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A realist’s guide to buying vs. renting

For Rent California real estate sign and house

Jay Spooner/iStockphoto

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By Rob Carrick

It's about time someone had some fun with the debate over owning a home versus renting. Okay, I've certainly had fun challenging stale, status-quo thinking about renting being a waste of money. Now, it's the turn of the satirical magazine The Onion to weigh in. Here's The Onion's Owning Vs. Renting comparison. It's funny, balanced and quite truthful.

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Now, let me quickly recap the case for renting. One, renting is rational if you're one of the growing number of people who cannot afford a house in some cities. Don't stretch to buy a house. Rent until you can buy comfortably (our calculator can help you figure that out). Two, aside from the insanity in Vancouver, let's get real about wealth building through home ownership. You can build wealth as a renter by investing the considerable savings you realize by not owning a house. Respect the renter.

Do you think renters get the respect they deserve? Have your say on the ROB Facebook page.

Rob's roundup of best money links

> Millennials are keen to buy houses, this CBC report says. In fact, they're buying younger than their parents did. My question: Why take on such a huge financial burden at a young age?

> The problem with cool technology is that it's too often an expensive budget breaker for many people. Here's a list of affordable gadgets that were introduced at the recent CES 2016, a showcase for tech.

> The new-and-cool factor sometimes lures people into making investing mistakes that cost serious money. To prevent that from happening with equity crowdfunding (you buy into a start-up company), read this primer from the Ontario Securities Commission.

> An increasing number of baby boomers across Canada are settling into adult lifestyle communities – not a retirement home, but no kids or teens as residents. Not my thing, but there you go.

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> Worried about stocks? Here's some smart, reassuring commentary from a couple of experts, including the ever incisive Professor Moshe Milevsky of York University's Schulich School of Business.

> With grocery prices soaring as a result of the weakness in our dollar, it's all the more important to be a smart shopper. Here are some thoughts on how grocery stores trick customers into spending more than they intend to.

Today's featured investment tool

As I mentioned above, a house is a heavy financial burden that will crowd out other spending priorities. How hard is it to manage the cost of a house? Don't bother trying the affordability calculators offered by banks and mortgage firms because they're way too simplistic. Instead, try my Real Life Ratio spreadsheet.


The question: "Is it wise to consider purchasing U.S. stocks right now, given the low state of the Canadian dollar and that an investor would experience a currency exchange loss if the Canadian dollar rises from where it is now if all other things remained equal?"

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My reply: If you own stocks for the long term, it's widely believed that currency gains and losses will net out to pretty much zero. So a lot depends on your time horizon. Near term, it's possible the Canadian dollar could go lower. If you're investing for the short term to medium term, you could see the Canadian dollar undermine your returns from U.S. stocks. Long term – 10 years or more – you may not need to worry. You can also buy currency hedged exchange-traded funds and mutual funds, which mute the effect of currency moves on stock market returns.

Do you have a question for me? Send it my way. Questions and answers are edited for length.

Featured video

Is it possible interest rates will stay low for the next 20 years? Actuary Fred Vettese tells me that it's almost a certainty.

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About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998. Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More


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