense.
You made my day with your one sentence: "........ I can buy a home, CASH, in retirement." Thank you!!
@@mine1685 Yes I have since bought a 3 bedroom home outright that has increased in value. I would strongly recommend renting, because you have more cash to leverage elsewhere, whereas a house can make you "house poor" with all of the upkeep if you are in a 30 year mortgage with property taxes.
At this point I am considering renting my home out, taking a contractor assignment overseas, renting again and buying another property in about 8 years. Tracey knows what she is talking about, and these unorthodox methods can really put you in a good place down the road. Good luck to you!
After 30 years you might move to somewhere u like and rent there again. That's better ! You can go anywhere u like
@@nippermh 🤣 There are plenty of rentals cheaper than ever, and they're still empty....what planet are you on?
Tracey, thank you for the video ! I needed to hear from a women to validate my thoughts.
An important part you eluded to. Liquidity. You can't just pull your cash out of a property if you need it when it's already paid to the bank and well and truly gone! Yikes! Some people see owning houses as an asset. No that's what they've been told to think. It's a liability, with having to put so much money into something that is constantly deteriorating and then there's your own time too. With stocks, it's the opposite, your money is working for you, people are working for you, nothing is physically deteriorating, and you don't have to spend your time relatively to manage it (except for your due diligence and homework!).
Thank you, very helpful.
Great video! Thanks 😊
As a renter you have to allow inspections into your home. You get evicted when the owner wants to sell or move back in etc. You can't just leave you have to wait until the end of your contract lest you lose your bond. The real estate and landlord will always try to take the bond. You can't make modifications on your rented home.
Yep. Happened to my Wife and I in London, TWICE! So fed up with shitty landlords, horribly decaying buildings and houses, mould (holy Jesus, the mould, the effing mould!!), in promptu inspections out of the blue, etc. we just went and bought a flat that appreciated over £100,000 in just four years, plus the overpayments we made on it and the initial equity and the four years of repayments, allowed my Wife and I to buy a very big, beautiful beach side house in WA. If we had rented all this time and instead invested in the stockmarket, we could have lost a lot of our investment value or it could have remained the same and we would have never been able to buy our new house in WA. Also, our monthly repayment in London was LESS than the monthly rent for a single room!!!! Here in WA it is different I have to admit though, as rents here are ridiculously cheap compared to London and mortgages are higher as interest rates over there are just 2% or so while here, and only recently due to the RBA's rate cuts, are just over 3% which is a massive different in monthly repayments.
I'm going through this now
Love your mentality... honestly I want to be debt free.. if I have to buy a house, I would like to pay it by cash. Period.
Great ideas. Thank you.
Thank you for this information. I’m 53 why would I want to buy a house now??!!! I’m content with renting.
RIGHT
Makes sense. And you got valid points. However we still want to buy our own home...
Cool! Good luck with your search 😊
This is what most people don't understand... You will be richer if you rent AND invest your money wisely. Buying a house to live isn't an asset, ESPECIALLY if you appl for a loan at the bank!
Good video. You point out what most do not - the actual cost of the house after 25 years, once interest is factored - almost 2x based on a 500k home - as well as payments the first years are paying down mostly interest.
You hit so many FACTS!!
You made me feel better. We tried to get a house and were out bid today. Feeling down in the dumps kind of but I also am scared to buy a home for all the points you mentioned. I love being financially free and being able to move around if I so wish. But our American culture makes it like if you don’t own a home you are unaccomplished.
Worry less about what other people think, it’s very liberating. Like Tracey, do the math and work out what’s best for you and your situation.
Firstly this was a great video, Thank you. Main takeaway for me is dont buy a house unless u really have the financial means to do it comfortably. I dont want to own a House but have barely money left over monthly. I will Rent and invest in stocks until I make enough.
Wow love the video. Was thinking about buying a house. Still young and single too but now really don’t think I will.
Buy house don’t listen to her, I’m 50 years old and Realestate is my life that haw I get reach. Home value grow in value, mortgage always stay the some while rent increase every 2 years. She is 100% wrong. Just buy as much you can afford don’t buy expensive home at first try to build equity.
Some really good points raised 👏👌. I'm also going down the stock portfolio route 👍 😀
Thank you for your story!
ive always been very unusual. when people see home ownership as a joy, i just see it as a burden, too much responsibility and i like just being free and calling maintenance when i got a problem; i don't like to be tied down to a property and dont want to go through the hassle of renting it out, i just like my nomadic energy--homeownership is a chore but like i said i know most people love it
Great video. I wish I rented. My wife keeps trying to improve our house. I see it as a money pit. If we sold our house, our cash flow would go through the roof as I would buy dividend-paying stocks.
