George is a worried baby boomer, wondering if today’s generation is drowning in the noise of today’s financial landscape. How does one find a balance between information and overload?
Heather is stunned by the notion that renting could make more financial sense than buying. Where she’s from, the numbers seem to always swing in favor of owning. What’s she missing?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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George asks (at 01:38 minutes): As leaders in the financial media space, what do you say to young financial enthusiasts in their twenties, thirties, or forties who fear that if they miss a single podcast or TikTok video, they’ll remain hopelessly behind?
So many folks here are interested in financial independence, retire early (FIRE) – whether it’s Fat FIRE, Lean FIRE, Coast FIRE, Barista FIRE, or even Double-II FIRE. As a member of the Baby Boomer cohort, I wanted to chime in.
I pulled the ripcord a year ago, retiring with the missus at the age of 60. Our philosophy was simple: Earn a good living, strive for excellence in our jobs, invest 25 percent of our gross income, and live an abundant life centered around family.
When I grew up, we didn’t have much insider access to personal finance and investing. We had Money magazine and a finance book from the local library. There were no experts to listen to.
Today, I’m afraid people will chase the latest fad and go all in with hacking, leveraging, and arbitraging while failing to understand that their perspectives will likely change: When children enter the family, a spouse leaves, a job goes sideways or a serious illness strikes unexpectedly.
What’s the role of financial media in informing but not overwhelming its consumers? Should they read all the sacred texts: Simple Path to Wealth, Millionaire Next Door, Mr. Money Mustache’s famous blog post, or Stacked?
Should they practice frugality, take on five side hustles, or drink the real estate Kool-Aid? Or should they Die With Zero, living their best van life and “retiring” to live in Portugal or Bali at age 26 with their bucket of FU money?
Heather asks (at 31:40 minutes): Given how different property laws and tax structures are around the world, do the usual formulas for evaluating rental property in the U.S. apply to overseas investing?
I’m based in the U.K., and I’ve been reflecting on something Paula said recently — that renting isn’t necessarily “throwing money away.” I agree in principle, but I think the dynamics are different here, and in many cases, buying makes a lot more sense.
For one, the opportunity cost of investing in property versus the stock market isn’t as significant here. Only 20 percent of Britons invest in the stock market. A third of first-time buyers get their deposit from parents, and for those who don’t, the money often just sits in a savings account.
Homeownership costs also tend to be lower than in the U.S. For example, I recently insured a four-bedroom home for £400 a year. We don’t have property taxes like in the States—our “council tax” is paid by the renter, not the owner.
And maintenance has been surprisingly minimal. I owned a home for 18 years, and including the mortgage, I averaged just £665 a month in total housing costs. Over that same period, the average maintenance expenses—including all repairs—came out to only £135 a month.
That home increased in value from £250,000 to £580,000. I put down £16,500, lived there for five years, and rented it out after that. Between rental income and appreciation, I made a significant return. The price-to-rent ratio was 21 both when I bought and when I sold.
So from my perspective, it seems like a slam-dunk investment. But after listening to your property episodes, I’m realizing how different the numbers can look in the U.S., especially with higher property taxes, insurance, and maintenance costs.
I’d love to hear your thoughts — do you think real estate investing principles still translate across borders, or do they need to be recalibrated for local conditions like those in the U.K.?
Resources Mentioned:
Die with Zero | Book
The Simple Path To Wealth | Book
The Millionaire Next Door | Book
Stacked: Your Super-Serious Guide to Modern Money Management | Book
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