Rent, buy, or rent-vest?
It's quite often debated whether you'd be better to buy a home, or to rent for the long term and invest your money elsewhere.
Of course, buying a home isn't only about the numbers.
It's also about some of the intangible benefits of having a home to call your own and to build to your own taste.
I was quite happy to be a rent-vestor when I was younger, for example, because I moved around a lot, lived overseas in Asia a fair bit, and I loved the flexibility of renting in cool places to live while simultaneously growing a property portfolio.
But having kids tends to change things quite a bit, so I ended up buying a house (unlevered), to renovate and enjoy the security of tenure, without living in fear of being punted out by the landlord, or the rents being suddenly jacked up to ridiculous levels, or being unable to find a place near the local school, and so on.
Stuart Wemyss of ProSolution discussed some of the pros (flexibility, asset selection) and notable cons (capital gains tax exemption foregone, endlessly rising rents) surrounding this very subject of rent-vesting in
The Australian newspaper this week.
To be fair, I guess he needs something to take his mind off Geelong's recent form 😀 - and he makes some very good points about the tax and cashflow implications, although it is also possible to refinance equity out of a property portfolio in the pre-retirement phase.
I've also seen those YouTube thumbnails, of course:
"Do NOT buy a house, you idiots...just buy stocks!" and the like, by all the various investment gurus and fin-fluencers.
I think that the best advice to take away from this genre of videos is to run the numbers.
If you hate housing and love stocks, it's certainly one option.
I will note in passing, though, that I know more than a few people in my peer group who decided to not to buy in Sydney years ago, and the traumatising nature of the rental market has lately turned some of them from aspirational young capitalists into rabid middle-aged socialists...
Melbourne population to hit to NINE million
A news piece caught my eye this week when it was casually noted in passing that Melbourne's population is expected to exploded to...*checks notes*...NINE million by 2050.
9 million...9,000,000!...from about 5,350,000 or so today.
There's quite a lot of discussion about this in various government literature and online, some of which allows residents to 'have a say' in how their city should shape up.
Albeit, it seems that 'having a say' doesn't anywhere extend to questioning whether expanding the population of the capital cities at warp speed is actually that desirable or smart an idea at all.
It's just simply assumed that it will happen.
An urban planning fait accompli, if you will.
Note that the population growth of Melbourne and particularly Sydney will almost all be driven via immigration, not natural population growth, so there will be integration challenges alongside the logistical challenge of providing housing and infrastructure for millions of new bodies.
Personally, while I'm obviously pro-immigration, I'm equally not so sure about the costs and purported benefits of growing at a breakneck +150,000 per annum pace for the next 25 years, but since I won't be living in Melbourne I guess it doesn't impact me all that much anyway.
What I will note is that if it was me and I was a young person starting out in the big capital cities, I would buy a first unit or home as soon as I was able to, and start paying down the mortgage.
The rental market absolutely sucks at the moment - and probably will for the next 25 years looking at these numbers, combined with the government's lacklustre efforts to improve matters - and owning a mortgaged home can give you plenty of optionality later in the journey for using equity to invest elsewhere.
But, hey, that's just me.
"Run the numbers", as they always say on YouTube.
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