Renting vs. buying a home - <AUTHOR> https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs--buying-a-home?utm_source=Sailthru&utm_medium=email&utm_term=Stuff%20you%20might%20like%20After%20Test%20Cohort%20Made&utm_campaign=Highlighted%20Content%204%20120413%20RentOrBuy&utm_content=Final <comment><USER2> Slightly tangential:

Conventional wisdom is just that - conventional, and an important thing to teach people is that there are times when convention should be broken.

Back during the height of housing bubble (2006/2007), a friend of mine decided to buy his first home. It was so obviously a "bubble buy" that even before things started to get bad, it was visible from a mile away that he was making a bad decision: He was buying a new construction K. Hov. cookie-cutter apartment in Edgewater, NJ, which was just close enough to Manhattan to tempt those "I'm buying a NYC apartment!" types but just far enough away that there wasn't a real fundamental demand to live there. He got a terrible no- verification mortgage ("liar loan") that we all warned him was trouble. He paid way too much -- something like $600k for a 1BR condo (near Manhattan prices, not Edgewater NJ prices).

When our friends warned him of these issues, when we pointed out that he could rent a very nice 2BR apartment a few blocks away for $2500/month that he and his wife would be plenty comfortable in, when we pointed out he was likely buying at or near the peak of a heady real estate market, he didn't care. His only refrain - over and over - was the age-old:

"But I'm going to be a _homeowner_. You guys are just throwing away money towards rent every month. I don't want to do that."

Fast forward a few years: Not surprisingly, his interest rate reset, his apartment is worth about $400k, and he had to go through mortgage default to get a modification on his loan.

And yet he still clings to his decision - "yeah but I own my place, and it'll even out over the next few years."

Sometimes buying for the sake of buying just isn't the right decision, despite what "we were all taught."

<comment><USER3> These types of people are irrational, irritating, and the root cause of so much social strife:

"But prostitution is wrong!" So we make it illegal and cause prostitutes to get roughed up by pimps and Johns. They attract more diseases and end up straining our social support system.

"But drugs are bad for the community!" So we make drugs illegal and we have gang turf wars and a "fuck the police" vibe from the poorer areas of our cities. Tell me again, what was worse for the community?

"But I don't want to live in a city with lots of condos!" So we make it illegal to build new condos. Then a bunch of google employees start moving in and now the original votes are economically squeezed out.

"It isn't right that Wallmart's (or McDonalds, etc) employees require subsidies from the government!" So we raise minimum wage and (through perverse incentives and lobbying) cut welfare benefits to the partially employed. Minimum wage companies replace people with machines and the government gets higher unemployment and less productivity (since engineers are creating machines to replace the unskilled, instead of the skilled).

It's all the same thinking over and over again. An emotional appeal that has nothing to do with good policy. This is why Khan's video is so important. It reaches out to people and educates them without judgement. Talking to your friend he may feel like he needs to stick to his decision, otherwise his friends will see him as weak, but if he comes to these facts on his own maybe it will enlighten him.

</comment></comment><comment><USER4> I'm amazed to see how many scientists are in here. Lot of math, lot of graphs, lot of speculation but _nobody_ even mentioned that we are, before technicians, people. We have desires, we have daily routines, we have habits and we have a psychological environment and background.

Renting will effectively (as the video outlined) leave a surplus of money in your pockets. Which you will use to buy the latest gadgets, to pay the latest cool service, to take fancy trips around the globe, to hunt the last ever living rhino in Africa or whatever else. BUT, thinking in perspective, after 20 years you will anyway have 0 cash in your pockets AND no house. Until your health and job keep up, this _might_ be fine. In case of need you will just be f---.

What you are really doing, when you buy a house, is forcing yourself in saving a liable equity for you and your family. Not only it will free you from any rent after 30yrs, but you'll also have a tangible good and you'll leave something for your children and relatives. Not even mentioning that, in case of extreme need, you'll be able to sell it.

Not sure how the concept of "house" might differ between Europe and the US and i realize that if you buy a really crappy built house, my arguments might not be valid. But where i live, houses are built to last centuries and they are by far the best way to responsibly spend your money.

Doing a Khanacademy video advising people in renting vs buying is just SO wrong. The video itself is not only rounding numbers in a bad way (IMHO), but it's also giving a superficial and _quite-not-always-true_ message.

Horrible.

<comment><USER5> If you are buying house because it is great investment then DO NOT BUY HOUSE. You should buy house because you need to place to live and you want to settle down in certain area (grow roots...).

The first thing that people like me need to understand is that we are _not_ professional investors.

Normal people need to buy house on the following factors: is it affordable? what is chance of you or your significant other moving to different area? do you like location? do you expect to live there for next 30 years? are schools good? etc. The excel spreadsheet comparing costs of owning vs. renting should be also there as one of factors, but spreadsheet showing how you are going to be rich by "owning" the house should be ignored.

<comment><USER6> Why not buy a house as an investment?

Even if you're not a professional investor, you can consider having a fraction of your savings on risky investments, such as stocks and real estate. I'm not saying it's easy, not saying it's for everyone, but I'm curious to know why you think a house is not a good investment.

</comment></comment></comment><comment><USER7> I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting.

I didn't want to buy a house until recently, but now I want to buy one around here. Why?

For one thing, in the major cities the rents keep going up at a rate faster than what the government reports national inflation to be. Your (fix rate) mortgage shouldn't change over 30 years, but your rent will likely triple or more in that time in a city like Boston.

But the biggest thing? Customization. I like building and changing things. I'm so tired of landlords that won't let me rip down walls, replace sinks, get a new fridge, repaint everything, etc... not that they should, but I still want to change things. Buying my own place will enable me to do this.

Another thing I can do around here, is buy a place that has 5 bedrooms, and rent out the other 4. I've had several friends that do this, and it essentially pays for their mortgage by having roommates. Not a bad deal.

<comment><USER8> Rent is largely a function of house prices and house prices haven't been going up constantly, in most US cities house prices are still below-2006 prices.

S&P House Price index:

[http://us.spindices.com/indices/real-estate/sp-case- shiller-...](http://us.spindices.com/indices/real-estate/sp-case- shiller-20-city-composite-home-price-index)

Investing in a house is a gamble on house prices going up, which if you're going to make it you should do with a full understanding that historically there have been many house price crashes (typically caused by broader economic downturns), prices in an individual city can also collapse because of the local job market (Detroit) or natural disasters (New Orleans).

<comment><USER9> I think most people in this thread are not talking about buying a house as an investment, but rather, as a value store compared to rent.

<comment><USER8> The two are inseparable, buying a house to avoid variable rent prices doesn't reduce your exposure to the housing market, it actually increases it because you're leveraging against it (because you're borrowing money to do it).

If house prices drop you can be stuck in negative equity whereby you owe more money on your house than it's worth which can easily bankrupt you. If you're renting that's obviously a problem you're not exposed to and you actually benefit from a declining market as your rent decreases.

<comment><USER9> Of course they are separable.

