When you near the official retirement age will the pension asset test have any impact on if you decide to buy or continue renting? With / without an imaginary extra million.

I’ve been going back and forth about buying and i have come to the conclusion i don’t want the responsibility

I agree with you, especially if you're single without kids. You're living for today and not shooting to be a homeowner in your 70s. Owning a house has been encouraged by the banking sector, which makes a lot of money from the housing market.

That is a really good explanation. I have been trying to justify to myself why I don't like the idea of a mortgage. I listened to this FX trader once explain that buying a house with a mortgage is crazy because you don't actually own an asset but have a liability (for 30 years in the example you mentioned). I like the 4 quadrant idea that you've used to explain this and it very clearly explains why buying a house will lead to you having a liability and reducing your cash-flow whereas investing the money in the stock market will give you dividend income. You're right about the "dead money"argument as well. We could say the same thing about paying for food --- you're actually helping the farmer pay his bills but then so what? You get a service or good in return. Thanks very much for the video.

Thanks people think if you just rent youre missing out on a dream of homeownership but to me I see the opposite. You can move around more easily with renting and just get rental insurance to protect you items. I'd rather stack my money invest and be debt free which I only have 1 debt right now no credit cards or car notes. There are some advantages in renting.

You are a smart woman. I'm young. I won't be fooled into ever buying a home. You point out literally every flaw with owning. Cheers from the states.

In the end, it comes down to what you're comfortable with in your life today! Like Tracey, the position of being debt-free is appealing and less stress. In todays world, most people couldn't come up with $1000 if they needed it suddenly without borrowing or selling personal property. . . no thanks. And, in-the-end, no one gets out alive; and whether you die with a $500K home or $500k in a portfolio of some sort, it is still meaningless. Entrepreneurship is not near as meaningful as realizing that what you have is all that you want -- being content in whatever position you accept yourself in is PRICELESS.

Being forced to pay a mortgage, property taxes, maintenance, and insurance/association costs EVERY month for 30 years with no easy way out is absolutely miserable. And knowing that you are paying thousands upon thousands of dollars extra in interest is complete misery. You can't just stop, move back in with relatives, or get roommates. You are STUCK with all of the monthly burden for 30 YEARS!.....I will rent and be flexible and free as a bird always.

As a doctor, and KZfaqr, I change hospital rotations every year. It makes more sense for me to rent than to buy for now, until I have a fixed hospital placement.

Tracey, I'm turning 22 this year and I want to be like you when I grow up! My lifestyle expenses to be mostly covered by passive income, none of the stress that comes with owning a property, and my assets to be producing income for me. That sounds like a bloody good life!

Having a paid for house when you retire is the best financial advise. We purchased a new home about 15 years ago and we just now had to spend less than $10k to upgrade our heating/appliances etc. Our tax/insurance is less than a quarter of what our home would rent for right now. If you buy the right house in the right place, it's a no brainer that it's the best decision to own.

Fully agree, I have had houses and I have rented. I sold my house and invested the profits into the stock market, in a diversified portfolio as well as other assets. Love the flexibility to move to more anywhere in the world.

Renting is better. When I die, I cannot take the home I worked so hard for with me. I love the freedom of picking up and go, not having to pay for repairs/maintenance, choosing the location and home I want to live in. Plus, I get to drive nice cars.

I'm in the same situation. I had a house, it was nice. Sold it. True cash flow and freedom from a stock portfolio is amazing!

Your first point was enough for me to SMASH the like button! Unless one is living off the land and off the grid, we are all paying someone else's lifestyle by purchasing something/a service. Rent went towards me living somewhere for that time, shoot!😊

I am renting now because I sold my home recently to be closer to family. I can't wait to buy again. I hate renting. I was in my last home for a short period of time and I made 50k cash (after repairs and upgrades) off of it when I sold. Plus, I saved money because my mortgage was about $600-900 less than those renting in my neighborhood. I easily made/saved over 100k in less than 5 years. Buying was one of the best financial decisions I could make. The key is to be debt free THEN buy. I've ran cost analysis, opportunity costs and all of the other numbers and I always come up with owning being a better option.

