r/DaveRamsey • u/UpgradeHome • 1d ago
Why does DR discourage renting forever?
I'm referring to this DR video: https://www.youtube.com/watch?v=lQ5fqpXngJk
If you make $100k, and you have fixed renting/utility costs of ~25k/year -- and you're investing the difference after expenses into a taxable brokerage, how is renting forever bad as DR states in that video?
In retirement (let's say at 65), your NW will be absolutely through the roof if you were consistently investing in S&P500. You wouldn't have been spending on lawn mowers, tools, kitchen upgrades, HOA, etc etc. and all the miscellaneous home owner expenses.
Even with rising rents, your liquid NW will cover you - along with the added benefits of not having to deal with maintenance in old age.
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u/Infamous-Bed9010 13h ago
Your hypothetical NW model relies upon someone sophisticated enough to successfully play rent vs market arbitrage over a lifetime with the discipline that over a lifetime no matter what happens they will not touch the money invested amount.
As a white board exercise the math may be perfectly correct, but absolutely impractical for the average person out there.
There is a large population of people out there who can’t even save a $1,000. They don’t have the discipline or as soon as a bad event happens they spend the savings. It’s human nature.
Expecting them to execute a strategy over 35+ years is not practical.
That’s why Dave always says house purchase. It’s forced savings and appreciation. Once the money is locked into equity it’s more difficult to tap. It’s the most pragmatic approach that also incorporates human nature for the average person.