Millennials, take note: If you’re looking to build up your nest egg, home ownership isn’t really all it’s cracked up to be. In fact, a new study published on Thursday shows that renting may very well be the best way to go about it.
The numbers, crunched by Florida Atlantic University, Florida International University and the University of Wyoming, determined that the property appreciation most homeowners expect doesn’t necessarily stack up in terms of wealth building.
Hence, FAU economist and co-author of the study Ken Johnson says that while the American Dream is alive and well, it needs a revision.
“When considering buying and building wealth through equity appreciation versus renting and reinvesting in a portfolio of stocks and bonds, property appreciation does not change the results,” he said. “On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds.”
Shawn Langlois at Marketwatch