I agree with you on many of your points they say rent is a waiste of money but so is paying interest. People are up to there eyeballs in debt and they can't afford any extra activities because they are living like tightasses. But just remember that like property the stock market can also crash reducing divendend paid to you.

We honestly need more voices like yours dispelling the myths that everyone needs to be a homeowner and that primary residences are assets. I did the math a couple years back and learned that my home would have to be pretty cheap for it to be even relatively beneficial. My spouse and I have decided to buy a home that's no more than twice our annual income (most banks would qualify us for 4x that amount). But after taxes and maintenance, owning a home is more like having insurance (a somewhat guaranteed "rent-stabilized" dwelling in exchange for doing your own repairs). But we realized investing in stocks is the way to go. Retire with only property taxes and insurance to really worry about, and have hired help when we get too old. We wish we could've reached FI early enough to just rent wherever whenever indefinitely.

Finally an Aussie financial budgeting channel!!

I like it. I was a home owner with loan, and although i sold it for handsome profit, the bank make more money than me, now i‘m even happier to rent anywhere i like with more liquid asset in dividend stocks. 🙏 thanks

As a renter you have to allow inspections into your home. You get evicted when the owner wants to sell or move back in etc. You can't just leave you have to wait until the end of your contract lest you lose your bond. The real estate and landlord will always try to take the bond. You can't make modifications on your rented home.

This was a year ago but I needed to see this at this point in my life lol. New subbie

Also if you are single and living in the big city rent a room that is all inclusive in the rent (hydro,internet etc.) and if possible no more than just another tenant accommodating apartment lesser the people less headache will be...also sell your car especially if you are in a big city no matter what make, what year it is a luxury to own it...I did this 2 thing renting a room, using public transit (for almost 10 years now) have a full time job and I saved tons of money

Tracy I love this video. We lived the American dream, owned houses and after living that and understanding the real costs that go with that we are now investor and high cash flow driven. This helped me focus tighter on what our goals should be and high cash flow principles we live by.

Great video Tracey, I stumbled upon this same concept on accident, and as a result I agree with you; I was in the military, renting because I was only in the same city for 3 years at a time, even though I wanted to buy, and I invested 20 percent of my take home pay, into mutual funds and etfs. Now, years later, after getting an average of 10 percent returns for the last 15 years, I'm still renting but I have a huge passive income producing investment portfolio, that provides me MORE than my Officer pay in the military. So now, debt free, I can buy a home, CASH, in retirement. And still be debt free with 3 streams of income. Knowing me, I'll move, rent the home out, and rent again haha. This is such a foreign concept to most people, but when you realize how much you get back from NOT buying, it makes sense.

Honestly I have never understood why someone would pay so much interest to own a house, I think its madness - I rent, I have zero stress, I also get tax benefits. It's all about creating the life you want.

You might be paying more in interest, but your home value is gonna also increase at the same time, usually more than 4%, so after you paid off your home, it's gonna be worth close to 1mil from 500k, 30 years down the road.

After 30 years you might move to somewhere u like and rent there again. That's better ! You can go anywhere u like

This video validates those who are struggling to buy their own property right now. But rent comes with their own stresses too. Since you don't own it it can be taken away from you at any time. Not to mention the stresses of finding a new (and decent) place to live without competing with many others. Rent is a physical burden rather than a financial one.

This is what most people don't understand... You will be richer if you rent AND invest your money wisely. Buying a house to live isn't an asset, ESPECIALLY if you appl for a loan at the bank!

Makes perfect sense to me. Thanks for explaining.

Such a good video. I’ve never heard it explained in the concept of house rich but cash poor. Food for thought. 👍

terrific points... I try to explain this to people but many just fail to understand it because they just are brainwashed to believe that home ownership is the key to wealth when it is clearly not.

