Happy Tuesday,

Angelo here! Welcome to New Money, where we go over weekly tips to help you build your wealth, one dollar at a time.

Today’s edition:

• The biggest myth about renting

• The calculation most homebuyers never run

• Paramount vs Netflix, oil surging, and more…

Read time: 2 min 40 seconds

🍎Wealth Tip of the Week

I’m 25 and I rent an apartment in San Francisco.

And every time I mention this, someone tells me I'm "throwing money away."

For a while, I wondered if they were right. Buying is supposed to be the smart move.

So instead of arguing, I did something simple:

I ran the numbers on dozens of properties. And then found out that buying would cost me $3,000 more per month than renting.

In fact, at today’s rates, the median monthly mortgage payment in the U.S. is over 38% higher than the average rent.

So I rent, invest the difference, and build more wealth than I ever would owning. But that is just the tip of the iceberg

Today, let’s break down the myths and run the numbers so you can decide for yourself.

Let's dive in!

1. The Biggest Housing Myths

Before we get into the math, let’s clear up a few myths that sound smart but aren’t.

Myth 1: “Renting is throwing money away.”

If renting is throwing money away, so is eating at a restaurant, taking an Uber and paying for a gym. You’re paying for value.

When you own, you “throw money away” too. It’s called interest, property taxes, maintenance etc.

In the early years of a 30-year mortgage at 7%, the majority of your payment goes to the bank, not toward equity. That’s how amortization works.

Myth 2: “You’re paying your landlord’s mortgage.”

Rent isn’t determined by your landlord’s mortgage payment. It’s determined by supply and demand. Landlords look at comparable rentals and price accordingly.

If their costs are higher than market rent, they absorb the difference. If market rent is higher than their costs, they profit.

Rent reflects the market. Their costs matter to them but the market decides what you pay.

Myth 3: “Building equity always makes it worth it.”

Equity builds but it builds slowly.

On a 30-year mortgage at 7%, your early payments are weighted heavily toward interest. It can take around 20 years before more of each payment goes toward principal than interest.

Equity is real, but it takes time to build and doesn’t automatically make a house a great investment.

2. The Comparison Most People Make

When people talk about renting versus buying, the comparison usually sounds simple: Rent vs. mortgage.

On the surface, that feels logical. But a mortgage is only one piece of the equation.

Owning also includes:

• Property taxes

• Maintenance

• Insurance

• HOA dues (if applicable)

• Closing costs

• Opportunity cost of your down payment

Economists call this the total cost of ownership.

If you don’t include all of it, you’re not really comparing renting and buying. You’re comparing rent to just one slice of owning and that can lead to very different conclusions.

Instead of building a full spreadsheet every time, there’s a simpler way to estimate the true cost of owning.

It’s called the 8.71% Rule.

Over time, the average annual cost of owning a home tends to include three major components:

1. ~1% for property taxes

2. ~1% for maintenance

3. Roughly 6–7% for the cost of capital (interest and the opportunity cost of your money)

Add those together, and you get approximately 8.71% of the home’s value per year.

In simple terms: Home Price × 8.71% ÷ 12

That gives you a rough estimate of the true monthly cost of owning.

For example:

$500,000 × 0.0871 = $43,550 per year
$43,550 ÷ 12 = about $3,629 per month

It’s not perfect, but it’s far more realistic than comparing rent to just a mortgage payment.

That doesn’t mean renting is always better. It simply means the mortgage payment alone doesn’t tell the full story.

Once you include the full cost of ownership, the comparison often looks very different.

3. When Buying Makes Sense

Buying isn’t wrong. In fact, for many people, it’s a great decision. But it works best when the numbers and your life are aligned.

Here are a few filters I use before calling it a smart move:

• 28/36 Rule. Housing should be less than 28% of your gross income, and total debt should stay under 36%. If the numbers stretch you thin, the house may own you not the other way around.

• 20% Rule. Aim to save at least 20% of the home’s value. Not because you must put all of it down but because being able to save it proves financial discipline and gives you a buffer. Homeownership comes with surprises. Your savings shouldn’t disappear the moment you close.

• 10-Year Rule. Plan to stay at least 10 years. Buying and selling comes with transaction costs (agent fees, closing costs, moving expenses). Time spreads those out. Short stays make ownership expensive.

Renting isn’t throwing money away. Buying isn’t automatically better.

Your numbers might look different and that’s the point. Me personally, it makes more sense for me to rent and invest instead while I’m in my 20’s. I also love the flexibility it gives me, but that’s just me

Make the decision based on your life and YOUR situation.

Are you renting or aiming to own? Hit reply and tell me your situation!

I read every response :)

💬Quote of the Week

📉 Market Recap

Check out some of the biggest stories shaking up money, markets, and momentum this week.

• Paramount beats Warner Bros. in the race to buy Netflix

• Oil prices surged above $80 as the Iran conflict disrupts global supply

• Apple just raised MacBook prices with its new AI-focused M5 laptops

• U.S. stocks slipped as the Iran conflict raises uncertainty

👀 In Case You Missed It

I tracked every dollar I made from age 18 to 24. In this video, I’ll show you exactly what the numbers revealed.

 🌱3 more ways I can help build your wealth

See y’all next week 🫡

P.S. I’ve been working on a secret project for you, someone who doesn’t just want generic money advice and doesn’t wan’t to be left behind. Can't reveal it yet, but your answers in this 90-second survey literally determine what it becomes and what problems we will focus in. I’d love your help, you in? [click here!]

- Angelo Castillo

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