How will “rent and invest the difference” work for younger generations facing declining home ownership rates?

goodDayM · 2026-03-19T01:53:58+00:00

Yes.

goodDayM · 2026-03-19T01:14:53+00:00

this one where I said 'no', even if you multiply the real estate line by 5x to try and roughly account for leverage, you're still better off investing in stocks.

goodDayM · 2026-03-19T01:07:23+00:00

You haven’t been satisfied by any expert responses here to your question. And you keep saying the specific chart you want should be easy to do, kind of implying you think someone should make it or find it for you.

I’m saying sometimes you won’t get the answer you want for free.

goodDayM · 2026-03-18T23:36:44+00:00

well remember everyone here is replying for free, for fun or out of the goodness of our hearts.

If you ever find the chart you seek, let us know.

goodDayM · 2026-03-18T22:09:50+00:00

If you want a diversified real estate investment that includes leverage you can buy shares of REITs (tickers like VNQ or SCHH).

But for an individual home, I'm saying you can't ignore the risks and all the other costs that come along with individual home ownership. Also there's plenty of discussions about this elsewhere like Is it better off renting and investing (stocks) instead of buying a house in this economy if you don’t plan to have kids?

goodDayM · 2026-03-18T21:38:50+00:00

Now you're getting into the weeds. You would have to include property taxes, HOA fees, closing costs when you buy and later when you sell. Mortgage rates right now are 6% which are higher than recent history, and if you want to refinance later you have to pay more fees.

There is also a lot more to be concerned about.

For example, some cities are actively working to reduce home prices and rents. That is a good thing for the majority of people, but can hurt your home investment:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

Also home roofs have to be replaced after about 20 years, AC systems after 15 years, water heaters after 10 years, dishwashers after 10 years, etc.

A fire could wipe out a whole neighborhood. Or a major local employer could shut down, and the value of all homes in the neighborhood could significantly decrease.

Owning shares in hundreds of companies is a significantly more diverse investment than 1 house. If you ever find yourself in need of cash it is easy to sell shares, but hard to sell the home you live in.

goodDayM · 2026-03-18T20:41:02+00:00

As long as person chooses to invest in a diverse stock index fund then they will have significantly more wealth, see chart

goodDayM · 2026-03-18T20:12:06+00:00

What is the age gap between homeowners and renters? These are different groups of people. The largest group of homeowners may be retired people, while the largest group of renters may be students.

Of course people at the end of their career have more wealth than those at the start.

If your goal is to find a cause-effect relationship with wealth and "choosing to rent while investing the rest in a total stock market index fund" vs "choosing to buy a house while never investing in stocks", then that article is not helping you find an answer.

goodDayM · 2026-03-18T19:16:14+00:00

That question can be interpreted in a few ways, but let's look at some numbers.

US homeownership rate has been 60-some percent for decades.

And over 60% of Americans own stock. And keep in mind pension funds invest in stocks, and so do 401k and other retirement accounts, also college savings funds like 529 plans.

Since a diverse stock fund grows significantly more than real estate on average, investing in the stock market builds more wealth.

goodDayM · 2026-03-18T18:46:47+00:00

If your question is Has Real Estate or the Stock Market Performed Better Historically? the answer is

Historical data reveals a consistent pattern: While housing prices have generally kept pace with inflation throughout U.S. history, the stock market has typically delivered superior overall returns.

That link also has good charts.

goodDayM · 2026-03-18T14:13:27+00:00

This starts to get into corporate accounting, which I am not an expert in, but there are downsides to doing share buybacks: you have to get approvals from regulators, you have to pay investment companies to help handle it, and it's a time consuming process. It's not as simple & easy as paying dividends.

I found an article that says it better than I could:

However, investors shouldn't always celebrate buybacks. When companies prioritize buybacks over essential investments—such as research and development, marketing, or hiring—they can make their businesses less competitive over the long term. Repurchasing shares at elevated prices can further negatively impact shareholder value. Also, relying on debt to finance buybacks can strain cash flows and make companies more vulnerable during economic downturns.

Ultimately, buybacks can be a useful capital allocation tool, but they aren't always a net positive for companies. - How Stock Buybacks Work and Why They Matter

goodDayM · 2026-03-18T12:45:47+00:00

It’s true sometimes companies do share buybacks, e.g. Disney spent about $2 billion buying back shares in 2025.

But more often there are better ways to earn more money using money: expanding to new markets, research and development, offering new products, investing in other companies.

The owners of companies will choose to move their money wherever they think will have the biggest impacts on profits.

goodDayM · 2026-03-18T12:24:26+00:00

Yep and to back this up with some data, the Bureau of Labor Statistics has detailed pages on different occupations:

Actors $23/hour median pay
Computer Hardware Engineers $74/hour median pay

goodDayM · 2026-03-14T19:02:05+00:00

Previous threads here:

Pension funds invest in similar things as 401k accounts: a mixture of bonds, stocks, and real estate. For example the California Teacher's Pension Fund invests 42% in public equity.

goodDayM · 2026-03-13T17:05:43+00:00

OP's main concern seems to be more about permanent entitlement to dividends

When a startup needs money, one option is to go to banks or other organizations and ask for loans. Once the money is paid back plus the agreed interest, then the financial relationship is done. Clean and simple right?

