THE $106,000 DIFFERENCE
Two people. Same exact income and savings - but different investment strategies.
Who's gonna end up ahead after ten years?
Both of them make $100k a year and have $25,000 saved up.
Person A takes that 25k, puts it in an S&P 500 index fund, and rents an apartment for $2,500 a month. They invest an extra $1,000 every single month.
Person B takes that same 25k and uses it as a down payment on a $500,000 house. Their total payment with mortgage, taxes, insurance, and some maintenance comes out to $3,500.
So both of them are spending $3,500 a month. One's building a stock portfolio. One's building equity.
After 10 years, the renter's investment account has grown to $237,000. (8% avg annual return)
The buyer's home is now worth $740,000 (using 4% avg annual appreciation).
-and they only owe $397,000 on it. That's $343,000 in equity.
So in this case, after ten years - the homeowner is $106,000 richer.
That's an extra $10,000 every single year just for choosing to buy.
