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Comment by amoitnga | Hacker News Reader

Can somebody try to answer a real question for me, please?

I'm 30, single, a software engineer working remotely, making ~100k a year, saved around 70k so far. I'm not very interested in investing it in any kind of active business. So I see 2 options:

- buy stock ( some kind of index)

- put a downpayment on an apartment(house)

Both have pros and cons. I lean towards getting an apartment. Something around ~350-400k with low HOA and taxes should get me into something nice, having smaller mortgage payment than if I'd rent it. Say we're talking about San Diego or Austin. After crunching some numbers ( in a very primitive way ) I feel having to pay amount that is less than I would typically pay for rent and most of that payment going towards my saving is a very good situation to be in.

Can somebody run some sort of calculation with above variables and tell me something I don't know/think of?

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I had a longer answer, but I think this short answer suffices: Everything is a terrible investment at the moment. Everything is overpriced. Everyone is expecting a recession imminently. Therefore whatever you do you will lose money, and lots of it. So, don't take risks, but do whatever will make you happier.

For example if you don't like paying rent to a landlord every month and not being able to decorate the walls, maybe you'd be happier if you owned a house. (This may not apply to you, it's only an example)

> Everything is a terrible investment. Everything is overpriced.

You don’t know this, no one knows it, and to speak in absolutes like this is to imply that you can predict the market. If that was the case, you’d have all the money in the world. This reminds me of all the “experts” in 2008 who said dismal 2-4% returns were “the new normal”. Those “experts” were dismally wrong and is a great example that anyone who “knows” what the market will do in the future is someone not to be listened to.

Thank you for the answer.

> Everything is a terrible investment at the moment.

"The best time to plant a tree was 20 years ago. The second best time is now." comes to mind. But I agree with you, in this case right moment is very important.

> So, don't take risks, but do whatever will make you happier.

Does this mean it makes sense to wait for a few years, if so, how many? and what to look for?

> For example if you don't like paying rent to a landlord....

I'd like to take the most efficient steps that would yield best result over 20-30 years. I'm pretty flexible in terms of "wall colors"

Does it make sense to wait till marriage before getting yourself into home-owning situation?

> Everything is a terrible investment at the moment

I would agree, but: you can also invest in things that thrive in a downturn (e.g. gold is considered to be a safe asset, some would say Bitcoin as well), or simply invest in risk-free assets (e.g. govt bonds), or in savings accounts that pay you 1.5-2% annual interests.

No one would consider Bitcoin to be a safe asset

Safe investments in a downturn include REITs that invest in apartments.

> No one would consider Bitcoin to be a safe asset

Pretty wrong. I personally know several people that do, and most of them compare it to "digital" gold.

REITs can go down as much as stocks, or more, in a downturn.

People thought a recession was imminent several years ago too, and the market is up like 50% since then.

> with low HOA

Before you decide to go with a HOA, you might want to read these:

theHOAPrimer: http://www.thehoaprimer.org/index.htm

The Tyranny of Homeowners Associations: https://www.citylab.com/equity/2013/02/tyranny-homeowners-as...

And then make up your mind after considering what is there.

GP is talking about purchasing an apartment. Since those inherently are part of shared buildings with common areas and maintenance needs, getting one without an HOA (or condo association, same thing) to do those things is pretty much unheard of.

You just opened a pandora box! A proper answer here would be hundreds of pages long.

I'll try my best to give you a short one:

1) Most advice on money is never great.

2) Most advice on money can be applied in general, but many people have specific needs or desires (e.g. some people WANT to own a house for psychological reasons, irrespective of whether it is a good investment or not). More here [0].

3) Your simple options with that 70k are: invest in stocks (probably an index fund, invest and forget), invest in a REIT (the equivalent of real estate investing, without the hassle), or invest in a house.

Alternatively, invest in your own education (degree, or one-year sabbatical, or else).

4) If you still want to invest in a house, it will be your first time - you will be the least experienced investor in that market. Do it at your own risk. Timing the market is hard. Knowing how to strike a good deal is hard. Etc.

