Millennials: Avocados or homes?

[MoneyGuy]

Originally Posted by DoubleF

....
Because of the convoluted argument of what an investment is, I will say, for me, it's to leave something behind for the future generations. Whole life insurance can help me achieve that.

This isn't the main point of your post but insurance shouldn't be used by the average person for this purpose, except in rare cases. Buy term insurance for a specific need and for the period when it's required then you don't need it when you become self insured.

[DoubleF]

Originally Posted by MoneyGuy

This isn't the main point of your post but insurance shouldn't be used by the average person for this purpose, except in rare cases. Buy term insurance for a specific need and for the period when it's required then you don't need it when you become self insured.

I think the reality is more along the lines of a horrible misunderstanding of insurance by me due to what I've been told.

Either way, I guess I have whole life insurance.

[blankall]

Originally Posted by afc wimbledon

Can we stop wasting our time with all this trading business and get back to the real meaning of this conversation, it's supposed to be about how ####ty and useless those youngsters are

A great response to the initial piece on avocados:

http://www.gq.com/story/cado-toast-open-letter

Shall I march into my local Chase branch and proclaim, "Lo! My tongue has not tasted the fruit of the alligator pear for nigh on six months! Now who shall grant me a $2 million mortgage to live in a hovel above David Chang's new milkshake parlor?"

Talk down to me, as though I were eating chalk, about the ways that I could afford a glimmering mansion if I just cut out a single $12 weekly expense.

[OMG!WTF!]

Maybe millennials shouldn't be buying houses...

http://www.newswire.ca/news-releases...623825354.html

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

[Fuzz]

I'll just leave this here......


The Avolatte.
http://www.neatorama.com/2017/05/23/...atte-Avolatte/

[CroFlames]

Surely most personal advisors won't get out of bed for people making less than $120k a year?

[Slava]

Originally Posted by CroFlames

Surely most personal advisors won't get out of bed for people making less than $120k a year?

I have lots of clients making less than that.

[Winsor_Pilates]

Originally Posted by Slava

I have lots of clients making less than that.

You must not be very good

[Slava]

Originally Posted by Winsor_Pilates

You must not be very good

LOL, and the craziest part (I hope people are sitting down) is that some of these people are even CPers!

[I_H8_Crawford]

I just question when owning a house became a right??

My wife and I rent and are in our mid-30's... get the speech from friends/family all the time: "You're throwing your money away!"

Even after drawing it out for them showing that by renting we are saving $1000+/month, and investing it, they don't get it.

Renting is awesome - I pay one fee each month and everything is taken care of. Fridge breaks? LL's responsibility. Need a new roof? Not my problem. I let the savings go into investments. Oh, and if we ever have to move cities, etc??? easy to pack up and move with notice to your landlord than trying to sell a house

[CliffFletcher]

Older Canadians have an unshakeable belief that real estate is a sure-fire investment, and owning a home is the foundation of financial security. And why wouldn't they? If you bought your first home in 1972, you're golden.

Canada may have to learn to be more like Germany, where half of adults rent all their lives.

[Hemi-Cuda]

Originally Posted by CliffFletcher

Older Canadians have an unshakeable belief that real estate is a sure-fire investment, and owning a home is the foundation of financial security. And why wouldn't they? If you bought your first home in 1972, you're golden.

Canada may have to learn to be more like Germany, where half of adults rent all their lives.

I bought my condo in my mid twenties because it was the "responsible" thing to do. However that was prior to the 2008 financial collapse, and now my condo is worth around $60,000 less than I paid for it. Worst financial mistake of my life. Now I need to look at moving since I'm married now with a kid and need more room, and I'm really trying to convince the wife that renting is the way to go, at least for a while. I really don't want to buy a house and then have the economy #### the bed again after Trump has had some time to do real damage

[CroFlames]

If you pay it off though, then you can live rent free even if your equity goes up in smoke due to a downturn.

That's how I view my primary residence anyway. The goal is to live rent free, and I don't view it as an investment. If I sell and make money, well great. If not, well, I wasn't planning on making money anyway.

[OMG!WTF!]

Originally Posted by CroFlames

If you pay it off though, then you can live rent free even if your equity goes up in smoke due to a downturn.

That's how I view my primary residence anyway. The goal is to live rent free, and I don't view it as an investment. If I sell and make money, well great. If not, well, I wasn't planning on making money anyway.

Sadly it's never rent free though. Property tax is getting very high and will increase dramatically in the future. As well maintenance and upgrades will take their toll over time. Your capital counts for something too. Rent also increases so it's a wash there. But financially real estate really needs to go up a lot to make owning a financial success. Or you need to get income from it too.

