undefined | Better HN

0 pointsstandel9y ago0 comments

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.

0 comments

kdamken9y 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...

jpetso9y 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)?

j / k navigate · click thread line to collapse