Property is a great investment strategy for building both net worth and cashflow, but it's more difficult and obviously location dependent.
Thanks Tracy!!
Can you please do an updated video for this 5 years on to see if your views are still the same, would be very interesting and beneficial to your subscribers.
You might be paying more in interest, but your home value is gonna also increase at the same time, usually more than 4%, so after you paid off your home, it's gonna be worth close to 1mil from 500k, 30 years down the road.
According to the Wall Street Journal, over the past 30 years, house prices have risen 3.6% annually, so a $500,000 house would be worth $1,469,961 after 30 years (which you paid $1 mill for).
@King Everywhere I Go That's not right at all.
@TraceyEdwards so that's not so bad then.
Hey Tracey! This was so helpful and just the advice that I needed right now. Thanks so much for sharing your tips! New subbie :) xx
Thanks so much! Love your channel :)
There are definitely pros and cons to both. Form my perspective you have more expenses when you own your own home but you also get the advantage of gaining equity which is passive.
terrific points... I try to explain this to people but many just fail to understand it because they just are brainwashed to believe that home ownership is the key to wealth when it is clearly not.
Of course it's better to rent. Your Landlord is obviously worse off than you.
This Video is Brilliant...
Great advice!
She is right renting is better because when you in the house you can struggle financially but when your renting you can save more money and not struggle as much🏠
Makes ALOT of sense , thank you for your insight !! I was thinking of buying already pre qualified and after watching your video and several others I will definitely stick to renting and invest the money I would have spent on down payment, closing cost and so on !!?
Don't forget high property taxes ,maintainance , upgrades etc
@@randymcmanus8691 well here it is almost a year later and i bought a home actually in July of 2020. Move in ready and furnished i did have to replace the vapor barrier & roof shingles. Rent was 900 a month now its 1250 and up in my area SOO i decided to bite the bullet and buy!! Couldn't pass this little place up !! Rent is going up fast and i have a 30 yr fixed interest rate which is very low ,the home is CBS and been remolded except original bathroom. Im paying 740$ a month total with property tax , insurance , PMI because i only put 5% down wich is just over 100 a month but can be dropped after 2 yrs which will bring my total to 640 ish a month maybe less.
@@mccranahan747 Where is this at ? You couldn't come close to that mortgage where I live in NC
@@randymcmanus8691 it’s a little beach town south of Melbourne Florida on the Atlantic Coast. East of the railway and onto the barrier island is high dollar closer to the beach and beach/riverfront properties. . I’m considered west of town , west of the railway but only 3 miles from the ocean. I have a pond across the street maintained by the county. And it’s a one way in one way out older subdivision no through traffic. Great for walking and children playing!
@@randymcmanus8691 I lived in Brevard NC for a couple yrs I had 2 separate places in 08 & 09 I paid 700$ a month rent for a similar 2 bedroom 1 bath home. Have relatives in Peachtree NC and spent many xmas yrs and summers in Newland NC in the Mount Gleen golf course & community
I like (love) the way you think!
Nicely done. I have not seen anyone get to the point like this. At some point buying a home just becomes a status symbol thing as all your friends buy and you want to keep up. A house is a great thing for facebook photos to soothe egos. Also most folks buy more home than they rent. While renting, folks rent a 1500 sq feet in the burbs, but when they buy they splurge on a 3500 sq ft home. in usa, in cold wether, you also have the headache of plowing the snow from driveway and also most folks mow a lawn. I would rather spend my weekend watching Netflix, having my investment portfolio compound than rake leaves and do more back breaking work around the home. I hate being a handyman and worrying about which contractor to call to fix the plumbing, or any appliance in the house. It might work if folks strictly bought a small house within their means. But most see a homeownership as a pride thing and want a super luxuriously large home compared to the little place they rented
We have all been BRAINWASHED into this get a job, buy your own home BS. Renting, capital release and reinvest is by a galaxy the better decision.
And if you angle it right, you'll live and lease a car for FREE by virtue of your passive profits!
No brainer.
This is better than Dave Ramsey’s video and advice !!! Thank you
I think your perspective is great and exactly what i have been doing .Everyone keeps pushing me to buy , yet i make a whole additional income from my investments which consist of mainly high end P2P lending , crypto lending , and a few other things .I try to tell people that because of my cash flow from interest i could borrower and have that pay down mortgage , i still have a way to go before im very cash flow rich so it was so nice to hear you talk on this and i feel even more convinced im on the right track.
Excellent content! New subscriber.
I liked the video. 2 points I'd mention.
