I’m 36 With $3.6 Million and I Still Rent a Home. Am I Making a Bad Decision?

When I bought my home about 15 years ago, I remember feeling jittery about making that financial commitment. But I also felt privileged to be in a place where I could afford a down payment and purchase a place of my own.

Key Points from 24/7 Wall St.

• Owning a home could tie up your financial resources and get in the way of certain goals.
• There’s also a lot of work involved.
• It’s okay to rent on a long-term basis, especially if you put the money you’re saving on housing to good use.

A number of my friends, to this day, still can’t swing a home purchase. Given the way housing prices and mortgage rates have soared since the pandemic, that’s understandable.

But for some people, renting versus owning doesn’t boil down to a lack of money so much as a personal choice. Such has been the case for the author of this Reddit post, who’s 36 years old with a young family and a $3.6 million net worth. They’re currently paying about $7,000 a month to rent a home and their spouse is pushing them to buy.

The Redditor is clearly worried about tying up a large chunk of their net worth in a home, and also, losing out on market returns over the next couple of decades by putting money into a home instead of keeping more invested. And to complicate matters a bit, the original poster isn’t working now, but they plan to return to a job at some point.

Based on what I’ve read, it’s clear to me that this Redditor can afford to buy a home. But whether they should is a different story.

Homeownership isn’t for everyone

I’m a firm believer that you can grow your net worth and be financially stable without owning a home. I’m also a firm believer that you should only own a home if that’s something you desire to do.

It’s similar to my take on having kids. If you want kids, have them. If you don’t, procreating to quiet your nagging grandmother is a bad idea. You’ll be making a lifelong commitment to caring for other living beings, and you’ll have to support them financially to boot.

Owning a home isn’t quite the same commitment in that you can eventually get out of it if it’s not right for you. But I think both situations are ones where caving to societal pressure could seriously backfire.

Not only is owning a home a big expense, but it’s also a lot of work. Even if you’re wealthy enough to outsource some of the upkeep, you still have to deal with it. Some people just don’t have the patience for that, and it’s perfectly okay if you’re one of them.

Also, as the Redditor alluded to, buying a home means tying up some of your cash in a fairly illiquid asset and losing out on market returns. And in some cases, it could mean pumping a lot of your money into a home, such as if you live in an area with a very high cost of living like the original poster does. So if that doesn’t appeal to you, why force it?

Use renting to your advantage

It’s often the case that renting a home is cheaper than owning one when you account for the numerous costs that come with the latter — property taxes, insurance, maintenance, and repairs every time something goes wrong. So what I’d suggest is that if you aren’t keen on homeownership, keep renting. But also, take the money you aren’t spending on those homeownership costs and save or invest it.

One nice thing about owning a home is that its value could appreciate quite nicely over time. But so could a stock portfolio.

So if renting where you live costs $2,000 less a month, put that $2,000 to good use. Throw it into an S&P 500 ETF, or buy some REITs to get into the real estate game without having to buy actual property.

But don’t let yourself get pressured into buying a home if you don’t want to do that — even if you have a pretty solid net worth and some cash to play with. It’s just too big a commitment to take on for something you’re not psyched about.