You explained that perfectly. Great to find another person on the same page as us. Subscribed. Not sure how I missed your videos.

ive always been very unusual. when people see home ownership as a joy, i just see it as a burden, too much responsibility and i like just being free and calling maintenance when i got a problem; i don't like to be tied down to a property and dont want to go through the hassle of renting it out, i just like my nomadic energy--homeownership is a chore but like i said i know most people love it

Thank you for this information. I’m 53 why would I want to buy a house now??!!! I’m content with renting.

Very well put Tracey! Always remember folks , the basic accounting formula as per GAAP(general agreed accounting principle) Assets - Liabilities = equity In other words What you own minus what you owe equals ,what you have . Acquiring a mortgage will increase debt to income ratio and potentially reduce equity. Contrary to what a common myth , buying a house is a great way to build equity. Your 100% doing it the right way Tracey!

Your one smart cookie Tracey, had three homes sold up a couple of years ago before the next decade of interest rates rises now pay rent and save baby save will buy a small house with cash when interest rates are high houses cheap.

Hi Tracey , Great video! You have revealed the unspoken truth about home ownership & it's real cost. Most people never deduct their incurred purchase costs, interest, maintenance/upgrades, inflation etc., etc., etc... from the sale price of their home. It always amazes me that Aussie parents will often discuss how difficult it will be for their kids to get into the housing market but ironically will encourage them to purchase a house at the earliest opportunity without expressing their concerns of affordability or options such as rent vesting. Mortgage = There goes your best YOLO lifestyle!

Nice, I like your thinking. Also you have the option of moving overseas and stretching that dividend income even further.

This really did help! Love the fact it isnt my responsibility to fix something that gets broken.

An important part you eluded to. Liquidity. You can't just pull your cash out of a property if you need it when it's already paid to the bank and well and truly gone! Yikes! Some people see owning houses as an asset. No that's what they've been told to think. It's a liability, with having to put so much money into something that is constantly deteriorating and then there's your own time too. With stocks, it's the opposite, your money is working for you, people are working for you, nothing is physically deteriorating, and you don't have to spend your time relatively to manage it (except for your due diligence and homework!).

you know what, I never really thought about it like that. That makes a lot of sense

We have all been BRAINWASHED into this get a job, buy your own home BS. Renting, capital release and reinvest is by a galaxy the better decision. And if you angle it right, you'll live and lease a car for FREE by virtue of your passive profits! No brainer.

You are brilliant thank you! I was already planning to buy and you changed my mind

Love your mentality... honestly I want to be debt free.. if I have to buy a house, I would like to pay it by cash. Period.

Firstly this was a great video, Thank you. Main takeaway for me is dont buy a house unless u really have the financial means to do it comfortably. I dont want to own a House but have barely money left over monthly. I will Rent and invest in stocks until I make enough.

She is right renting is better because when you in the house you can struggle financially but when your renting you can save more money and not struggle as much🏠

You know why I rent. Because houses are artificially inflated and can't fucking afford one even though I'm a middle class earner.

Thanks for the great explanation, really changed my perspective on owning a house. Great video!

This was INCREDIBLY helpful! Thanks!

Property is a great investment strategy for building both net worth and cashflow, but it's more difficult and obviously location dependent.

Makes sense. And you got valid points. However we still want to buy our own home...

I must say that there is one aspect of renting that many see as a huge burden but if you adapt accordingly eliminates it entirely, and that is not being a consumerist hoarder of useless or excess possessions. If you live minimalist you can move out in an hour and a single car load....

In my opinion, buying a house is usually best if you are raising kids with your spouse.

Great video. I wish I rented. My wife keeps trying to improve our house. I see it as a money pit. If we sold our house, our cash flow would go through the roof as I would buy dividend-paying stocks.

