Rule of thumb · FinanceNº 84 / 96

"Rent is throwing money away" ignores what the down payment could be doing

A renter who actually invests the cash a buyer would tie up in a down payment isn’t losing that money — they’re compounding it somewhere else instead of in home equity.

Why it works

Comparing monthly rent to a mortgage payment alone misses the opportunity cost on both sides — the honest comparison nets out total cash spent against equity built (for buying) or investment growth (for renting), and the assumed investment return often decides which one wins.

Do it exactly

Estimate with the rule, then check it against the calculator that models it properly.

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