If you are buying a home to live in rather than an investment you can ride out the odd declining market.

Seems like people have a lot of 'once bitten, twice shy' syndrome when it comes to housing. Market corrections like 2008 are exceedingly rare. I am not saying prices go up forever like so many idiots did around that time, but if you buy in a non-volatile market, it is a pretty safe bet that your home price will at least retain much of its value.

<comment><USER8> There's no such thing as a "safe bet". If housing was a safe bet then significant amounts on money would feed into the housing money until it stopped being a safe bet. That's just basic market efficiency theory.

Most mortgages are typically 30+ years, based on historic data you're almost guaranteed to see a house price crash sometime over a 30 year period.

(Although it's important to remember that the future isn't necessarily going to reflect the past)

<comment><USER9> You are not understanding.

I am not saying it is a safe /investment/ I am saying it is a safe(ish) /value store/. There is a big difference.

Your comment is the equivalent of saying "Saving accounts are not a safe bet. If it were everyone would be putting money into savings accounts until it stopped being a safe bet."

You have to pay so much to have a roof over your head whether it is through rent or through ownership. Even if a house is a loser, investment wise, it can be a winner value-store wise.

Now, you can totally mess that up by buying a home at the peak of a bubble and watch it tumble to near worthlessness, no doubt. But that is not the situation 99.999% of potential homeowners face.

<comment><USER10> It's safe-ish /as long as you continue to live there/. If you ever need to move for whatever reason you're back to the mercies of whatever market cycle happens to be in force.

<comment><USER9> That's true. And the real risk in buying a primary residence is in churn costs which are relatively huge and take years to make up.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER11> One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable:

[http://www.nytimes.com/interactive/business/buy-rent- calcula...](http://www.nytimes.com/interactive/business/buy-rent- calculator.html)

<comment><USER12> The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance.

Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.

<comment><USER13> "Who is paying 2.6% of their property value each year on those things?"

Nationwide the figure of a couple grand per acre is remarkably constant. Although property costs may vary two orders of magnitude or more, a firefighter gets paid "about" the same everywhere, ditto a new police car costs about constant, etc. So I would guess someone living where an acre costs about $200K would pay about 2.6%.

I would imagine in Detroit you could buy 50 houses for $100K but have to pay $100K/yr prop tax on them if the surface area adds up to enough acres.

The only utility bill I paid in my apartment was electric and it averaged about $10 over the course of a year. In a house you'll find its another order of magnitude plus of course all the other utilities.

<comment><USER14> In Michigan property taxes are on the assessed value of the house and property (the assessed value is not necessarily reset to the transaction price of a sale).

In general, acreage is cheap. The millions of small lots with $X00,000 houses on them tend to make up for all the acres with nothing on them.

</comment></comment></comment></comment><comment><USER15> Realize that Sal recorded this video in March of 2008, at the peak of the housing bubble. Many of the assumptions made in the video are certainly not going to be the same in today's market.

When you're modeling the rent vs buy scenario, the outcome is hugely dependent on regional factors (like average rent & purchase prices in your area), current economic factors (like mortgage rates), and also your estimates of future events (like long-term investment return, rental price growth, and home appreciation). Even small changes in these factors can make a huge difference in the outcome. If you're interested in going into more detail, I suggest downloading the model [1] that Sal was using for these videos and plugging in your own numbers:

[1] [https://www.khanacademy.org/downloads/buyrent.xls](https://www.khanacademy.org/downloads/buyrent.xls)

</comment><comment><USER16> This seems to really depend on where you live and what the house/rental prices are.

Where I live, you can get a variable rate mortgage that's advertised at 3%. More than likely, the bank will look at your credit rating and offer something lower. Even if they don't, that's half of what the video is showing.

Likewise, a 4% return on investments seems unreasonable. The same bank with the 3% mortgage is offering a non-cashable GIC (which seems to be the Canadian version of a CD) which pays 2.3%. That's only a little better than half of what's shown in the video.

As for housing prices, it's very hard to find identical houses available for rent and for buying, but here's what I found:

For rent, a 3 bedroom, 1.5 bathroom, 1100 sq ft townhouse for $1500/mo. For buying, a 3 bedroom, 2 bathroom, 926 sq ft townhouse in the same area of the city for $225K. It's not apples to apples by any means. The one for purchase is smaller, plus it's a condo so there will be additional fees on top of the regular things you'd pay for in an owned house. In spite of the differences, $3K of rent does not equal a $1M house in my part of the world.

I plugged the numbers into the New York Times rent vs buy calculator that was mentioned elsewhere ([http://www.nytimes.com/interactive/business/buy-rent- calcula...](http://www.nytimes.com/interactive/business/buy-rent- calculator.html)). With these two properties, with these interest rates on the mortgage and investment, with local taxes and utility costs applied, buying is better after three years.

That said, it might not be all about cost. If you like to move around a lot, maybe renting is better because not renewing your lease is easier than selling a house. Maybe renting is better because you don't have the savings for a downpayment or don't qualify for a mortgage. Maybe buying is better because you like to do the handyman type of stuff and rarely move.

There's all kinds of reasons that renting or buying can be better, which is why I don't buy blanket statements that say "renting is always better" or "buying is always better".

<comment><USER17> Like you point out, how long you intend to live at a particular place has a huge impact on whether you should buy or rent. Along with that SPECIFIC [local] market conditions will also dictate whether holding short, long, or in between makes sense. You CAN make large amounts of money flipping houses (in certain markets), you CAN come out ahead in the long term, but you CAN also come out "worse" depending on how you go about things.

</comment></comment><comment><USER18> I just went from owning a house for 15 years (bought at 23) to renting, and I love it. Maintenance was a huge burden and having a lot of capitol tied into the housing market was an anchor for several reasons. I also have the freedom to just get up and go at any time.

I am fortunate to live in a renters market, you can get some really great deals for long-terms rentals if you put in the work.

A house is not an investment for the average buyer, it's an emotional purchase.

<comment><USER19> Note that one can also buy an apartment and have the apartment company do basic maintenance. (Different countries do this differently).

>A house is not an investment for the average buyer, it's an emotional purchase.

I'd say the house is an investment for the average buyer, even if the average buyer doesn't buy it as an investment.

</comment></comment><comment><USER20> As a renter, you can't do cool stuff like this

[http://diy.blogoverflow.com/2012/08/building-a-brick- pizza-o...](http://diy.blogoverflow.com/2012/08/building-a-brick-pizza-oven- into-an-existing-space/)

conversely, over the last 4 years, we've completely gutted and rebuilt this early 1900s house from all new electrical to plumbing, to insulation and windows. It helps to be handy (which I am) but it can be a money pit...

<comment><USER21> For me, it can be a feature. Prevents from spending on things like that on impulse.

</comment></comment><comment><USER22> I think anyone will concede that depending on the location and interest rates, the math can be close. But 4% on a CD and 6% interest only loan? That is not realistic.