Dear Tracey, I am not agreeing completely with what you say. If you buy a property, and yes the majority of your mortgage payments the first years goes towards the interest of the loan. But, you are not concidering the increase in value of the property. I have been buying and selling property, to climb the ladder to where I am today. I would not have been able to afford this property if it wasn´t for the increased value of each property. Now, I own the most expensive property I have ever owned, and with only a 50% mortgage on it. This is my forever home, and is my investment for retirement. I can then choose to sell, or stay in it for as long as I am able to, keep chickens or grow vegetables... (I built it with old age in mind, with all amenities on the ground floor) I do live in Norway, we do not have property taxes, insurance is low, most people own their property, and we were not affected by the financial crisis or the recession. I have no clue of the stock market, I have a small savings every month into a fund.. also extra savings for retirement. Also the feeling of being secure. A renter can choose to sell your home at any time. The most important thing is to be aware of pros and cons. And I do understand the reason why you are renting. :-)

If you can purchase. What is required sometimes is discipline. Everyone tells you it's ok to rent now, when you're in your twenty's and thirties even forties. As if you'll die at 50. Imagine being a renter in your 70's and 80's. People need to be honest about the real possibilities. There is something called inflation and that has no respect for age and it's commodities or your pension. Thing long term... If and when you have the option.

Nicely done. I have not seen anyone get to the point like this. At some point buying a home just becomes a status symbol thing as all your friends buy and you want to keep up. A house is a great thing for facebook photos to soothe egos. Also most folks buy more home than they rent. While renting, folks rent a 1500 sq feet in the burbs, but when they buy they splurge on a 3500 sq ft home. in usa, in cold wether, you also have the headache of plowing the snow from driveway and also most folks mow a lawn. I would rather spend my weekend watching Netflix, having my investment portfolio compound than rake leaves and do more back breaking work around the home. I hate being a handyman and worrying about which contractor to call to fix the plumbing, or any appliance in the house. It might work if folks strictly bought a small house within their means. But most see a homeownership as a pride thing and want a super luxuriously large home compared to the little place they rented

You made me feel better. We tried to get a house and were out bid today. Feeling down in the dumps kind of but I also am scared to buy a home for all the points you mentioned. I love being financially free and being able to move around if I so wish. But our American culture makes it like if you don’t own a home you are unaccomplished.

I think your perspective is great and exactly what i have been doing .Everyone keeps pushing me to buy , yet i make a whole additional income from my investments which consist of mainly high end P2P lending , crypto lending , and a few other things .I try to tell people that because of my cash flow from interest i could borrower and have that pay down mortgage , i still have a way to go before im very cash flow rich so it was so nice to hear you talk on this and i feel even more convinced im on the right track.

Can you please do an updated video for this 5 years on to see if your views are still the same, would be very interesting and beneficial to your subscribers.

Dear Tracey, I agree with you on the high cost of owning a house. A house is a liability not an asset. It depends of the country you live in and the housing market if it makes money or worth owning it. The stock market is in a bubble now, same as the housing market. Both will correct eventually. I rent and build my savings in precious metals. Hard assets are not income producing ones but you can combine the two. Also cryptocurrencies, classic cars, art are a good way to mitigate risk just to mention a few. I will buy a house if the market crashes by 75-80% only. If it never happens then it is better for the people.

There's no right or wrong answer to this question. As you say it depends on a lot of variables. I live in the UK (south), I had a good amount of money saved up over the years. I was against buying for at least 3 years waiting for the market to crash (which I still believe it will) but in the end I pulled the trigger. I put down a large deposit of around 50%. My mortgage is £399/month (754.52 AUD) which is stupidly low for the UK, because of the large deposit. To put it in perspective to rent my house it would cost around £850/month (1,607.67 AUD).In an emergency I could rent my 2 spare bedrooms for £400-£450 each which would easily cover my mortgage and even some of my living expenses with the positive cash flow. I will have my mortgage paid off completely in 5 years, I am currently overpaying the maximum 10% per year (no fees). My original 30 year mortgage will end up paid off completely in 7 years using this method. You could certainly argue that my money would have worked better for me in the stock market but that comes with many negatives also.

👏👏👏 "you're not paying $500,000 for that house, you're paying a million dollars". this is the truth. my dad always pushes on me that owning property is the biggest marker of financial success, and that he's set up for life (because he owns 3 properties). but at the same time i see him become outraged at seeing his land tax, council rates, etc go up (i get outraged too). he always boasts that the value of his properties keep going up and therefore he will make double what he paid for when he sells them, but one property has been on the privately listed market for 3 yrs now, and not a single buyer has shown strong interest. i find him very silly and purposely ignorant for having such a black and white thinking, which he wants his children to have as well.

