Ep 68 | You Don’t Have to Buy a Home to Build Wealth
In this episode, Priya Malani makes the case that buying a home is probably not the smartest financial move for high earners in their 30s. The math is less obvious than the cultural script suggests — and most people never bother to run it.
Takeaways:
The mortgage calculator leaves out the costs that actually catch people off guard.
Renting is not throwing money away. It might be the smarter capital allocation.
Wealthy people own real estate, but their primary home is not the cornerstone of their wealth.
The right question is not "can I buy?" It is "have I actually thought about this, or am I just following a script I inherited?"
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Stash Wealth is a Registered Investment Advisor. Content presented is for informational and educational purposes only and is not intended to make an offer or solicitation for any specific securities product, service, or strategy. Consult with a qualified investment adviser (that's us) before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results. There…we said it.
Transcription
The F Word – Ep. 68: You Don't Have to Buy a Home to Build Wealth
If you're a high earner with real income to invest, you have options that most people don't, which means you're not in the same position as somebody who needs their home to be their retirement plan. So the question isn't whether wealthy people own real estate. They do. The question is whether they're counting on their house that they live in to make them wealthy. And the answer, almost universally, is no.
Who the fuck am I to tell you what to do with your money? My name is Priya Malani, currently managing millions of hard working dollars. Enough for play, let's talk.
Welcome to the F Word, smart money. Hey guys, welcome to the F Word.
If you're a high earner in your 30s, I'm going to make the case today that buying a home is probably not the smartest financial move that you can make right now. I know that's not what you've been told, it's not even what your parents think, and it might not even be what your financial advisor thinks.
But stay with me, because the math is a lot less obvious than the cultural narrative has led us to believe. We've all grown up with the same script. Buy a home as soon as you can. It's the responsible choice. It's how you build wealth. Renting is just throwing money away.
That narrative has been repeated so many times it feels like law. It's not. It's advice that made a lot of sense for a different generation, in a different rate environment, with different investment options on the table. Applying it blindly to your situation, your income, your goals, is exactly the kind of unexamined decision that I want to help you avoid.
Today we're talking about what buying a home actually costs, why wealthy people think about their primary residence completely differently from the rest of us, and what question you should actually be asking before you even pull up Zillow on your computer. At the very least, you'll go in prepared. So let's get into it.
Earlier this week, my sister took a bath, which sounds like the most unremarkable sentence in the world until her husband walked into the bathroom a few minutes later to tell her the ceiling was leaking. Not dripping, leaking — water was coming through the ceiling of the room below the bathroom, which happens to be their living room. Did I mention her daughter's 4th birthday party was scheduled for a few days later?
Anyway, the tub wasn't overfilled. It wasn't the kids splashing water everywhere. There was no obvious thing that she did wrong. The plumbing just failed. Now, for you OG listeners to the F Word, you'll know that this is the second major plumbing issue that they've had since moving in less than a year ago.
I think that's what makes this particularly painful. The first one was a sewage line that backed up through the toilet onto the bathroom floor — the entire basement, in fact — which if you haven't had that experience, is exactly as awful as it sounds. So in under 12 months of owning this home, they've dealt with two significant plumbing disasters. Two rounds of contractors, two rounds of repair bills, two rounds of the kind of stress that comes with something going wrong in your own home and realizing that it's entirely your problem to fix.
Keep in mind that they thought, rightly so, that they could avoid the standard warnings by buying the contractor's home, the one he planned to move his family into. This was a home built by the contractor for himself, and there were still shoddy decisions made.
So they're one year into their home and they've shelled out around $5,000 for plumbing issues on a brand new build. Every time I hear a story like this, and I hear them more than you think, I keep coming back to the same question. Why don't we talk about this part more?
So let's talk about the story that we were sold. Most of us got the same financial wisdom growing up. Buy a home as soon as you can. Build equity. Stop throwing money away on rent. A house is the best investment you'll ever make.
