Renting vs. Owning a home which is better? Recently I seen some tweets and an article stating that renting was way better and less of a hassle. I for one strongly disagree for several reasons. Number one being money. Some say that a house has to many expenses and to hard to maintain, while renting you can just call your landlord to fix what ever breaks and every thing is cheaper. While yes you are responsible for the upkeep of your home I believe that when you are renting you are throwing your money away. Ok that may be harsh, you are at the least giving your money away instead of keeping it for yourself.

Let’s look at it this way. For ease of math let’s say you are paying $1,000 a month renting your home and you live there for 30 years. You just gave some one $360,000. After the 30 years you can continue to rent, paying that $1,000 a month, but in reality rents do increase so you will most likely be paying a lot more. Yes you can move and find a lower rent but over time it will go up.

Now let’s say you purchase a home and again for the ease of math you are paying a mortgage of $1,0000. At the end of the 30 years you have paid off this house. You can continue to live here and yes you will have to continue paying property tax but eh it’s no $1000 a month. Most important thing you do have is property which is more than likely worth quite a bit more than your buying price instead of giving someone $360,000 you more than likely have that much in equity now. You can borrow against it or sell it and use it towards a better home or retirement.

Want to know something else. While that rent did increase overtime if you were smart with your loan, your house payment didn’t increase. Some may say what about property taxes, I don’t want to pay that. What do you think you are paying when you pay rent? You are paying someone else’s property tax. When someone rents you a house or apt they figure in their mortgage, taxes, insurance, maintenance and finally a profit. Yes you are paying everything you would have if you owned your home plus giving them a little extra.

When I say home it can be a house or a condo, either way you are investing in your living space and your future. This is just one aspect to me that that says home ownership is much better than renting, and a simplistic view I know. No it will not always be easy, you have to do your research and be smart when purchasing your home. Bottom line though is that when owning your home, with each and every mortgage payment you make you are increasing the equity with in your home and thus improving your net worth rather than improving the net worth of someone else. Even in the recent downward slump in housing prices my house is still worth twice as much as what I original paid for it.

Whats your take? would you rather rent than own?

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Investing in the stock market can be a very good source for one of our multiple streams of income and financial stability. I’m not here to advocate day trading; some do well, but it takes time and effort (and risk) and I’m looking for a more passive stream of revenue. What I do recommend is a buy and hold method of investing focusing on dividend paying stocks. Now there are of course always risks when dealing with the stock market, so please do your research before investing. Yes, you will have to do a little work (work now so you don’t have to later, remember) When looking for your first few stocks you will have to do some research to be sure they are a sound company and have a history of increasing their dividend yield. Afterwards you will want to be sure you continue to add (buy additional shares) on a monthly basis and just like compound interest you will start to see your money grow with little work on your part.

Of course with any passive income stream you want to have a handle on the costs, as that will eat away at the money you make. So you need to consider how you will be investing in stocks as there are fees with any method you end up choosing. The aim is to keep them at a minimum while still getting the level of service you require.

DRiPs

DRiP’s are one way to start out slowly investing your money, especially if you don’t have a lot to start with. It stands for Dividend Reinvestment Program and it is a way for you to buy stock with a company directly. The main point of it is you can start the program typically with a little bit of money (sometimes as low as $10) for nominal to no fees. Then when its time for the company to pay its dividends they are automatically reinvested for you at no charge. The other beauty of the program (and play on the name) is your ability to ‘drip’ in additional funds by setting up an automatic investment, where they will take a set amount out of your bank each month and buy additional stock. This too can be a very low amount and allows you to put aside some money each month towards your future. Get a bonus or tax return and want to invest a little more?  Sure, you can buy additional shares anytime with most programs. Most of the time these programs are direct with the company you are investing in, but lately to make it easier on them there are now third party agents. These agents or brokerages can come in handy as they allow you to have DRiPs with multiple companies under one account, but it could also increase your fees.

Buy and Hold.com

BuyandHold.com is an online brokerage I have used in the past when I was more heavily investing. The beauty of Buy and Hold is they take the concept of DRiPs and apply it to the entire stock market. Meaning it doesn’t matter if the company itself has a DRiP program or not, they still will reinvest your dividends and capital payments from non dividend paying stocks. They also do not have minimums like most brokerages and allow purchases of fractional stocks (so you are buying by dollar amount not quantity of shares) which makes it a little easier. Like a DRiP you can also set up for automatic monthly investments and spread the dollar amount across a number of stocks you wish to purchase. You are also welcome to buy additional shares at any time.

What’s the catch, you say? Well, there is a small one. To keep costs down (a purchase or sell is only $2.99 per transaction) you place your order and the trade is made at the next ‘window’ not real time. So you may not get that great price it’s at at that exact time. They do have 3 windows a day and for the mentality of ‘buy and hold’ and ‘dollar cost averaging’ then this is not a deal breaker. They do offer real time trades if you wish for $15 each (I reserve this for a sell if needed). All this for $6.95 a month (which includes 2 window trades) which is  great for keeping your costs down. I mean with most online brokerages you would be paying about $20 for those 2 trades, this way you will see returns on your money much faster. If you plan on doing more than 5 trades a month they also offer a $15 a month unlimited window trade option.

Just a note, there is no affiliate plan for buyandhold.com (I don’t even hold stock in them). I don’t get paid if you sign up. I just really liked the service 🙂

Conclusions

So it’s just like niche marketing:  you want to research your companies for long term growth and dividend payments (keyword research). Purchase your stocks in a low fee account (setting up your site). Continue to drip in money automatically and reinvest your dividends (monetize your site). Be sure you diversify your stocks so you can make money in most climates (same with your niches). Once it’s all set up, you let it run on automatic while checking on it from time to time and modifying as needed.

This is especially useful for those of you younger ones out there. Time is a powerful friend in the stock market and the younger you start the better off you will be later in life and the earlier you can retire (ahh if only I could go back knowing what I do now). Just putting $20-$50 aside each month (or week) can turn in to tens of thousands for you when you are ready to start a family or the kids college fund (unless you put in a new kitchen, another story). But you are never too old to start, so stop thinking about it (or if you haven’t maybe you should) and put a plan into action.

What about you? Are you ready to start an investment program? Let me know your thoughts!