<comment><USER23> wouldn't you pay tax on interest for that 'CD' thingy too?

also it's not a fair comparison: yes with a mortgage at the beginning your payments are 99% interest, but in the last 5 years they're almost entirely principle, so you get to keep that money.

if you're still renting in 25 years 100% of that money is still going to the landlord, and your rent has likely gone up by a factor of 5 too.

ALSO over long periods of time real estate nearly always increases in value (more than inflation), so that's another thing to consider.

<comment><USER24> And early on while you are paying lots of loan interest it can lower your taxes significantly.

</comment></comment></comment><comment><USER25> I agree, as others have pointed out, that the exact numbers differ based on location as well as situation (mortgage size, etc.) and in some cases it is better to buy vs. rent.

However, I think it was a good video because it does an apples-to-apples comparison and clears up a misconception that many people have about buying. In part 2 of the video he sums it up pretty well "You are not a home owner until you have no debt. Until then, you are a paying rent on the money you owe instead of the place you live - you are a money-renter".

Evident from the comments here on HN as well as the blog post, many people mistakenly believe that monthly payment in a buying situation all goes towards equity or "savings". But after 30 years, the buyer would still owe $1M on the house - he hasn't saved any money at all. Reading some of the comments, it's almost scary that people about to spend a huge amount on a home don't understand this!

</comment><comment><USER26> The link submitted to HN lands on video 2 of 4 which was created was uploaded Uploaded on Mar 15, 2008 where Sal was renting and the video is pro renting: [http://www.youtube.com/watch?v=YL10H_EcB-E](http://www.youtube.com/watch?v=YL10H_EcB-E)

Interestingly, it looks like on Dec 31, 2013 new video was added as 1 or 4 where Sal said he bought a house and now is neutral on rent. vs. buy: [http://www.youtube.com/watch?v=JNL6f1xkie4](http://www.youtube.com/watch?v=JNL6f1xkie4)

</comment><comment><USER27> As someone who recently bought, if the decision is an investment in housing vs an investment in other things don't buy a house!

On the other hand, if what you want is a place to live that you can redecorate, remodel and change however you like then you can't beat buying. Where I live you can't do anything to the fittings and fixtures without the landlord's permission.

Given my local housing market I tripled my floor area buy buying for same monthly payment, but that's not true everywhere.

</comment><comment><USER28> If you could transfer your mortgage exactly as it stands if you decide to move around then buying would be in all ways superior. Since that is not the case, if you aren't in a place that you've been for a while and intend to stay in for the foreseeable future then buying is really just a nuisance and prevents you from attaining things like better jobs unless you want to sacrifice your lifespan in the form of a long commute.

</comment><comment><USER29> This is actually quite interesting,

I'm from Australia (Sydney - one of the major capital cities) - and house prices here have basically been rising continually for the past few decades.

House prices are predicted to rise 10% per annum in most capital cities (less in smaller cities):

[http://www.smh.com.au/business/property/australian- capital-c...](http://www.smh.com.au/business/property/australian-capital-city- house-prices-rise-10-in-2013-20140102-306tk.html) [http://smh.domain.com.au/real-estate-news/boom-time- sydney-h...](http://smh.domain.com.au/real-estate-news/boom-time-sydney-house- prices-set-to-rise-strongly-20130917-2txbh.html)

Hence, investing in a house is seen as a solid investment - most people will tell you to get a mortgage, and put your money into a house - to do anything otherwise is seen as silly, since the prices only go one way, and interest rates are incredibly low.

Occasionally, you'll get one or two people talking about "bubbles", but they're regarded as a bit kooky by most - and there doesn't seem to be any fundamental reason prices would shift.

What are people's thoughts on this?

</comment><comment><USER30> I'd LOVE to find a CD @ 4%. And I'm also glad my mortgage rate is 3.75%.

<comment><USER31> Pretty much this. The interest rates on both sides seem just thought up on the spot to prove his own point.

Second, if I were to buy a house, I'd first go to my bank to check what kinda mortgage I could get, see how much that would cost me a month, and only then find a house.

Third, can't really compare rental homes with bought homes around here (netherlands); rentals are usually apartments and the like, while bought houses are... well, real houses.

Fourth, you get more house for the same amount, or pay less in mortgage/interest when you buy a house. I choose to rent for now, because the main advantage over renting vs buying is flexibility. I can give my landlady a one month notice and I'm outta here. Not so with buying a house; you've got to sell it, and hope that you can use that money to pay off your mortgage, or whatever. You're pretty much stuck on a 25-30 year mortgage if you get one.

</comment></comment><comment><USER32> I really don't think the bay area is a good choice to make an argument for the average person against buying.... $3000 a month seems too small for a house in the valley, maybe a 1,300 sqft apartment? Also, how out of touch is this guy? Who the fuck has 250k in the bank? certainly someone who would probably own property... maybe even renting it out to this guy...

<comment><USER33> I don't have any knowledge of the home market in the valley, but I will say that the numbers he uses for interest rates are very off from current real world rates. The method is instructive but the numbers used are so off they don't offer proof one way or the other.

<comment><USER34> This video was made in 2008, when mortgage rates were 6% and money market accounts were paying close to 4%. Now, mortgages go for 4.5% and money market accounts pay less than 0.5%. In 2008, rent prices were low while home prices were high, too. Today, a $1M house would cost closer to $10K/month in rent. It certainly doesn't pay to rent today, but it's harder to get a loan today, too.

<comment><USER35> If this video was made in 2008 and all the numbers are off, leaving this video up without any caveats in a site where kids go to learn is beyond irresponsible.

</comment></comment></comment></comment><comment><USER36> Buying property is a long term decision. People in my family tend to buy a home and then get dragged out feet first 50 odd years later.

I bought my place 15 years ago in San Francisco. It seemed like an unreasonable shitpile of money at the time.

My mortgage on a three story single family home plus land on top of Twin Peaks is three grand and change. I rent a couple rooms out and that covers a good part of the mortgage. A one bedroom apartment next door just rented out for more.

Granted SF is an unusual market, but California's population is forecast to nearly double, so the housing supply/demand imbalance is likely to only get worse, and if you don't live in a rent controlled unit, your rent is only going to increase in spades.

Plus I have the added advantage of being able to paint my house anyway I like, put pink flamingos and garden gnomes out front, and yell, "Get off my lawn!" when the mood suits me.

</comment><comment><USER37> The numbers here are weird at least in my area, so it's hard to compare. But in general, in most places, over a 30 year comparison, buying is better than renting unless you get very lucky with your alternative investment decisions.

A couple things to add, house payments stay exactly the same over a very long time. They don't increase _at all_. The absolute dollar amount is fixed. So while rent in an area might triple over 30 years due to inflation and local housing market fluctuations, mortgage payments don't. It's a time-value of money idea. It's cheaper to buy now than later.

Most people buy or rent homes where the monthly payment is at around 1/3 of their take-home income. As a home owner, that percentage decreases as your pay increases (inflation, pay raises, promotions, etc.).