As I said, that narrative has been repeated so many times it's basically cultural law. Your parents believe it, your coworkers believe it. And honestly, for a long time the math kind of backed it up. Home values appreciated, mortgage rates were low, and building equity felt like a reliable path to wealth.
But here's the thing. Buying a home isn't just a lifestyle milestone. It's one of the largest capital allocation decisions you'll ever make. And when you look at it through that lens, the conversation just gets a little bit more interesting and a lot more complicated. Because buying a home doesn't just mean you own something. It means you've made a very specific choice about where a significant amount of your money is going for you to live. And that choice comes with costs that most people severely underestimate.
So next I want to talk about the costs that don't show up in the mortgage calculator. When people run numbers on buying a home, they usually focus on two things: the down payment and the mortgage payment. That's where the math tends to stop.
But owning a home costs a lot more than that. You've got property taxes, homeowners insurance, HOA fees if you have them, furnishing the place. And then there's maintenance — the category that tends to catch most people off guard.
There's a rule of thumb in personal finance that homeowners should set aside roughly 1 to 2% of the home's value per year for maintenance and repairs, even if they come down the line. Now, on an $800,000 home, that's $8,000 to $16,000 annually just to keep the place functional. Some years it'll be less. Some years — the years your sewage line fails or your ceiling starts leaking or your HVAC dies in August, that happened to me — it'll be significantly more.
And here's the thing about those repairs. They don't wait. They don't check in to see whether or not you're having a tight month or whether you just paid for a big vacation. A plumbing failure at 11 months is just as expensive as a plumbing failure at 10 years.
Again, this isn't an argument against buying. It's an argument for going in with your eyes open, because the people who feel blindsided by homeownership almost always say the same thing afterward. Nobody told me it would be like this.
There's another cost that never appears on any repair bill, and it might actually be the biggest one. It's called opportunity cost, and it's the cost of what your money could have been doing instead.
So let's say you buy a $900,000 home and you put 20% down. That's $180,000 that's now sitting inside your home as equity, which means it's not in the market, it's not compounding, and it's illiquid, meaning you can't access it without selling the home or taking on debt against it.
Historically, the stock market has returned somewhere around 8 to 10% annually over long-term time horizons. That same $180,000 invested over 30 years at 8% becomes roughly $1.8 million.
Now obviously home values also appreciate, and there are real financial benefits to owning — building equity, a fixed mortgage payment versus rising rent, potential tax advantages — and I'm not dismissing any of that. But the question that almost nobody asks is: where will my money work harder?
We all want our money to work harder for us, and the honest answer is that it depends. It depends on the market you're buying in, on how long you plan to stay, on what renting in that same area would cost you instead, on your income, your investments, and your other priorities. There is no universal answer, which is exactly why the universal advice to just buy as soon as you can is worth questioning.
Real quick — if you've ever seen your paycheck hit your checking account and thought where the hell does it all go, you're not alone. If you're in your 30s making six figures, it's time to get your financial shit together. Go to stashwealth.com and book a call. All right, back to the episode.
The next thing I want to talk about, that doesn't get talked about enough, is how wealthy people actually think about real estate. I guarantee no matter what you think, you probably have it a little confused.
Here's a distinction that almost never comes up in the rent versus buy conversation, and I think it changes everything. Wealthy people do buy real estate — we know this. But the way they think about it is fundamentally different from the way most people are taught to think about it. When someone with significant wealth buys real estate, they're usually doing it as an investment. Not a primary home — a rental property, a commercial building, something that is generating income. That's a very deliberate financial decision with its own math.
But their primary residence is a completely separate conversation. Where they choose to live is driven by lifestyle, flexibility, school district, and sometimes tax strategy. But it's not the cornerstone of their wealth-building plan.
I'm going to say that again: for most wealthy people, buying a primary residence is not the cornerstone of their wealth-building plan. And it doesn't have to be, because they have other assets doing that work.