[0]: https://medium.com/fabrica/the-rent-versus-buy-dilemma-12-im...

> You just opened a pandora box!

I know, right! :) It's not an easy thing to answer, hence me struggling.

I think the best/simplest advice on money for me personally comes from 'rich dad, poor dad" and 'the richest man in babylon'

- understand the difference between things that bring money and things that take(spend) money - pay yourself 10% first.

Served me well so far.

> Alternatively, invest in your own education (degree, or one-year sabbatical, or else).

This is really good advice that I think I already put to use, 5 years ago when used my saved 10k to take time off of work and teach myself how to code, and went form unskilled worker to a web developer. I understand I'm not a real engineer, just a guy who "makes buttons', but I enjoy it and it pays handsomely.

> some people WANT to own a house for psychological reasons

This makes sense and, I guess, part of me feels that way. But I'm definitely not controlled by it. I've lived pretty frugally my entire life (10 years that I've been an adult) and at this point looking for an upgrade in a lifestyle. I don't want to be in my 30's living with roommates. So new place is going to be much better/more expensive. I understand that I'm gonna be losing money on it. So the question is, do you pay ~2k/month for rent, or you pay ~2.5k/month for a mortgage? I understand none of it will make me better financially, so if framing it as "which will lose less?" - I'm fine with it.

Haven't read the article yet, will do shortly.

I honestly see this as a relatively simple calculation.

You can calculate the rent you could have to pay over the course of a tenancy.

You can calculate the cost of your bought house/apartment over the same period (the estimated value of your property at the end of the period minus the rent payments and interest and any outstanding loan)

You can calculate the estimated return on investments.

It turns out for me that it makes sense to buy a house with a mortgage (it's pretty large, we're a family of 4, UK), pay the minimal amount off on our low interest mortgage (rather than over pay) and invest anything spare.

Given that in the UK (the places I've looked) rent has always been more than the mortgage payment on an equivalent property buying has always made sense.

> Given that in the UK (the places I've looked) rent has always been more than the mortgage payment on an equivalent property buying has always made sense.

What about fluctuations in house prices? I can imagine a small crash would easily make up for the difference between paying off a mortgage and renting, plus it gives you more options and freedom since it's far more costly to buy and sell than it is to rent and move.

I know little about the housing market but from what I briefly read about the UK and a few graphs it does look like we are at a rather large and long peak right now.

This also isn't merely about trying to save more money, but also what you can buy, inflated prices generally mean you are forced to buy something smaller, worse, in a less preferable area, and all for the same price.

There has never been a fluctuation in my lifetime that has pushed house prices lower than the cost to rent (that I've noticed anyway)[0]. The prices certainly do go up and down, but we're operating from the basis of an island with minimal available space to build more, and seemingly never enough houses available for people to buy who want to.

You defeinitely have more ability to move if you're renting, and I'm sure that's of concern to some people, but not all.

In terms of buying in a more or less prefereable area, rental prices (IME) tend to track the cost to buy so if you can't afford £n00/month mortgage in a certain area then you are likely going to see £(n00 + y)/month rents you also can't afford.

[0] edit Also, remember that when you finally finish paying off the house, it's yours, an asset. You can live in it or sell it. Rent has to go down quite a lot to 1. initially be lower than mortgage payments on an equivalent house and 2. to still end up costing less after you've factored in the sale price of your house at the end.

Best performing asset of that past decade, and 2019: https://medium.com/@100trillionUSD/modeling-bitcoins-value-w...

Compare your projection of each local economy over the next 20 years. This will help choose the city.

I don't think I'm skilled enough to do it properly, but I'll give it a shot

No one can see 20 years into the future. Pick somewhere that offers the lifestyle you will be happy with, but do take into account security of water, electricity, gas, income and the governments’ financial and infrastructure debt.

> and most of that payment going towards my saving

For the first several years at least, most of the mortgage payment goes to interest and taxes, not principal, and is "wasted" in much the same way rent is.

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