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Rev. Marcy Bain @HolyShiftDayton
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#MondayMotivation Money for Millennials. Dispelling Myths. Home Ownership Edition.

I know a lot of millennials. I work with a lot of millennials. And something I hear from a lot of you is that you'd prefer home ownership to investing because your parents lost a lot $$ in 2008.
But what you probably didn't know is that the house you personally live in is not an investment. If you live in a house for 30 yrs (which few people do) and pay 30 year mortgage and do normal but required maintenance--you will spend more on the house than it's worth over time.
People can get lucky in 3-5 yr cycles if they bought low and sell when the market is high like right now and where you don't have major repairs. literally everything in a house needs replaced over a 30yr cycle. Paint, walls, electrical, roofs, flooring, window, appliances etc.
My spreadsheet compares home ownership for 30yrs to renting 30yrs.
assumptions: 200k house, 30yr loan at 4.25% +normal maintenance & repairs vs rent at $1300 month+2% increases yearly per inflation.

The real argument for owning a house is you lose less than renting long term
Losing less money over time is not the same thing as “investing.” For those of you doing Airbnb and renting your house—that is a form of “investing.”
But those trying to choose between owning a place vs investing. I’d much rather have you investing long term before buying a house
And here’s why. The secret to investing is doing simple things over a long time.
Some fha loans let you put $5k down on a house. If you invested that +200/month in a simple index fund—here’s what life looks like in 30 years. The historic avg for the stock market is 10% over time
And this 10% historical avg over 30 year cycles includes all crashes+down years. I lost a lot of money in 2008 like everyone. As in I watched at age 30 as 1/2 my savings disappeared in 2008, but I've also tripled my retirement account since 2008 as the stock market recovered.
The more you can put down on a house-the better of an idea (and less of a financial liability it becomes). There's a legit reason banks want you to put 20% down on a house and you have to take out a 2nd form of ins (PMI) if you don't. The reason is banks see you as a "high risk"
What most people do is they have a wake up call around age 50 and they start planning for retirement. This is what happens when you invest $5k like in the first scenario & then $1000/ month for 10 years.

most important factor in investing=TIME for compounding interest to grow
In the first scenario $200/month for 30 years you wind up w/ half million dollars.

In scenario 2–$1000/month for 10years—you wind up w/ $200k

For most of you stay away from nonsense like bitcoin or even individual stock & just invest in an index that follows the stock market
In my opinion & this is just my opinion—it makes 0 sense to be investing in individual stock if you have less than 100k net worth & debt. Once you have no debt & at least $100k networth a portfolio of 10% single stock starts to make sense as part of a diversification strategy
But before that it's an unnecessary level of risk (in my opinion) because math. We hear abt sexy stock aka Amazon. But who gave a crap about amazon in the early 2000s or Apple in the 90s. Very few of you. 80% of individual companies underperform the benchmark S&P 500.
Which means most are better off putting a big chunk $ in an index. It's true- you can get much higher returns in individual stock (especially over short periods) than you can w/ an index. It's also true if you put all your $$ in 1 company it can go out of business. Risk vs Reward
And I'm not alone in my thinking. In 2014, Warren Buffet gave the same advice

"My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.)"…
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