All the finance blog posts summarised:

[Bandit]

Ever feel like all the blog posts you read is basically the same message posted over and over again? Here I summarised them for you:

 

- Costs matter more than you think, watch what you buy to achieve FIRE


- Spending on luxuries (cars, boats, DSTv) is money lost that you could’ve invested. No FIRE for you


- Don’t buy a house… it’ll kill your FIRE with extra costs
 and it's not an investment but an emotional buy.

- Don’t buy to let. Buying listed property is the only sure FIRE way to achieve FIRE
.

- Unit trusts/active management 
is bad.

- ETFs/passive management is good.

 

Did I miss something? If you don't know what FIRE is: Financial Independence, Retire Early.

[padjakkels]

I disagree on the statement 'don't buy a house'. Why should you pay rent to someone else where you could have paid your own property, which increases in value every year? You might not reap the growth in it, but your children might one day.

[Bandit]

I disagree on the statement 'don't buy a house'. Why should you pay rent to someone else where you could have paid your own property, which increases in value every year? You might not reap the growth in it, but your children might one day.

 

It's a generalised statement and not true for all properties (location, size etc. are all factors). 

 

Consider JHB North for example: 

 

Rent - You pay R8500 rent, water and lights bring it to R9000 pm.

 

Buying - R1,100,000. Assuming 10% deposit and an interest rate at 10.5%, you'll dock up roughly R150,000 before you're first instalment (just to get started). Your bond pm is roughly R10,000, levies R2000, then comes insurance costs, utility bills, taxes, maintenance costs.

 

You'll be paying R5-6000 pm more for the same place.

 

The benefit of buying? Well it is an asset that appreciates, you have the security of not being homeless and you are "forced" to "invest" by paying off the house. You are paying a lot more for it over 20 years (it'll cost you roughly R2,500,000 in the end) but if you keep it long enough you'll make a profit provided the area doesn't go down the drain (Windsor in Randburg, Hillbrow was a great place in 1990...)

 

The benefits of renting? You are mobile (can move very easily), your money isn't "stuck" in an asset, little to no worry should the place burn down and extra to invest every month.

 

No - and this is important - if you are renting but not saving/investing the difference should you have bought it then you should buy. If you are the type of person struggling to manage your finances, prone to impulse buying and maybe financially clueless or ill-disciplined you should buy.

 

Again, it is a much broader topic. Above is a very simplified example of why it is not a good idea and it is not true for all. Your age and risk appetite should also be factored in.

 

Buy to let though - well when you look at the ROI from studies it would seem you are better off collecting interest in a 32-day notice account (again, if you are renting out a place in Cape Town CBD you're probably making a killing).

 

Here is a calculator: http://www.rollingalpha.com/2016/09/27/rent-or-buy-the-calculator/

[MrDividend]

Most South Africans should buy a house - purely because they won't invest any money saved. Those that would, shouldn't.

 

On FIRE, stopped working at 39 years 11 months. Been retired for three years now, woohoo

[Bandit]

Lucky bastid! But you did it before the blogs thought it was cool