What makes the decision difficult is the cost of servicing a loan vs. just paying for rent. [1]

The problem is that, even with a low interest rate, you pay _a lot_ of extra money towards interest. A $500,000 home with a 3% 30 year loan costs something like $750,000 in the end. You can effectively lower your rate by artificially paying down your principle. If you view the monthly payment as a _minimum_ monthly payment, just pay extra and pay down the principle faster. One simple way to do it, as your income grows, just keep paying 33% of your take home pay towards your mortgage. If you get a big bonus, pay that as well. Most mortgages don't have a limit to how much you can pay in a month. Doing this will reduce the effective interest rate, lower the minimum required payment, and shorten the length of the loan. Even better, during months where you need lots of fluid cash, just pay the then minimum payment and different you were paying is now usable. It's like giving yourself a pay raise if you need one.

Also, when interest rates drop, you can refinance and otherwise change the terms of your loan to be more favorable. You can turn equity into large sums of cash almost on demand if you need to. You can't do any of that as a renter.

After a few years, if you run the numbers, you'll probably find that you can comfortably service a shorter-term loan, say a 15-year loan. Which also have lower interest rates than 30 year.

As a quick example, my "minimum" mortgage payment + amortized property tax is about $1500 less per month than the current market rental rate for a similar sized home.

In the end, once you finally own your house, all you are responsible for is upkeep and property taxes, which will be a tiny fraction of the then market rate for renting a similar sized property. You'll likely have more income coming in by then then you'll really know what to do with. Whereas if you had rented a similar sized property the entire time, you'll still be renting and have nothing to show for it and you'll be subject to the whims of your landlord.

I know a number of families who started out renting the house they eventually bought, but if they had just bought a house to start with would be close to owning the property instead of 10 years behind. Renting those properties bought them very little.

1 - Here's a fun experiment, let's suppose I buy a home at $500,000 with a 3.25% interest rate over 30 years. My monthly payment is $2176.03. Supposing I decided to stick with that, I'll pay $783,370 for the house.

Now let's say I rent the same property and I get lucky and it's an even $2,000/mo or $24,000/year. But let's say rent increases with the current rate of inflation (1.5%) for 30 years. Over that time you'll pay $900,928.40 for the same place. And the owner of the property will now own the place you live in and have made $117k off of you. Inflation rarely stays at 1.5% though, so let's say it's a more normal rate of 3%. Well now you've paid 1,141,809.977 for somebody else's to own their property. In other words, they'll have made $358k off of you and gotten a house of out it.

In fact, the property owner is probably just taking the increase in payment and paying down the principle even faster like I propose above.

2 - Here is an awesome tool that sort of shows my point [http://www.nytimes.com/interactive/business/buy-rent- calcula...](http://www.nytimes.com/interactive/business/buy-rent- calculator.html) In my notional example, buying is better at around 6 years.

3 - and another one somebody else mentioned [http://www.trulia.com/rent_vs_buy/](http://www.trulia.com/rent_vs_buy/) in my notional example, buying is almost 1/3rd cheaper than renting over 30 years.

<comment><USER38> Except your example conveniently leaves out:

1) Property Taxes Between 0.18% to 1.89% in the US. Let's assume the mean of the two for 1.035%. In the first year, that would be a payment of $5,175. Over 30 years, using the same 3% inflation to calculate the future value of an annuity, that works out to $246,202.78

2) Opportunity cost of down payment. Assuming a 20% down payment of $100,000, the future value of that money would work out to $100,000 x 1.03^30 = $242,726.25, or a gain of $142,726.25

Note that this is already quite a conservative return. A well-balanced portfolio over the last 10 years, even taking into account the disaster of 2008, would have easily exceeded 6%.

3) Maintenance/Upkeep At $2,000/yr and 3% inflation, the future value of the annuity would work out to $95,150.83

So, the cost of owning in your example is actually: $783,370 + $246,202.78 + $95,150.83 = $1,124,723.61

and the cost of renting is: $1,141,809.977 - $142,726.25 = $999,083.727

<comment><USER39> ... And in the end, for that trivial difference of $125,000 over 30 years ($350 a month) - you get to _stop making mortgage payments on the house_. And you can sell your investment in the house at any point during or after those 30 years.

You _never_ stop making rental payments.

Worth it.

<comment><USER38> See my follow-up comment, the difference is actually $1,635,215.78 - $999,083.727 = $636,132.053

Depending on the residual value of the building and the land value in 30 years, that may or may not be worth it. My point was just that the example was highly biased, not whether it's better to rent or to buy.

Note also that if you sell, you will have to pay realtor commissions and a capital gains tax on the nominal value.

<comment><USER37> Can you provide any examples of homes that aren't worth at least the original purchase price in absolute dollars 30 years later? Most of the homes, at least in my area, that are 30 years old are worth _multiples_ of the original price in absolute terms. In fact, my first home was about 40 years old when I purchased it and even after the housing crash was worth about 15x what the original owner payed in absolute dollar terms.

<comment><USER38> Many homes can end up being teardowns after 30 years. That means that not only is the house itself worth nothing, but there'd be significant expenses to demolish it as well, effectively making the value negative. So it's possible to just end up with land value less demolition costs. How much of the current value is based on building and how much is based on land, depends on the property. There's also many circumstances where a house can be sold below 'market' value or forced to sell under poor market conditions such as divorce, death etc. Many people greatly overestimate the liquidity of housing. The paper value of a house is meaningless until it's actually sold for that amount.

15x what the original owner paid in nominal dollars doesn't give nearly enough context as to the real return. How many and which years was that over? What was the rate of inflation over this period? How did the Dow, S&P, or <insert stock market index here> do over that same period? And that's kind of beside the point.

Like I said earlier, I'm not arguing in favour of either owning or renting. I'm just making the same point as the submission, and that is to use full, accurate numbers to make informed decisions. If more people did (and everyone should), we probably wouldn't have such extreme bubbles and crashes.

</comment></comment></comment></comment></comment></comment><comment><USER40> Two issues.

\- I'm currently paying $2,300 for a $500k house. I think his rental rates are way off.

\- In a free market, rental rates are supposed to adjust to make it such that an individual is indifferent between renting and buying. If it was that much more expensive to own than to rent, the landlord would never rent the house out!

<comment><USER19> >\- In a free market, rental rates are supposed to adjust to make it such that an individual is indifferent between renting and buying.

I don't quite agree with that. If you're renting out, the apartment owner must pay for the risk of you destroying the apartment. If you instead buy the apartment you don't need to pay for the risk, assuming that you don't yourself destroy it.

</comment></comment><comment><USER41> I'm in southern England. I have no idea what to do. House prices are insane.

I have a sizeable deposit (20-25%) but I would still need a large mortgage. I want to buy because I know rent is going to through the roof as this tiny island becomes more and more populated.

However, I don't want to be tied to a job/location. Commuting to London for work is always an option but it comes at a cost of £350-450/mo in travel. Not to mention the time involved. I want the flexibility of renting but I also want a paid-off house when I'm in my 40s/50s.