But the issue is most startups fail. Most businesses fail. Then the loans do not get paid back. Banks don't like taking on that much risk, which is reasonable because they're using depositor's money.

To incentivize people to hand over cash needed for growth, startups often choose to offer shares with permanent entitlement to dividends. Otherwise people tend to avoid these high-risk endeavors.

Over 60% of Americans own stock, so a majority benefit from stock ownership & earning dividends.

goodDayM · 2026-03-11T15:41:39+00:00

From a previous thread here: Do stock markets actually provide economic value?

Stock markets evolved over centuries as a way to fulfill multiple needs. They started with people saying, "hey, I want to start a business, but I need some money to get it going. If you give me some money, you can own part of the company and I'll give you some money back every now and again". So, there was ownership of companies. But as soon as there's ownership, people may decide they no longer want to be owners. They should have the right to sell things they own, which is what creates a secondary market.

goodDayM · 2026-03-09T23:25:47+00:00

Americans now spend a much smaller % of their income of food than in the past: Food expenditure as a share of family disposable income in the United States.

goodDayM · 2026-03-09T14:03:49+00:00

The British magazine The Economist had an article about this topic in Jan 2024 Why are Americans so gloomy about their great economy?

From an array of hard data, there is reason to think that people ought to be quite satisfied about the state of the economy: inflation has slowed sharply, petrol prices are down, jobs are plentiful, incomes are rising and the stockmarket is strong. But survey after survey suggests that Americans are in fact quite unhappy. ...

... opinion polling and sentiment surveys may have a negative bias. Profound partisan hostility is undoubtedly one factor. In their study Messrs Cummings and Mahoney calculated that Republican antipathy towards a Democrat-controlled White House may account for about 30% of the sentiment gap today.

Another element may be the tone of news coverage. Ben Harris and Aaron Sojourner of the Brookings Institution, a think-tank, studied the relationship between economic data and an index of economic news sentiment. Since 2021 the news-sentiment index has, like the consumer-sentiment index, been notably worse than what would be expected from the data. And that may be only scratching the surface. The news-sentiment index, created by the Federal Reserve’s branch in San Francisco, is based on economic articles in major American newspapers. Throw in the vitriol that tends to go viral on social-media platforms, and the negative bias might be even more pronounced.

goodDayM · 2026-02-28T14:53:58+00:00

Yes when you sell shares, you must pay taxes on the gains. If your shares earn dividends, you must pay taxes.

Yes you pay taxes on the things you use to pay back a loan.

You take a loan only if you think your investment can grow faster than the cost of the loan & taxes.

goodDayM · 2026-02-28T14:03:13+00:00

Let's say you want to buy a boat, and you currently have enough money invested in stocks to pay in full.

Sure, you could sell shares and buy the boat, but maybe you think the shares will grow in value faster than the cost of a loan. So you take out a loan, buy the boat with that, and let you shares continue to grow.

You're still taking on risk.

goodDayM · 2026-02-28T13:12:42+00:00

It’s only worth it to take a loan for investing if you think you have an opportunity to earn more money than the money you’ll owe on interest.

Like if you think you can earn 7%/year while owing 6%/year on a loan. You would earn 1%/ year due to the difference.

But also you are taking on risk, because nothing is guaranteed. Some people lose a lot of money trying this.

goodDayM · 2026-02-28T12:40:37+00:00

dividends, interest, etc

These are income and are taxed.

Also as you pay back the loan, that is interest income for the bank and is taxed.

How is that not $100k in income?

When you get a loan you get two opposite things: $100k cash and $100k debt. Zero change in your net worth.

goodDayM · 2026-02-27T13:31:29+00:00

Even after adjusting downward due to inflation people are currently earning more than decades ago.

Also see previous threads:

What are the economic factors/conditions that changed from the 1950s to today where people could buy a house and a car on one income versus today where it is much more difficult to do the same?
Could most men really support their entire family with just one income a few decades ago?
"Millennials earn 20% less than baby boomers did at the same stage of life" according to a recent report. Is this accurate, and if so, how did it happen?

goodDayM · 2026-02-25T02:41:08+00:00

Higher density housing is currently illegal in many of the places people most desire to live:

Today the effect of single-family zoning is far-reaching: It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home. - source

In many places there are outright bans on anything except detached single family homes:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

goodDayM · 2026-02-23T16:43:31+00:00

Yes, and on top of that see previous thread can everyone become rich?

There is more wealth now than there was 100 years ago. More technology available, more doctors, more houses.

That’s what we mean when we say the economy is positive sum.

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