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A 30-year-old professional found themselves facing a big financial decision after a new advisor suggested putting their money into a home instead of the stock market.
The poster and their wife shared on Reddit that they have more than $300,000 invested in mutual funds, earn a combined $240,000 a year and rent a luxury apartment for $3,000 a month. They expect to stay in their current city for about five years, have no plans to have children and enjoy the freedom to move if a new opportunity comes along.
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The financial advisor reportedly argued that buying a home would put their money to better use. The advisor apparently said they could get them a mortgage payment that never rises and that owning a home would allow them to build equity as the property gains value over time.
Unsure whether real estate would outperform their investments, they turned to Reddit for advice.
The Decision Starts With Lifestyle
The replies showed there is no single answer. Many people felt buying a primary home should match the life someone wants, not simply the return they hope to earn.
“Home ownership vs renting should be primarily a lifestyle choice and not an investment decision,” one popular comment read.
Several people pointed to the couple’s five-year timeline. They said buying, paying closing costs, covering maintenance and then selling after only a few years could make it difficult to come out ahead.
“Buying real estate with only a 5-year outlook, unless you want to be landlords, is foolish,” one person said.
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Others encouraged the poster to ask the advisor to explain the numbers behind the recommendation. Even though the advisor is a fiduciary, commenters said every recommendation should be backed by calculations that compare housing costs, expected investment returns, taxes and transaction expenses.
Many also questioned whether the couple should keep their money in mutual funds, suggesting lower-cost index funds instead.
Real estate has helped many people build wealth over time, but owning rental property is far from the only way to take part. Investors who like the long-term potential of real estate without dealing with tenants, repairs or contractors should give Arrived a closer look.