Here's the difference, eventually, all your rent will pay off the owners home, and they will own it, but you will still have to rent it and then your rent is profit for the owner. You'll simply have nothing to show for your decades of rent. Oh, you think you'll save the extra income? Don't kid yourself, it doesn't happen like that, ever.

A happy renter. My landlord negative gears, so he’s deliberately making a loss to subsidise my housing! It even has a pool and backs onto a golf course. How good is that. I’m paying less than half the cost of a mortgage required to buy this place, leaving my savings in the market to earn a nice income.

Hey Tracey! This was so helpful and just the advice that I needed right now. Thanks so much for sharing your tips! New subbie :) xx

I think maybe a good alternative is to have as a good mix in to your investment portfolio as is humanly possible....that could include stocks and shares, bonds, pension plan, regular savings account, and yes maybe also an investment property or 2 if your finances will stretch that far. Hedge your bets and do not put all your eggs in one basket is my motto.

I’m in America, so I’m not certain that this will be true for everyone in other countries. We have 30 years to pay off a mortgage, so in 30 years, I will own my property if I started a mortgage today. 🚨 With renting, I will be paying rent forever. 🚨

If you can just buy a house in cash it would beat either of these 2 options you discussed but lots of people can't do that. Wish I could and not have to worry about the 2 options.

Wow love the video. Was thinking about buying a house. Still young and single too but now really don’t think I will.

As long as there is a such things as property taxes, you will never own your house. From a strictly financial standpoint, It only makes sense to own a house if appreciation is greater then the sum of property taxes, maintenance costs, and the opportunity cost lost by not investing. At a certain point, it doesn't make sense to pay a mortgage vs renting. There is a neighborhood I want to live in where after my down payment of 45%, my mortgage will still be over $3k. Houses cost a million and I have $400k for a down payment. I can rent for the same amount. Why would I pay $400k for this scenario? I'm thinking I should rent for the same amount, and take the $400k and invest it.

You hit so many FACTS!!

Brilliant breakdown! Thanks for the perspective.

Yea, people say Im wasting money but their maintenance, property tax, water bill, garbage bill, and INTEREST combined are way more than my rent per month... and after agent commission and first time home buyers payback... unless you stay for over 7 years... renting is farrrrr wiser.

Thank you, very helpful.

You are so right same with me I live out to my room a small room and I rent and I leave out to my van and I have no debt I'm debt-free and I have money in my pocket every day if I want to take a day off I'm on vacation I can you come do that when you own a house a lot of people think cuz I don't have to have money that was off so renting is not a bad that money it is great to rent as well depending on the person but me I love renting I'll never ever ever buy a house again myself... And I too am debt-free

I agree, you have more freedom by renting as long as you have a good stock portfolio and some dividend stocks. Renting gives you more freedom.

The one issue with renting is that you can get kicked out at any time and you then have the hassle of finding another place and also moving costs. So ownership gives security. But let's say you have 1.5 million in stocks, you can still keep most of that to generate income you buy a house and get a mortgage . But instead of paying rent, you are paying the mortgage and getting potential future capital gains on the house. But it does depend on the interest rates compared to the rent you are paying, and recently rents have gone up alot with high inflation. As have interest rates. Whereas stocks have flatlined.

Could you do an updated video on this in todays circumstances?

There are definitely pros and cons to both. Form my perspective you have more expenses when you own your own home but you also get the advantage of gaining equity which is passive.

I have been a renter for many years, and I am done being at the mercy of a landlord that increases rent every year. While their rental property grows in value, your wallet thins out every lease renewal! I rather have a 30 year fixed mortgage. I live below my means, which many do not. Either way, you have to save$$$. There are pros and cons on each side. You have to decide which one is more beneficial.

Hi Tracey. Just found this video - agree with your conclusions. There is an additional benefit of renting - one can more easily move to a new place. And of course, it is so nice to have the landlord fix and pay for upgrades to the home. Good for you & thanks for the insights.

