"Renting is like throwing money away. You need to buy"

"Renting is like throwing money away. You need to buy"

Everyone has received the wise uncle tip at family gatherings. He probably means well. Is he right though?

My post about property vs stocks (https://lnkd.in/p/e9tmCvbZ) triggered many follow up conversations, so let's break down the follow-up question everyone asked: Rent vs Buy?

Say your rent is €1,000 a month. Your uncle would say "That's €12,000 a year, gone! A mortgage payment comes back to you."

Now look inside a mortgage payment. Say it's €1,000 too. Around €600 of it is interest (assuming 3%) - that goes to the bank and never comes back, exactly like rent.

Add property tax, insurance, community fees and repairs; easily another €250, often more. So around €850 of the 'smart' option disappears every month as well.

Only the rest (the part that pays down the loan) ends up becoming yours.

Cinco Días, El País's business paper, recently did this maths for a full purchase in Spain. A home listed at €300,000 ends up costing about €511,000 over 30 years. The extra €211,000 is everything nobody mentions at the viewing: roughly €120,000 of interest, over €30,000 in taxes and fees just to get the keys, and years of property tax, insurance and repairs. The price on the listing is not the price.

One more thing your uncle forgets (at least the Spanish one): To buy a €300,000 flat you need about €90,000 in cash on the day - a €60,000 deposit plus around €30,000 in transfer tax, notary and legal fees. That's €90,000 that could be invested and growing somewhere else. Giving that up is a real cost, even if nobody writes it down.

So who's right? It depends. Job stability, how long you'll stay, how much you value flexibility. So there is no universal right or wrong, only "what do the numbers actually mean 𝘍𝘖𝘙 𝘔𝘌?"

That's what Senso does. Your rent, your savings, prices in your area - it shows you what each choice would actually mean for you. It doesn't tell you what to do. It makes the picture clear, so you can decide, or talk it through with your adviser.

Your uncle got one thing right: It's a big decision. Big enough to deserve real numbers tailored for you, instead of relying on old slogans.