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# Is it better to buy a home, or choose some other investment? Charlie's story

Now that he’s making more money from his new job, Charlie is wondering if he should stop paying a landlord and start making payments on a home of his own. He has \$20,000 saved so far. He tries to estimate how much he will have at the end of 25 years if he buys a home, compared to investing those savings.

This chart sums up how he estimated his return with each option:

 Option How much the investment goes up in value over 25 years How much the investment will be worth after 25 years Put \$20,000 down on a \$200,000 home •            Increases 4% for the first 5 years, then 3% a year •            \$440,000 Rent and invest \$20,000 •            Increases 6% •            \$360,000

Charlie decides: Charlie compares the \$360,000 with a home potentially worth \$440,000, and decides to buy the home. However, he knows these numbers are estimates only. There is no guarantee on what he will make on either investment. Housing prices in his area may not increase, and may in fact fall. Stock markets could drop, dragging down his investment return.

Also, he will have certain costs to pay with each option. For example: