Reply to Question for renters..Aren't you tired of paying someone's mortgage?

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[quote=Anonymous][quote=Anonymous]Economically the comparison is the rent vs. the interest portion of the mortgage. Whether one pays for borrowed money or a borrowed house doesn't make a difference.

Now whether one wants to build equity through a home purchase or by acquiring financial assets is a matter of choice, and will depend one one's personal circumstances and preferences. [/quote]

.... or cultural background. I'm German and in Germany everybody rents; my family always built (when they could) wealth by acquiring financial assets, notably corporate stock. My wife is Spanish, in Spain everybody buys (as in the US), and in her family they seek to build wealth by acquiring real estate. My family considers real estate a speculative investment, hers stock or bonds.

Of course both are wrong. First, every asset carries risk, real estate and stock are typically both among the riskier assets. Second, what ultimately matters is the mix of the portfolio - a one-sided portfolio is always risky. Third, the "cultural" differences ultimately relate to tax systems, or at least this is my theory. In the US and Spain one mortgage interest payments are tax deductible, which creates a strong incentive to buy - so eveyrboyd buys and it becomes a "cultural" habit. In Germany one can deduct mortgage interest payments only for a house in which one does not live oneself, hence the tax incentive is to buy and rent out.

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