Renting might not be such a bad investment

If you’ve ever made a prediction about how the future would shake out, and later had to face up to the fact that you were entirely wrong, don’t feel alone. There have been plenty of lofty ideas about the days ahead that have turned out to be dead wrong.

Are you still renting an apartment, rather than living in a house you own like you thought you’d be by now? This is one of the most common readjustments that Generation Y has made as we’ve aged. Rather than adopting the rent-to-own plan that our parents may have followed, our path has turned out to be different, both residentially and financially, than expected.

Different isn’t bad, thought it may have an adjustment period attached to it. There are many pluses to being a renter, rather than a homeowner, one that can have positive long term financial consequences. According to one study that looked at the benefits of renting vs. owning over time: “a $100 investment in housing in 1985 would be worth $293 today, while that same $100 placed in stocks would be worth $1,146, nearly four times as much.”

So, well it may feel like you are throwing your money away on rent every month, but if you save the money that you’d otherwise be putting towards a large house payment and invest it wisely, you could come away with large gains in the end.

One disadvantage of renting vs. buying is that if you plan to have children and want them to inherit a piece of family property when you die, that won’t be possible as a renter. However, you could always invest some of your additional savings in a vacation home to leave to your kids, something that might have more value to them if it is a place where you establish happy family memories. Such a property could have value to you as an income –generator as a rental, too.