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Here’s How to Make More Money Renting Than Owning, According to Ramit Sethi – The Motley Fool

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If you want to grow your wealth but don’t want to buy a home, …….

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If you want to grow your wealth but don’t want to buy a home, this advice could be for you.


Key points

  • Generally, homeowners have a higher net worth than renters, because owning a home can help build wealth.
  • Finance expert Ramit Sethi has some suggestions on how to end up richer as a renter.
  • He recommends investing the money he saves on housing costs by renting instead of owning.

In general, homeownership is one of the easiest paths to building wealth — if you make smart decisions about buying a home. If you get an affordable mortgage and pay it off on time, you will acquire an asset that is quite valuable (especially if your property has appreciated) just for making a monthly housing payment. That’s one big reason why homeowners tend to have a higher net worth than renters.

But, this doesn’t mean that buying a house is the right way for everyone to get rich. In fact, the author of I Will Teach You to be Rich, Ramit Sethi, has explained how you can actually make more money owning than renting. Here’s what he suggests doing.

Sethi’s suggestion for building wealth as a renter

On Twitter, Sethi explained that he makes “more money renting than owning,” by taking a few key actions.

Sethi explained that he lives in an area where the cost of living is high. He has chosen to rent a nice place there, rather than to buy a property. However, the home he rents has a lower monthly cost than owning a property would. He then invests the difference between what he would pay in rent and what he would pay to own a home.

So, his recipe for success is basically to spend less on renting than he would on owning and put the money into assets that produce a reasonable return for him. It is this invested money that will make him more over time than he believes he could earn through property appreciation.

Will this approach work for you?

Sethi’s approach is sound. After all, if you could rent a place to live for a few hundred, or a few thousand, dollars less than what it would cost to buy one, this can give you a lot of extra money that you can put into investments that will hopefully perform well for …….

Source: https://www.fool.com/the-ascent/mortgages/articles/heres-how-to-make-more-money-renting-than-owning-according-to-ramit-sethi/

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