AFAIK most mortgages (non buy-to-let) do not permit letting out your property, so I'd need to re-mortgage to do that.

<comment><USER42> The Economist's house price index for the U.K in 1990 was 628, in 2013 it was 2042. That is a 325% increase. Between 1990 and 2013 the Compound Annual Growth Rate (CAGR) of the S&P 500 market stock index was 9.46%, yielding an 875% return.

My advice: rent and be a fanatic about investing the difference in the mortgage payment for a property exactly equivalent to what you'd been thinking about buying. Over the long time horizon you're planning for you should be all right.

<comment><USER41> the mortgage payment would be at least £200 less each month because of my large deposit. interesting stats though, thanks.

</comment></comment></comment><comment><USER43> The worst assumption here is that you're gonna pay your bond off over 30 years. I payed my house off in 5. It's also an access bond, meaning, even though it's "payed off" it's not closed and I can use the money in there like a savings account, withdrawing and depositing back in later as I want. Essentially I'm my own "bank" now paying whatever interest my bond currently has, which is usually a whole lot lower than a credit card. If I had to calculate the interest I'm saving over the next 20 years which I can now freely speculate with it trumps renting.

</comment><comment><USER44> When it comes down to it, there are way to many variables to consider in anyones equation. Some people prefer owning and others prefer renting and whatever you think is better might be better in your situation. I've been around a lot of "owners" telling "renters" that they are throwing away their money. I've never heard a "renter" say that to an "owner" even though this video points out that it could be the case in certain scenarios. It's just a different perspective based on the time that the video was recorded.

</comment><comment><USER45> Your rent will probably not stay the same for 30 years ...

<comment><USER46> But your mortgage might go down over the course of 30 years. Mine is near 41% less than it was when I got it, because I was able to refinance. The rent for my house would be 4-5x what I'm paying in a mortgage.

</comment></comment><comment><USER47> Renting costs just about as much as owning. Using my neighborhood as an example a co-worker rents a house of similar size one street over from the one I own. We both pay roughly $1,200 per month.

The big difference is my interest is tax-deductible and I will always get at least something back from my investment. From a finance/economics perspective: Owning home > renting. Obviously.

<comment><USER17> Unless Congress doesn't keep the mortgage interest deduction and you renting friend doesn't have to pay if the furnace, water heater, or AC breaks. He also doesn't have to think about and set up a sinking fund/account for replacing the roof.

</comment></comment><comment><USER48> Shameless plug: [http://www.trulia.com/rent_vs_buy/](http://www.trulia.com/rent_vs_buy/)

</comment><comment><USER49> Warning flag to anyone who watches this for curiosity: the formula for interest is most certainly _not_ (principle * ROI)

</comment><comment><USER50> As everyone points out in different ways, this is a terrible example. Leaves out a lot, and many ways to reslice the pie, for example, by taking on renters. Not to mention factors like easier job mobility from renting (easier to move to where a better job is).

</comment><comment><USER51> What he forgot to take into consideration is that the $ coming from his savings to pay his rent isn't completely recovered at the end of the year, so his interest will go down too.

At least that's how it works in the UK, fixed rates are hardly worth it.

</comment><comment><USER52> The best rent vs buy calculator I've ever used - [https://www.smartasset.com/first-time-home- buyer/affordabili...](https://www.smartasset.com/first-time-home- buyer/affordability/rent-vs-buy)

</comment><comment><USER53> Best Buy vs Rent calculator out there.

[http://www.nytimes.com/interactive/business/buy-rent- calcula...](http://www.nytimes.com/interactive/business/buy-rent- calculator.html?_r=1&)

</comment><comment><USER54> maybe I missed something but it seems like he ignored the house value.

Even if we assume that the rent & the house price remains the same of 30y, after 30y you end up with a house that worth $1M & spent ~$15K more per year. Over 30y it's $450K in cash vs owning a house of $1M, meaning buying the house was the right decision.

Where is my mistake?

<comment><AUTHOR> > _after 30y you end up with a house that worth $1M_

In his video, Sal Khan did an apples-to-apples comparison: He compared the net out-of-pocket costs of (i) an interest-only mortgage in which you build no equity, and (ii) renting, where you likewise get no equity.

If you also want to build equity in your house, in addition to merely paying the interest, then that's an additional out-of-pocket cost (which unlike the interest payment is not tax deductible).

That's not to say his numbers are realistic approximations. But his basic approach to comparison seems sound.

<comment><USER54> It doesn't make sense to ignore the fact that you ending with owning the house. Maybe the numbers still works but if he ignores that fact his entire presentation is useless.

<comment><USER25> At the end of the 30 years, the buyer in the video would not own the house. He would still owe $1M in order to own the house (if the market is good, the house could very well be worth more than $1M, but that is besides the point).

The amount that he was paying monthly goes towards paying off interest on the loan, property taxes, etc. only.

</comment></comment></comment></comment><comment><USER55> I always thought the main difference between buying and renting was tax, since mortgage payments are tax deductible.

<comment><USER17> Mortgage payments are not tax deductible. Currently the interest is. Congress could change that. But as it stands now it is something one needs to consider in the cost comparison. (You might be paying $1000 to save $250)

</comment></comment><comment><USER56> I bought a home in 2009. Ha ha ha.

</comment><comment><USER57> Homeownership is about psychology. Taking out reckless drug use, the #1 predictor of whether a person will have mental health issues (from depression to schizophrenia) is the number of involuntary moves due to adverse economic circumstances. That feeling of being "chased", when coupled with low social status and economic failure, does psychiatric harm that takes decades to recover from-- especially in children.

Owning a home makes people feel _safe_. Renters know they can be priced out at the end of a lease cycle. (Most of the yuppie "luxury" buildings, because they target people who work obscene hours, pack an automatic 15-20% increase in the first year, just because people hate moving.) Owning may be a worse deal on average (expectancy) but it doesn't pack as much volatility.

The error is in the idea that homeownership provides protection. As the OP points out, a mortgage is just renting from a bank. If you have a catastrophic income loss, you're just as exposed to eviction. This can even be true if your mortgage is paid off-- if you lose the ability to pay property taxes.

I don't like being an involuntary renter (read: I made too many bad calls in my 20s) but homeownership in a city is almost always a bad idea. It's an investment that (a) you cannot move and (b) other people can fuck with by, say, building ugly things near it. The obscene cost of housing in most cities has far more to do with NIMBYism than natural supply/demand issues, when the real problem is just that urban homeownership is a pretty raw deal.

This analysis didn't even cover upkeep and transaction costs, or (even worse) the career-altering loss of geographic mobility. Urban homeownership is entirely about prestige and emotion; it makes no sense otherwise. But it's an enormously expensive hobby, making boats and cars look like childrens' toys.

