Rent vs buy
Buy with a home loan, or rent and invest what you’d have put into the house? Same monthly spending, compared on wealth.
Renting leaves you $637K richer
After 20 years: $1.04M in home equity if you buy, against $1.68M invested if you rent. Both spend the same each month; the renter invests the difference.
Shown in future amounts. Turn on Today’s money to adjust for 6% inflation.
Wealth after the period
Buying takes $108,000 up front, then $2,777 a month in EMI plus upkeep. Renting starts at $1,200 a month.
Renting stays ahead the whole time.
Wealth over time
Show the numbers as a table
| Year | Buy | Rent |
|---|---|---|
| 0 | $72,000 | $108,000 |
| 1 | $97,969 | $140,888 |
| 2 | $125,480 | $176,415 |
| 3 | $154,634 | $214,811 |
| 4 | $185,534 | $256,329 |
| 5 | $218,295 | $301,245 |
| 6 | $253,037 | $349,862 |
| 7 | $289,890 | $402,510 |
| 8 | $328,992 | $459,551 |
| 9 | $370,491 | $521,381 |
| 10 | $414,546 | $588,432 |
| 11 | $461,329 | $661,178 |
| 12 | $511,021 | $740,139 |
| 13 | $563,818 | $825,884 |
| 14 | $619,930 | $919,034 |
| 15 | $679,584 | $1,020,272 |
| 16 | $743,020 | $1,130,345 |
| 17 | $810,500 | $1,250,073 |
| 18 | $882,302 | $1,380,353 |
| 19 | $958,725 | $1,522,170 |
| 20 | $1,040,093 | $1,676,602 |
How this is calculated
Both households spend the same. The buyer pays the down payment and buying costs, then the EMI and upkeep each month. The renter invests that same upfront cash and, each month, whatever the buyer pays beyond the rent (or draws on the investments when rent is higher).
rent = invested upfront cash + monthly differences, at 10%
At year 0 the buyer is already behind by the buying costs and the selling costs they’d pay to cash out. Tax benefits on home loans, rental income and capital-gains tax aren’t modelled. Returns and price growth are assumed steady.