Wealth manager: Buying a home is 'usually a terrible investment'—here's why via CNBCMakeIt
A lot of people will tell you that buying a home is a good investment, but"that couldn't be further from the truth," says Peter Mallouk, a certified financial planner and president of wealth management firm Creative Planning.
Over time, your home might increase in value, Mallouk says, but it probably won't appreciate enough to offset all of the costs. Instead, if you took what you'd save from not buying a house and invested it in something that's likely to grow in value, such as stocks and bonds, chances are you'd end up with more money in the long term.
Ramit Sethi, self-made millionaire and author of "I Will Teach You to be Rich," has made the same argument. Think about it this way, Sethi suggests:"Generally we can assume that over the long term, if we invest in a low-cost diversified index fund, we get about 7%" in terms of annualized returns.
"For the biggest purchase of your life," he adds,"you should know all the math and how it plays out 20 years in the future."
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