And you're deliberately oversimplifying the calculation, which is just as bad. You're assuming a guaranteed return of 7%, and that the capital isn't touched for the years. If withdraw $50 from your investment capital per month to pay the rental, the numbers don't come out as favourably. similarly, if you reduce the returns (7-8% is an average return, but it's not a guaranteed return, especialy on smaller sums where you may have to pay $25 per trade, or 1+% fees in fund management every year, or tax on the returns).
Your point about renting being a viable option is valid though, your numbers are just inflated.
I’m not sure what you do when you’re in a down market. Last time I lost a lot of money because I was dumb.
mind you renting your toothbrush probably isn't worth it, but if you're thinking about spending thousands of dollars and compare that to the compound interest you earn in a passive fund over a few years, you'd be surprised how much you lose out on.
In fact that's one of the drivers between middle class and upper class inequality. The upper class invests primarily in capital.
So I did. Remember you've still got pay the $50/month out of that savings. Even with 7% guaranteed annual interest on your initial investment you're still losing money after month 46 with renting at $50/month compared to paying $2000 up front.
And you still don't own the couch.
$50 a month for a $2000 couch is equivalent to a debt at 26%. You can't overcome that with investment. It only makes sense if you're planning to throw it away very soon.
Putting money in a property especially if you can do your own upgrades can really pay off. Example, bought a house for $280k,I invested about $50k, its worth about $400k now.
Yeah 2008 happened, however, the prices at least in my area are back to 2007 levels. Short term real estate can be risky but long term it is a relatively safe investment.
Edit: As long as you are diversified and not putting all your money into meme stocks, of course
And in case of damages and repairs, if you own the sofa, you're always sitting on the damages. Homeowners for example routinely spend thousands of dollars per year on their houses, whereas renters (generally), have repairs covered by the landlord.
this is a basic situation of opportunity cost. You can't just tally up the renting costs while ignoring the freed up capital, this is the exact mistake people make when they prematurely buy.