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The Simple Dollar Morning Roundup: Wild Wednesday Edition 2comments
I decided to go for the “giant” book rather than the small one, because it’s easier to make cuts than think of additions. I’m going to do much of the framework assembly today, transforming a ton of notes into some sort of structure for a single book. Wish me luck. Here are some personal finance resources of interest.
Unconventional Thinking: Renting as an Investment This is a very interesting discussion on the topic of how renting can actually be a very good investment. (@ getting green)
Morningstar is the place online to do research into the quality of mutual funds. By default, they’re the place I trust when evaluating individual funds.
Ten Money Questions for Jamison Green I was fascinated by this interview of Jamison Green, a very liberal community leader in the LGBT community, on the topic of personal finance issues. (@ queercents)
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Matt, I agree wholeheartedly with you. He didn’t even take tax savings from mortgage interest into account, plus his idea of renters insurance vs. home-owners insurance compares apples with oranges.
Intent was good, but his idea was not well-though out at all.
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Re: Renting as an investment
His argument is so flawed it’s laughable. First, most people don’t have the capital to do what he suggests. How many people buy a house without a mortgage? You would need $200,000 earning 12% (9% to pay the rent, 3% for inflation) to afford to rent a $1500/month house. ($1500/month is a more reasonable example than his $750 apartment, since his premise was that you could have the benefits of owning a home without the burdens. An apartment is not a house.) Most people don’t have the money to put such a plan into action.
Also, the market may return 12% annually over long periods of time, but in the short-term you can’t rely on 12% each and every year. His scheme doesn’t account for that and you will almost certainly end up using some of your principal in the first few years. In fact, his scheme relies on you getting a 1% return each month in order to avoid dipping into principal right from the start. Unless you are lucky and the first year sees incredible returns, you will have eroded some of your principal and you’ll need higher returns or more capital to make up for it. The end result is that you’re likely to end up with nothing left.