1. When you referred to paying 1 million for the 500 k house, this isn't really a true representation of the asset because after 30 years I guarantee that house is also worth over 1 million dollars.
2. I really liked your list of wealth and I 100% agree. I earn a higher than average wage yet I purchased a townhouse worth 350 k. It gives me somewhere nice to live but keeps most of my cash flow open for use in the stock market. I think you're right in that most people stretch for these expensive large properties while being cash flow poor which helps them in their retirement but not so much today.
Only advantage is that their wealth likely grows faster as long as they don't sell as they'll never be taxed on their gains which continue to compound unlike dividend income.
You are so right same with me I live out to my room a small room and I rent and I leave out to my van and I have no debt I'm debt-free and I have money in my pocket every day if I want to take a day off I'm on vacation I can you come do that when you own a house a lot of people think cuz I don't have to have money that was off so renting is not a bad that money it is great to rent as well depending on the person but me I love renting I'll never ever ever buy a house again myself...
And I too am debt-free
Completely agree with you in terms of home ownership for living and paying interest. You haven’t considered the option of not selling and renting out your house. I own 3 houses in Auckland and if I need to move I just buy and rent out my old place. It creates exactly the same feeling and flexibility of renting but with ownership. Plus not to mention the about of borrowing leverage you get from the bank. And the actual cost of buying is far cheaper if you rent the place to assist in your mortgage.
Your one smart cookie Tracey, had three homes sold up a couple of years ago before the next decade of interest rates rises now pay rent and save baby save will buy a small house with cash when interest rates are high houses cheap.
Sounds like an excellent plan :)
Your full of shit mate, you'll be living in a caravan dickhead
Splendid indeed ❤
I think maybe a good alternative is to have as a good mix in to your investment portfolio as is humanly possible....that could include stocks and shares, bonds, pension plan, regular savings account, and yes maybe also an investment property or 2 if your finances will stretch that far.
Hedge your bets and do not put all your eggs in one basket is my motto.
Great video and I agree with your points. Seems like if your even considering buying homes for investing than you have to be able to pay cash to avoid the interest fees.
Lastly, it seems to be an insecurity thing when you tell people you rather rent and they look at you funny cause your going against the general thought of wanting to buy a home.
Dear Tracey, I agree with you on the high cost of owning a house. A house is a liability not an asset. It depends of the country you live in and the housing market if it makes money or worth owning it. The stock market is in a bubble now, same as the housing market. Both will correct eventually. I rent and build my savings in precious metals. Hard assets are not income producing ones but you can combine the two. Also cryptocurrencies, classic cars, art are a good way to mitigate risk just to mention a few. I will buy a house if the market crashes by 75-80% only. If it never happens then it is better for the people.
You said a house is a liability, not an asset. You are absolutely completely 100% wrong. A house is an asset. Your thinking is wrong. I repeat, a house is an asset.
In monetary facts, a house is an asset because you own it. It builds equity. An apartment does not gain.
👍🏽my 2 cents, like your point of view.
Me too
Great advice
Fantastic and thought-provoking video. I have watched it a number of times. I moved from South Africa to Melbourne a number of years ago and am still renting and find most are property (home ownership) obsessed here. Lots of pressure to own. Thank you. If you don't mind me asking, are you still renting today?
Yes I still rent at the same place I did when I made that video :)
@@TraceyEdwardsHi Tracey, I'm in the UK and in a similar situation as the commenter above where there's just so much pressure from everyone to buy. I'm still ignoring all the pressure as I like the freedom of renting. But I was wondering if you have real estate as part of your portfolio in one way or the other? i.e. while you rent where you currently live, do you own other property which you rent out, or do you own REITs, or anything else like that? Trying to figure out if I'm missing out on something by not owning or being invested in real estate in one form or the other, and how best to approach adding it to my portfolio if I choose to continue to rent the roof over my head 🙂 thanks for any insight you could share
I like your financial concept. Please tell me how do you determine what percentage of your Monthly Income would best suit your "Rental Budget "? Thank you, God Bless
Could you do an updated video on this in todays circumstances?
I must say that there is one aspect of renting that many see as a huge burden but if you adapt accordingly eliminates it entirely, and that is not being a consumerist hoarder of useless or excess possessions.
If you live minimalist you can move out in an hour and a single car load....
3 minutes in and you've convinced me, I have to rent for the rest of my life. Unless I can buy, cash.
I'm looking back in your archive and found this video. Very informative - Thank you, Tracey. BTW, the video was posted 5 years ago and you look very rejunenated. wow
Thanks! Yep, I had a glow up.