But own a home that you earning growing value of equity and when you sell is free tax on capital gain

Good video. You point out what most do not - the actual cost of the house after 25 years, once interest is factored - almost 2x based on a 500k home - as well as payments the first years are paying down mostly interest.

I don't agree with most of your points. Especially when you said you are not paying 500K, but you are paying a million to buy the house considering the interest you are paying. You know that a million is going to be paid over 25 or 30 years. Your house value also raises to multiple time more than its initial value in the course of 30 years. Let's say you got a 500K mortgage and bout a 600K house. Although you will repay close to 1 million dollars, your house value would be somewhere around 3 million or more after 30 years. Considering this factor, buying a house is still a winning card.

Definitely agree not to buy a house when you are not financially ready. If u will buy, put at least 20% down not the 5% the gov't is trying to encourage. Also the monthly mortgage should not be more than 30% of your monthly income and continue saving. What i like about buying is the stability of not having to move when the owner decided to sell or increase rent. Also some rents in Sydney is ridiculously high that it's almost the same as the amount of mortgage. And i think it's better to diversify. But as u said, it all comes down to personal situation and your priorities in life.

Wonderful insights! Thanks for sharing!

You will look back on this vid and seriously regret your decision and your logic. Paying a mortgage doesn't last forever, renting will. And be sure rent will always go up. Owning is about the long term not the short term.

I think, as in all real estate, a major consideration is location. If you can be flexible about your location, renting is a lot more attractive. If rents go up, you can move to a cheaper apartment or area. (Albeit that would have been realized as appreciation had you owned. So complicated!)

I liked the video. 2 points I'd mention. 1. When you referred to paying 1 million for the 500 k house, this isn't really a true representation of the asset because after 30 years I guarantee that house is also worth over 1 million dollars. 2. I really liked your list of wealth and I 100% agree. I earn a higher than average wage yet I purchased a townhouse worth 350 k. It gives me somewhere nice to live but keeps most of my cash flow open for use in the stock market. I think you're right in that most people stretch for these expensive large properties while being cash flow poor which helps them in their retirement but not so much today. Only advantage is that their wealth likely grows faster as long as they don't sell as they'll never be taxed on their gains which continue to compound unlike dividend income.

Thank you!! Needed this. Youre advice is so pure and honest and I appreciate the honesty.

Great video and I agree with your points. Seems like if your even considering buying homes for investing than you have to be able to pay cash to avoid the interest fees. Lastly, it seems to be an insecurity thing when you tell people you rather rent and they look at you funny cause your going against the general thought of wanting to buy a home.

THANK YOU for making this video. Could you please do it again for 2021? That's what I've been thinking but all my friends are buying/have bought really expensive houses and that has made me doubt in my thoughts. But you are the ONLY person that makes sense to me. 🙏🙏🙏

My home value has doubled in about 20 years. That’s 5% earning against an average mortgage rate of 4ish. Up there. That doesn’t however include all I’ve spent on maintenance, repairs, improvements, fees, increasing property taxes, etc. I’m dead tired of having to take time and fit maintenance into my schedule. Equity means nothing until you cash out. And I can’t wait to.

Love, love, love this!! Finally, someome who makes some sense. Subscribed!

Another reason why renting may be better from a financial standpoint. For example, lets say you are renting a property for $1500 and you bought a property to live in that has a rental value of $2000 if you move into the property you would be losing money($500) even if you bought cash because what you were paying for rent is lower than what you could be renting your property for. I prefer to rent because I don't like owning personal items that can't move/difficult to move. I like moving every 3-4 months so I rent short term furnished rentals that I have the option to extend my my stay(hotels, airbnbs etc). Whether you chose to buy or rent I would like to advise you to have an exit strategy in place incase there is a black swan event and you need to move out immediately. Love the video Tracey!

These are excellent points! A large cash flow is more important than sitting on a pile of money you can not liquidate. It's called being house poor. All your money will be going to repay and maintain the house.

This is better than Dave Ramsey’s video and advice !!! Thank you