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SaferWealth Calculator™
What's Safer? Owning or Renting?
We built this for priced-out Canadian home-buyers who are tired of being told that renting is ‘throwing money away’.
SaferWealth will show you how you can grow wealth and protect your family, even if you never buy a million-dollar home.
Change these inputs to get started!
OWN TO INVEST
Step 1
(mortgage payments and other
ownership costs)
Home Purchase Price
Mortgage Rate % (APR)
(assuming a fixed % interest rate for 25 years and a term range of 1-7 years, the average being 5-year term)
Down Payment
(% of home price)
(Error Message)
Closing Costs
(% of home price)
Estimated Yearly Expenses
(% of home price)
Down Payment
$200,000
Closing Costs
$30,000
$833
Monthly Expense Investment
(Yearly Expenses/12 months)
Mortgage Payment
$4,677
(based on a 25 year amort.)
Monthly Expenses
$833
Add: Mortgage Payment
$4,677
Monthly Cash Outflow of Ownership
$5,510
RENT TO INVEST
Step 2
(swapping ownership costs for stock investment with
investment insurance)
Your Stock Market
Return %
Your Monthly Rent
(increasing at 2% annually)
Down Payment
$200,000
Add: Closing Costs
$30,000
Total Market Investment
$230,000
Monthly Expense Investment
$833
(Invest the monthly renting expenses instead)
Monthly Cash Outflow of Renting*
*assume outflow of owning = outflow of renting i.e. monthly budget is the same
$5,510
Cash Outflow of Renting
$5,510
Less: Monthly Rent
$2,000
$3,510
Less: Monthly Market Investment
$833
Investment Insurance Premiums Per Month
$2,677
Here's the Results!
Wealth Accumulated...
(based on a 25 year amortization and policy year)
Home Appreciation | Owning | Renting | Winner | Advantage |
|---|---|---|---|---|
1.0% | $1,282,432 | $4,908,774 | Renting wins | +$3,626,342 |
2.0% | $1,640,606 | $4,908,774 | Renting wins | +$3,268,168 |
3.0% | $2,093,778 | $4,908,774 | Renting wins | +$2,814,996 |
4.0% | $2,665,836 | $4,908,774 | Renting wins | +$2,242,937 |
5.0% | $3,386,355 | $4,908,774 | Renting wins | +$1,522,419 |
6.0% | $4,291,871 | $4,908,774 | Renting wins | +$616,903 |
Break-even (6.57%) | $4,908,774 | $4,908,774 | TIE | +$0 |
7.0% | $5,427,433 | $4,908,774 | Owning wins | $-518,659 |
So for the next 25 years, your home will need to grow at
6.57% per year
so you don't lose any money.
The 10-year Compound Annual Growth Rate (CAGR) for Toronto residential real estate is approximately 5%
Is that really an "investment"?
Real estate should have better growth rates!
SHOW ME REAL ESTATE NUMBERS!
Year | Mortgage Payments (Cumulative) | Interest Paid (Cumulative) | Equity (with Appreciation) | Effective CAGR |
|---|---|---|---|---|
1 | $56,121 | $39,625 | $246,495 | -3.76% |
2 | $112,241 | $78,407 | $294,734 | -2.84% |
3 | $168,362 | $116,301 | $344,788 | -2.18% |
4 | $224,483 | $153,263 | $396,728 | -1.68% |
5 | $280,603 | $189,245 | $450,633 | -1.28% |
6 | $336,724 | $224,196 | $506,580 | -0.96% |
7 | $392,845 | $258,064 | $564,654 | -0.69% |
8 | $448,965 | $290,794 | $624,941 | -0.47% |
9 | $505,086 | $322,327 | $687,532 | -0.28% |
10 | $561,206 | $352,602 | $752,521 | -0.11% |
11 | $617,327 | $381,555 | $820,006 | 0.03% |
12 | $673,448 | $409,118 | $890,091 | 0.16% |
13 | $729,568 | $435,220 | $962,882 | 0.27% |
14 | $785,689 | $459,786 | $1,038,493 | 0.37% |
15 | $841,810 | $482,737 | $1,117,040 | 0.47% |
16 | $897,930 | $503,992 | $1,198,645 | 0.55% |
17 | $954,051 | $523,462 | $1,283,436 | 0.63% |
18 | $1,010,172 | $541,058 | $1,371,547 | 0.70% |
19 | $1,066,292 | $556,683 | $1,463,115 | 0.76% |
20 | $1,122,413 | $570,236 | $1,558,289 | 0.82% |
21 | $1,178,534 | $581,611 | $1,657,218 | 0.88% |
22 | $1,234,654 | $590,696 | $1,760,061 | 0.93% |
23 | $1,290,775 | $597,375 | $1,866,986 | 0.98% |
24 | $1,346,895 | $601,525 | $1,978,164 | 1.03% |
25 | $1,403,016 | $603,016 | $2,093,778 | 1.07% |
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