That's the part most of us were never taught. For the average American, the family home became the primary wealth-building vehicle by default, often because it was the only significant asset that we had. And for a long time, it worked. But if you're a high earner with real income to invest, you have options that most people don't, which means you're not in the same position as somebody who needs their home to be their retirement plan.
So the question isn't whether wealthy people own real estate. They do. The question is whether they're counting on their house that they live in to make them wealthy. And the answer, almost universally, is no.
OK, now let's talk about when buying does make sense, because it absolutely can. But the reasons are for a lot more than wealth building.
Buying a home makes sense if you're planning to stay somewhere for a very long time — generally seven years or more as a threshold where the math tends to work more clearly in buying's favor. Or if you want the stability and the space to make a home your own. This is the one that I really harp on: if you're emotionally ready to take on the responsibility of maintaining a property. Also, if the rent-to-buy ratio in your area makes homeownership genuinely more cost effective — but don't just assume that it does. And finally, if it fits into your financial picture without stretching you to a place where one bad month creates real stress.
In those cases, buying can be a great decision. But notice what's true of everything on that list. None of it is automatic. All of it requires you to actually look at your specific situation and run your specific numbers. The decision isn't can I buy — it's have I actually thought about this, or am I just following a script that I inherited? Those are very different questions, and only one of them leads to a decision that you'll feel good about long term.
I'm not against buying a home — although I do rent — but I am against assuming your primary home is a good investment.
OK, before I let you go, we always end the show with a segment I call Best Bite. I'm a big foodie and I love to pass on recommendations of things that I've had that really stood out. So this one is from an area in the city that I wish I spent more time in — Greenpoint. I went to a Mumford and Sons listening party a couple weeks ago at a great vinyl shop called For the Record, and afterwards I took myself to dinner to a place called Wen Wen, which is an amazing Taiwanese spot — never been before. And I got a salad. It was a wood ear salad. Don't want to butcher it but I believe it was called Dongbei. It was awesome. It was a very healthy portion, super flavorful. So I highly recommend the wood ear salad at Wen Wen in Greenpoint.
OK, to close out — my sister's ceiling is going to get fixed. The plumber will come, the repair will happen, life will go on. That's homeownership. It's not all bad. It's not always a disaster. But I do think that the version of the story where she'd gone in knowing exactly what she was signing up for, where she had planned for those inevitable costs, where the sewage backup last year wasn't a financial shock — just an annoying expense that she had already accounted for — that version of the experience of buying a home just feels a lot less stressful.
And that's what I hope that this episode does for you. Not talk you out of buying a home, but just make sure that if you do buy, you're doing it with a clear picture of what it actually costs — because it's not just the mortgage and the down payment, but all of it.
Unfortunately, the best financial decisions don't come from following the rules you grew up hearing. They come from asking better questions. If this episode made you think twice about homeownership, please share it with someone who's in the middle of a rent versus buy decision right now. And if you're not already following the show, I would be so grateful if you would take a second to like, subscribe, follow wherever you're listening. It helps us more than you know.
All right, that's it for today. Thanks so much for listening and I'll see you next time.
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Thanks for listening to the F Word with Priya Malani. If you liked what you heard, hit subscribe wherever you're listening and leave us a review while you're at it. Or approval junkies. Don't forget you can find a ton of great resources, content, courses, and other freebies at stashwealth.com. Now for the capital F stuff our lawyers want us to say: Stash Wealth is a registered investment advisor. Content presented is for informational and educational purposes only and not intended to make an offer or solicitation for any specific security product, service, or strategy. Consult with a qualified investment advisor — that's us — before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results.THE STUFF OUR LAWYERS WANT US TO SAY: Stash Wealth is a Registered Investment Advisor. Content presented is for informational and educational purposes only and is not intended to make an offer or solicitation for any specific securities product, service, or strategy. Consult with a qualified investment adviser (that's us) before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results. There…we said it.