I've held a mortgage on a house since 2008. The people bought it for 950k. It was just reappraised at 925k. They've paid off about 150k in mortgage and so are quite happy with the whole thing even though they are down 25k. But the real loss is around 250k in interest, 50k in property tax, about 25k in repairs and maintenance. Also their 250k down payment has to count for another 50k. It's just funny how some people calculate wins and losses.

[DoubleF]

Originally Posted by CroFlames

If you pay it off though, then you can live rent free even if your equity goes up in smoke due to a downturn.

That's how I view my primary residence anyway. The goal is to live rent free, and I don't view it as an investment. If I sell and make money, well great. If not, well, I wasn't planning on making money anyway.

I personally view my primary residence as a consumptive good. A secondary residence+ can be considered an investment.

I keep meeting people who think their primary residence is an investment. I've had weird conversations with people who just regurgitate and never think critically about the whole scenario. They never think about the end game. Usually it's something like:

Investment, in what sense?
"Oh, you can sell it and take the gains."
And then what? Rent?
"Obviously you don't sell it if you need to live in it."
Then when would you ever be able to sell the home?
"I don't know, but it's an investment."

I mean, I own my own home. In a horribly misguided financial way, I view it as a vehicle to force myself to save. I wouldn't have the diligence and control to properly save excess money I earn. I'd probably blow a huge portion of it on things I wouldn't normally do if the cash wasn't liquid (like a home).

The rental perspective is starting to get more and more accepted vs home ownership, at least in my friend circles. That being said, I don't know of many individuals who rent and have big savings. I think I literally know of 1 guy like this and he's not even a normal millennial. He's planning to retire in his mid 30s, has very few vices, sits on a pile of cash and has a few minor business ventures set up in anticipation of retirement.

I mean, geez. That's the way to do it if you are diligent and disciplined isn't it? I'd be elated to be mortgage free at 35. This guy is contemplating retirement at the age of 35 without lucking out on building some app or program.

[Flamenspiel]

There is still maintenance though. To me, it depends on your skill set, if you can pick winners in stocks and financial instruments, rent away.

If you can build sweat equity and move from house to house tax free, then build it.

[Fuzz]

Originally Posted by OMG!WTF!

Sadly it's never rent free though. Property tax is getting very high and will increase dramatically in the future. As well maintenance and upgrades will take their toll over time. Your capital counts for something too. Rent also increases so it's a wash there. But financially real estate really needs to go up a lot to make owning a financial success. Or you need to get income from it too.

I've held a mortgage on a house since 2008. The people bought it for 950k. It was just reappraised at 925k. They've paid off about 150k in mortgage and so are quite happy with the whole thing even though they are down 25k. But the real loss is around 250k in interest, 50k in property tax, about 25k in repairs and maintenance. Also their 250k down payment has to count for another 50k. It's just funny how some people calculate wins and losses.

You have to add the other side of the coin though. The rent they would have paid over that period. Not that it makes it a good situation, but you can't just say they had all these expenses and ignore the fact that they got to live in the home, and not pay rent elsewhere.

[PepsiFree]

Rent or buy, people could probably just be happy with their own decision while admitting that the other one may not work for them but works great for others.

People are too worried about having made the "best" decision. Neither renting or buying are universally better than the other. Both have major faults and major benefits, pick the one that is weighted more heavily with benefits and live your life.

I'm having avocados either way.

[DiracSpike]

I often wonder if I made the right decision to buy my condo instead of just renting something. Calculating it out, the amount I spend per month in property tax, condo fees, and interest on my mortgage is more or less what I would spend in rent for a one bedroom, my place is a two bedroom. That part is not bad, the one that gets me is the 100k I have sunk into my condo as a down payment, making me zero money.

I guess the ultimate answer on whether it was a good decision is if down the road I'll be able to sell it for more than I paid. A lot of the time though I find myself wishing I had just rented a one bedroom place in Mission (didn't want to buy there because of flooding, but renting why not), invested my money and just waited for a house.

[OMG!WTF!]

Originally Posted by Fuzz

You have to add the other side of the coin though. The rent they would have paid over that period. Not that it makes it a good situation, but you can't just say they had all these expenses and ignore the fact that they got to live in the home, and not pay rent elsewhere.

Oh sure. 30k a year in rent is 270k. That's a comparable house for sure. So they're still down over 100k. Much more if you count the cost of actually selling and the realized loss of 25k in capital. It's honestly a bit of a disaster that's not too uncommon.