Ramit Sethi has been renting for 20 years. Not because he can’t afford to buy. Not because he’s waiting for the right moment. Because renting has been the smarter financial decision for him, and he’s not apologizing for it.
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In a recent video, the personal finance expert challenged one of America’s most sacred beliefs: that buying a house is always the best investment you can make. His take is blunt and backed by math that most people never bother to run.
America’s No. 1 Religion
“In America, our number one religion is buying a house,” Sethi said. “Most people in America believe that buying a house is the best investment they can make. They are often dead wrong.”
That statement hits hard because it goes against everything we’ve been taught. Buy a house. Build equity. Stop throwing money away on rent. It’s the standard script for financial success.
But Sethi argued that, right now especially, renting and investing the difference can be the better financial move. The key phrase there is “investing the difference.” This isn’t about renting so you can spend more on other stuff. It’s about making a calculated financial decision.
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The Math Changes Everything
Sethi broke down why the rent-versus-buy calculation matters more than most people realize. If you can rent a place for $2,000 a month, buying the equivalent property might actually cost you $3,000, $3,500 or even $4,200 per month once you factor in everything that comes with ownership.
What does “everything” include? Transaction costs when you buy and sell. Opportunity costs of tying up your down payment. Maintenance, repairs, property taxes, insurance and HOA fees if you have them.
“You think I want to spend every weekend mowing my lawn, raking my leaves, maintaining my house and then driving to Home Depot for fun? No,” Sethi said.
That time cost matters too. Weekends spent fixing things around the house are weekends not spent doing something else. For Sethi, that trade-off isn’t worth it.
Invest the Difference or Lose the Advantage
Here’s where most people who rent get it wrong. Sethi explained that the financial advantage only works if you actually invest the money you’re saving by renting instead of buying.
“If you just rent and then go buy Arby’s for the rest of your life, you’re screwed,” he said. “Instead, you need to carefully run a buy versus rent calculation and understand what is the right financial decision for you.”
Story continuesLet’s say renting costs you $2,000 per month and buying would realistically cost $3,500 when you account for all the hidden expenses. That’s a $1,500 monthly difference. If you invest that $1,500 consistently in a diversified portfolio earning average market returns, you’re building wealth without the stress and risk of homeownership.
But if you rent for $2,000 and then blow the extra $1,500 on lifestyle upgrades, you get none of the benefits. You’re just spending more and building nothing.
Why This Matters Right Now
Sethi was very clear on one thing: Timing matters. “Right now, especially, it is often a better decision to rent and then to invest the difference,” he said.
Home prices in many markets are at historic highs. Mortgage rates, while lower than recent peaks, are still significantly higher than they were a few years ago. The combination means monthly payments have jumped dramatically for buyers.
Meanwhile, rental prices in some markets have stabilized or even dropped slightly as new apartment buildings come online. That creates a wider gap between the true cost of renting and the true cost of owning.
Running Your Own Calculation
Sethi doesn’t claim renting is always better for everyone. He’s saying you need to run the numbers for your specific situation instead of blindly following cultural expectations.
A proper buy-versus-rent calculation factors in your local market, how long you plan to stay, your down payment amount, expected maintenance costs, property tax rates and what you could earn by investing money instead of tying it up in a house.
For Sethi, the math has pointed toward renting for two decades. That decision allowed him to build wealth through investments while maintaining flexibility and avoiding the time sink of home maintenance.
The takeaway isn’t that buying is bad. It’s that buying isn’t automatically good just because everyone says it is.
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This article originally appeared on GOBankingRates.com: Ramit Sethi: Renting Beats Buying, Actually
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