Renting _is_ throwing money away, but so is owning in most cases. The best we can do is to make housing a commodity (what suburbia originally intended to accomplish, but at horrific costs) or, more accurately, to accept the fact that that's what it is. That is, we need to tell the NIMBYs to choke on a dick and build high-rises (i.e. solve the supply crisis that is making housing more expensive than the natural $125-175/ft^2 level-- price of new house construction-- at which it belongs) yesterday.</comment>


What happens when your pivot goes horribly wrong?  - <AUTHOR> http://skift.com/2012/11/23/what-happens-when-your-pivot-goes-horribly-wrong/

<comment><USER2> I blame the insane culture springing up around inaccurate and ill-conceived interpretations of the lean startup methodology. Many young entrepreneurs and early-stage startups seem entrenched in a mindset that they must be pivoting or iterating or using all their runway or sumsuch similar nonsense.

The word "pivot" should be banned from tech startup lexicon.

<comment><USER3> You beat me to it. Ditto. Perhaps I should've pivoted my reply! Yes, that was just as meaningless.

<comment><USER2> Next time, you can be first.

I've long had "issues" with the madness that tech startup culture inspires. MVP should be IVP, where as IPV = Initial Viable Product. If one really learns "lean" methodology, MVP really is IVP, but no one seems willing to actually pause and learn. Sad.

<comment><USER3> Totally agree.

</comment></comment></comment></comment><comment><USER4> First off, this isn't a pivot. They're expanding their service. A pivot is moving in a new and different direction.

Secondly, they are not the first company to make a misstep, and if most of the comments are regarding the ability to search by airport name, that is a fairly minor issue to resolve I'd hope. Particularly if they had the feature previously, the back-end might still be there and they'll just need to update the UI.

This isn't 'horribly wrong', decisions need to be made, they just made the wrong one. I doubt this is sinking the ship.

<comment><USER2> > First off, this isn't a pivot. They're expanding their service

Apparently the users felt differently. From the feedback and reviews, the users saw a different direction -- not an expansion.

</comment></comment><comment><USER5> I wonder how much testing they did before releasing this. As developers we often have a blindness to the way users see things compared to how we see them, especially if we're in love with our ideas.

<comment><USER3> Agreed. As developers we should also avoid turning everything into another Bill and Ted adventure. Awesome!

</comment></comment><comment><USER6> "in the coming weeks" doesn't soon enough to save their business. Couldn't they just revert to their previous version in the apple store since it is already approved?

<comment><USER7> If only. There is no option to revert. The best they can do is submit an update and hope to get an expedited review approved. Generally Apple says no when you reason I made a dumb update.

</comment></comment><comment><USER8> I'll let the rest of the comments talk about how this isn't a pivot. I'm more concerned that entrepreneurs are worried about pivoting at all. It is almost as if they are planning pivots in advance. How fucking stupid can you get? Sure, successful startups do it...but they do it because find out they are going in the wrong direction...not because the act of executing a pivot makes you successful.

</comment><comment><USER9> Interesting to see the similarities with this situation and the one bitly faced a few months back: <http://techcrunch.com/2012/05/29/bitly-update-user- reaction/>

It seems like the response will be quite different, which will make this comparison a lot more interesting.

</comment><comment><USER10> If this was a change that warranted a drastic switch in a different direction, why didn't they ask the existing user base for feedback? Judging by how vocal this group is, they'd have easily figured out that this wasn't the right move.

Even if that user base didn't care for the change, they could have just released a new app with the new feature set.

<comment><USER11> Well, people are loudest when things go wrong. The thing is though, evidently _it wasn't actually a pivot_ , but a complete retool/redesign. Perhaps they didn't realize that you can add features without removing others. Perhaps they got bad advice.

</comment></comment><comment><USER12> I'm sorry but I don't know what pivot means here.

I can upgrade and downgrade an html5 app (in phonegap) more easily can't I? Just update code on server.

Apple doesn't let you do a/b testing?

This seems to be a case of the product manager having no clue what his customers use in the product.

<comment><USER13> Typically you won't have your app's UI on your server in a PhoneGap app. You'll include the UI in the app, and what's on the server is data services. It's not that you can't do what you described, but if your app is little more than a browser, you increase the odds of being rejected.

</comment></comment><comment><USER14> If you have money in the bank and still believe, you pivot again.

If you don't have money you either get some, sellout, or die.</comment>


HN Uptime Visualized: Lots of mini-outages lately? - <AUTHOR> http://hnstatus.net/

<comment><USER2> I forget exactly why, but attempts to connect get ignored when MzScheme is in the middle of GCing. I'm going to start tossing old stuff back out of memory, which should mitigate the problem, but I've been too busy with YC lately to work on HN.

</comment><comment><USER3> It's weird, when HN goes down, it seems to accept the HTTP connection, but closes it again once the request is sent. I'm not sure on the exact timing, but I'm definitely never getting "connection refused" or an actual HTTP error code. No other site behaves like that.

<comment><USER4> I'm guessing there's a proxy or load-balancer involved—the backend goes down, but the proxy stays up, so when you send your request it gets forwarded first, and then fails.

<comment><USER5> A working proxy would send a 500 error. The closed connections are a telltale sign of an amateur Web server; probably written in Arc in this case.

<comment><USER6> An outdated version of the HN source code, including its web server is distributed along with Arc.

</comment></comment></comment></comment><comment><AUTHOR> Almost seems to be doing a hockey stick, if you look at the last 6 months.

</comment><comment><USER7> I've been noticing it too, was wondering if it was just me ( downforeveryoneorjustme.com said it was just me, though that could be because it came up in the meantime).

</comment><comment><USER8> I think I heard somewhere that HN is auto-rebooted every half hour or so.

<comment><USER2> No, I manually restart it when it gets slow.

</comment></comment><comment><USER9> what tool do you use to generate these stats?

<comment><USER10> You could combine Nagios, Lilac, and PNP4Nagios to get some pretty good monitoring with graphs(PNP4Nagios), notification(Nagios), and the ability to configure new servers from templates(Lilac). Not for the feint of heart, but not outright tedious. With some slight hackery you can even graph and alert on windows drive freespace.

</comment></comment><comment><USER11> if you manage to hack HN you're going to lose some karma... but lets be honest... you're also gonna get some mad props.</comment>


Some call Uber drivers, Airbnb hosts receiving unemployment checks a 'bailout' - <AUTHOR> https://www.washingtonpost.com/technology/2020/03/27/airbnb-uber-lyft-unemployment/ <comment><USER2> If this happens Uber and Airbnb need to pay unemployment insurance for their non-employees.

<comment><USER3> That doesn't make any sense given that this applies to all those who are self- employed, not just those getting paid via Uber and Airbnb:

> In crafting their coronavirus aid package, lawmakers in Congress opted > against wading into the thorny war over who qualifies as an employee. > Instead, lawmakers set up a fund focused on self-employed workers affected > by the outbreak yet ineligible to receive traditional unemployment > insurance.

</comment></comment><comment><USER4> I get with Uber drivers.

But why Airbnb hosts? Airbnb is supposed to be supplemental income right?

