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A comment on Most Germans don’t buy their homes, they rent. Parent comment

Re:Most Germans don’t buy their homes, they rent by coldtea on Monday October 24, 2016 @09:25AM (#12778516)
>After all, renting has a guaranteed zero ROI.

A guaranteed zero ROI is better than a negative ROI which you can get with buying a house (e.g. the house you can resell it drops due to the market and you can't afford the mortgage for some reason...)

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Re:Most Germans don’t buy their homes, they rent by standel on Monday October 24, 2016 @11:10AM (#12779476)
negative ROI on investment is the risk component of your investment. This is true of any investment. Stock being certainly higher risks than housing and still people invest a lot in stocks.

But I should have said renting is a sunk cost. There is no investment component at all in renting.

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Re:Most Germans don’t buy their homes, they rent by kdamken on Monday October 24, 2016 @04:41PM (#12782678)
Stock being certainly higher risks than housing and still people invest a lot in stocks.

I would say low cost index funds are a much lower risk investment than a mortgage. They also have the advantage of being very liquid in the case of actually needing your money. Rent is not a sunk cost, this is a common misconception.

There are many good reasons to buy a home, but do not think of it as an "investment". Compared to other investment options, it's a pretty terrible one.

I highly recommend reading this article to learn more - http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrib...

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Re:Most Germans don’t buy their homes, they rent by jpetso on Monday October 24, 2016 @04:04PM (#12782338)
You could also look at it the other way and say you have sunk costs either way, either on rent or on running costs for your (owned) property: mortgage interest, property taxes, maintenance, opportunity cost for your down payment.

The question is how do you invest the extra leftover money: in home equity tied to the property with running costs, or in other investments (stocks, bonds, your own business)?

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