Even though many young people may be saving thousands by not paying rent and living at home, they may also be delaying first-time home ownership, which is still a key driver of household wealth, Jones said.
If (a) they aren’t missing out on higher-paying jobs by not being able to move close enough to such a job and (b) if they’re actually reasonably investing what they’re saving on housing costs — a very important “if” here — they’ll potentially be considerably better off by doing that.
Say I save $2k/mo on housing for a single year and I’m 20. That’s $24k for that year. At a 6.5% average long-run S&P 500 return, accounting for inflation, that doubles about every 11 years. At 31, that becomes $48k. At 42, $96k. At 53, $192k. At 64, $384k. At 75, $768k.
One year of saved housing costs, just doing nothing other than living with the folks. If they save it, and if they invest it reasonably.
Also, the idea that buying property is a key driver of wealth relies on a bunch of assumptions regarding buying in an area where the cost WILL go up, where there isn’t some massive, hidden maintenance cost (oh, the roof contained asbestos and we didn’t know) and that the housing market in general will remain insane.
I’m moving back to Geneva, and recently read an article stating the Swiss housing market has gone up by 94% for apartments , 80% for houses between 2000 and 2021.
That’s not sustainable…
If (a) they aren’t missing out on higher-paying jobs by not being able to move close enough to such a job and (b) if they’re actually reasonably investing what they’re saving on housing costs — a very important “if” here — they’ll potentially be considerably better off by doing that.
Say I save $2k/mo on housing for a single year and I’m 20. That’s $24k for that year. At a 6.5% average long-run S&P 500 return, accounting for inflation, that doubles about every 11 years. At 31, that becomes $48k. At 42, $96k. At 53, $192k. At 64, $384k. At 75, $768k.
One year of saved housing costs, just doing nothing other than living with the folks. If they save it, and if they invest it reasonably.
Also, the idea that buying property is a key driver of wealth relies on a bunch of assumptions regarding buying in an area where the cost WILL go up, where there isn’t some massive, hidden maintenance cost (oh, the roof contained asbestos and we didn’t know) and that the housing market in general will remain insane.
I’m moving back to Geneva, and recently read an article stating the Swiss housing market has gone up by 94% for apartments , 80% for houses between 2000 and 2021.
That’s not sustainable…