<comment><USER5> I agree, anyone doing AirBnB full time isn't an employee, they're a landlord. They should receive relief commensurate to what (if any, not sure on the details) other landlords are receiving, not unemployment.

</comment></comment><comment><USER6> They didn't pay into the insurance fund, so they didn't have 'unemployment insurance', so if they are getting an emergency payment without years of paying into the program, that is by definition a bailout.

Going forward gig workers should have to pay into the program like everyone else, these programs are designed to protect workers and make sure people can survive when times are harder, everyone should pay in when things are good, and everyone should be protected when things are bad. They shouldn't need a bailout (because they should have been protected and part of the system, and therefore _entitled_ to these payments), but I'm glad they weren't left to try to survive on their own.

</comment><comment><USER7> Obviously, the answer is to stop distinguishing between an employee and a contractor. Arbitrary thresholds have never been good policy.

<comment><USER8> Both are too extreme.

Employees are huge liabilities for employers and contractors have zero safety net.

<comment><USER9> What about part time employees. They often don't have benefits, or much less.

</comment></comment></comment><comment><USER10> I'm fine with Uber drivers getting unemployment. Just make sure when this storm passes that we also retroactively collect unemployment back taxes. I don't really care if it's garnished from the workers or the companies, but _somebody_ has to pay and they've got to pay going forward as well.

<comment><USER11> Honest question - why?

Every other western country protects workers without some accounting detail. Why not us?

<comment><USER12> Not quite sure what you mean by "accounting detail", but in canada, every paycheque I've ever received has had government-run pension and employment insurance deductions applied.

</comment></comment></comment><comment><USER13> What is an AirBNB host exactly? The person who owns or rents out the place? Serious question - if I list my extra bedroom on AirBNB, do I also get a bailout?

I fully support helping people in need, but are we just handing people checks?

<comment><USER14> Absolutely. The bill may have been bipartisan, but Trump will be hoping its remembered come election time.</comment></comment>


The World's First Immigration Economy - <AUTHOR> https://foreignpolicy.com/2018/10/03/australia-the-worlds-first-immigration-economy/ <comment><USER2> Australia is one of the country with develop economy and good life style. It is one of the preferable choice for the Indians who are looking forward to migrate abroad. Your occupation as must be listed in demand list of Australia before applying. Here is the list of occupation ([https://www.aptechvisa.com/australia-immigration/medium- and-...](https://www.aptechvisa.com/australia-immigration/medium-and-long- term-strategic-skills-list-mltssl-australia)) you must match you job code here to meet the eligibility requirement.

</comment><comment><USER3> From the article:

Australia's population has grown by 45% since 1991. No other country even comes close.</comment>


Capital vs. labor: who risks more? - <AUTHOR> http://yosefk.com/blog/capital-vs-labor-who-risks-more.html <comment><USER2> "One justification for this is that investors risk losing much or all of their capital."

Huh? Whose justification?

It is naive to think that our tax code is based on how much people risk (ignoring how ridiculous quantifying that is). Is this what schools teach or something? Where does the author even get such a notion?

</comment><comment> FLUX-YOU Practical side point:

If I have a lot of capital, I may be able to convert to cash and just go retire to a beach somewhere. If I lose everything and can't convert (even to scrap metal), then I'm about as well off as low skill labor when low skill labor loses work / can't find more (surely I've made a wealthy friend or two while having lots of capital that can help out though).

High skill labor might have some savings and capital if they lose work / can't find more, and the benefits might include severance. That can buy you time to pivot and then replenish your savings.

Low skill labor just has very few options if they lose work / can't find more.

So IMO, capital has the best options depending how nicely you can exit the market.

<comment><USER3> I always wonder why we tax things that we otherwise want to encourage. It's a human bias, we tax what everyone does because we think it's "fair", in the sense that everyone supports it. If you've studied micro-economy, you know that a tax discourages demand and diminishes the offer.

What if we taxed what we wanted to discourage? We already have high taxes on alcohol, which is good because there are many side-effects that society has to support: Car accidents, busy hospitals on Saturday evening, violence at home, and just the loss of people who would be valuable to society. In that sense, high taxes on alcohol are a mere compensation for the cost of alcohol to society.

Let's have no tax on labour and high tax on pollution. You may say it would be unfair because the poor would pay higher total taxes. I don't think that's proven. If you could however demonstrate that poor people pollute more (eg. "Poor people commute a lot, using cheap cars, therefore consume more petrol"), we should re-adjust our minimum wage, our whole society, maybe our whole real estate assignment, because we'd be doing it real wrong.

Actually, that's the point: With tax on labour, we create a lot of incentives that are contrary to organizing a world which pollute less.

So the whole debate about "which one of tax on capital gains or tax on labour should be higher" is flawed. None of those should be high. Tax on pollution (and more generally things which create a cost for society) should be higher.

It's called "externalities".

</comment></comment><comment><USER4> This isn't really an ideal article to kick off a series of debates that could be very interesting. It's trying to relate too many concepts from taxation theory to economic stimulation to labor management, etc, etc.

If the main point is to ask if capital or labor risks more the answer is trivial: capital. There is a -100% downside for investment and minimum positive earnings for labor. On the other hand capital has an unlimited upside, while labor does not.

A more interesting question would be how to you optimize the opportunity between capital and labor?

<comment><USER5> You ignore the article's point about the risk of choosing a proffession. For example, what's the return on investment for the worker that trained to be a professional car welder in Detroit? I don't know if "-100%" captures the loss.

<comment><USER4> This is an apples to oranges comparison. You're bringing up losing a job and comparing it to losing an investment. In this case the investment is gone, and the FUTURE earnings of the worker from that specific job are gone. The worker already received compensation for past work.

However, there is a point to be made about how the loss of livelihood, or a reduced standard of living can be devastating. It's just not the same economically.

<comment><USER5> You're discounting the time it takes to learn the skill. That training is worthless to the worker now. It's an investment that is gone.

</comment></comment></comment></comment><comment><USER6> What I see is that in taxes there is never enough. The always want to raise it higher and higher, until politicians confiscate all the wealth for their selves.

In Spain we have 21% VAT taxes,and progressive over 53% maximum income taxes. If you have a house they add property taxes, and this year capital gains have been considered as income taxes.

It is not enough, politicians want at least 23% VAT, and the left party wants to raise the income taxes as it is "fair". They want to remove inflation coefficients so they could confiscate 50% of the value of everything you have when you sell it.

In the new year, people that sell old houses will have to pay more than 30% in taxes(30% of the principal, not the benefit).

Meanwhile we discover that they took the public money of the public banks(cajas) to basically pay themselves luxury life, each one expending half a million dollars in credit card expenses OVER their multimillionaire salaries.

Parties like the socialist party(PSOE),PSOE accepted checks of 50 million euros dollars from the cajas that never paid back.

They took loans from the European Union to help nonworking population, over 1000 million euros and gave it to their friends and family.

They destroyed all the wealth they could touch and you tell me that higher taxes are necessary?

<comment><USER7> You seem to be unnecessarily conflating taxation with corruption. There are plenty of places that collect high taxes that don't have that sort of routine unethical behaviour.

<comment><USER8> Which countries collect high taxes that don't have economic stagnation as a result of it?

I can think of only a few out of ~195 countries in the last decade that have seen good economic growth with high taxation. Most of which have some other prop, such as oil in Norway.

<comment><USER7> I was talking about corruption, not economic growth. I'll bite, though.

The corrolation between high tax rates and economic growth is an incredibly partisan issue. There are lots of people saying that they are connected, but there are just as many saying that stagnation is much better corrolated to inequality (e.g.):

[http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf](http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf)

I will say that if you look at the "quality of life for the average person" indicators (health and longevity, infant mortality, leisure time), the high- tax countries smoke the rest. So my argument is: even if your country's GDP is growing a little faster, why would you care if it doesn't make your life any better?

</comment></comment></comment></comment><comment><USER9> _investors risk losing much or all of their capital_

This of course implicitly assumes that the economy is an unplanned one. Yet the investor class is who fights tooth and nail with political donations and so forth to keep the economy unplanned. They fight tooth and nail to keep an unplanned economy, and then say they are deserving because they have to suffer the vicissitudes of an unplanned economy.

<comment><USER10> There is no such thing as "investor class". Also there is no collective "they" who comment on the economy, planned or not. It is not possible to generalize all or majority of investors into one box.

<comment><USER9> _It is not possible to generalize all or majority of investors into one box_

This entire discussion is about that class of people that fill out their tax form in the income tax box, not the capital gains one. You seem oblivious to that particular discrete distinction which is the whole point of this article.

</comment></comment></comment><comment><USER11> Who risks more: capital or entrepreneurs? Entrepreneurs may not contribute upfront capital but they are contributing market value of their labor to the enterprise which may be substantial over the first 6-24 months as a venture tries to get off the ground. Entrepreneurs are also expected to go down with the ship. They can't easily pick up and leave if they're burned out or if an attractive opportunity arises. Furthermore, the odds of a return are low without an opportunity for diversification. Capital can make a bet and if the deal is structured right they can dollar cost average into their position to avoid dilution, whereas the entrepreneur will typically face significant dilution. For some unicorns like Facebook or Google there was very little downside risk after the first 6-12 months and they clearly made out better than their investors.

</comment><comment><USER12> Hmmm. I have over half a million dollars in electronic components and custom assemblies sitting in storage pretty much rotting away. A market shift made the project and the product almost impossible to sell.

All employees were paid on exit, including generous severance pay, etc. All of them found employment relatively quickly. A number of them were able to parlay the experience gained during the couple of years they worked for me to gain higher level jobs. One particular individual came in with very little experience in the field. I spent over a year tutoring him. He was able to get a VP position at a competing company within a week after we closed the shop.

My? I nearly lost everything. Probably took a million dollar hit (don't know exactly how much yet) and have components and supplies in storage that I paid half a million dollars for that you might be able to sell for less than five cents on the dollar.

Be careful making assumptions about who risks more based on silly examples like some guy flipping burgers at a fast food joint. Things often aren't that simple. I know one entrepreneur who died due to the stress of his business tanking during the economic collapse of 2008. His employees moved on just fine.

Yes, these are extremes. And, yes, these cases might not compare well when we are talking about billionaires. Don't know. From my perspective few people are willing to do the kinds of things I do: Put it all on the line. All. Take a huge risk. And if it pays off you reap the rewards and live to have someone call you a greedy bastard. If you fail miserably nobody gives a crap. They might even call you an idiot and malign you for firing a bunch of people without much notice.

Walk in someone else's shoes before being opinionated. Reading about something on the net is very different from living it. Don't think so? Go SCUBA diving with sharks. I've done it. Pissed myself. Multiple times. Easy to read and sound really smart about on the 'net. Not so when you are 100 feet under water with five of them surrounding you.

</comment><comment><USER13> Capital Gains simply affects the monetary value of a the capital. It has no real value increase. No physical good or novelty is created from capital gains. Thus, it's rent.

Labor & Capital tends to create physical goods and/or novelty. Thus labor, when applied toward sustainable pursuits, makes our lives, as a civilization, better.

Capital gains, providing "incentive" to invest, may or may not improve sustainability & global health. Global warming, resource depletion, poverty, hunger despite enough food being produced, & innefficient allocation of resources due to profit motive, corruption, rampant war, etc. indicate that the "incentive" is detrimental to sustainability & global health.

</comment><comment><USER14> Why is it "vs."?

Is it necessary for Capital and Labor to be so opposed? It doesn't seem like the optimal arrangement. Wouldn't increased cooperation between these 2 sides reduce risk for both?

<comment><USER9> Where does the wealth in those dividend checks sent off quarterly to the type of idle class heirs you can watch in documentaries like "Born Rich" come from? It comes from the wealth created by Labor. Workers work and create wealth, and get to keep the first few hours worth of wealth they create. The last few hours of the day, they are made to work for free, with the dividend checks and profits sent off to these heirs and such.

Why should labor cooperate with these parasite heirs who suck off of their wealth-creating ability? Labor hasn't historically, and doubtless will in the future. Capitalism is the fourth major economic system the world has seen, and a rather unstable one. Marx said crises like 2008's $700 billion TARP bailout were harbingers of an eventual total economic collapse, and I for one believe that - one day the economy will go into the ditch and no bailout, New Deal or libertarian type solution will get it going again.

<comment><USER8> No they're not made to work for free. That dividend check does not belong to them. They take a job, with a paycheck, and that's all there is to the arrangement, and they know that going into it. Those are the terms.

Labor should not get compensated for that which they are not owed and did not agree to.

It's that simple.

If they don't like the terms, they can go create their own wealth elsewhere, like so many millions of people before them have had to.

Your theory is that labor deserves to be paid something they didn't bargain for, and that does not in fact belong to them. You're arguing in favor of violent theft, because that's the only way such a system can ever be implemented, through extreme violence; there is no other way to give labor money that isn't owed to them, and does not belong to them, you have to steal it with guns.

Here's your scenario: so I have $1,000 to my name. You have $50,000. I don't like that you have what I consider to be capital, and I don't think you deserve it. I think that capital should be taken from you, because you're a rich person compared to me. I think you should have to give me most of your money.

It's a spiral to oblivion, because there's always someone richer and better off, and someone claiming that someone else doesn't deserve what they have. It's a system of envy and violence.

</comment></comment></comment><comment><USER15> The article uses the argument that an investor risks losing the investment and still the investment is taxed. Maybe there are national differences but where I live only gains from capital that are realised (dividends paid or when an asset is sold) are taxed, not the investment itself.

</comment><comment><USER16> This article is quite odd:

 _income appears to be taxed "more progressively"...One justification for this is that investors risk losing much or all of their capital. Workers, on the other hand, are guaranteed their wages_

This is not the primary justification at all, and I'd be rather surprised to see many economists arguing it.

The actual reason capital should be taxed less than income (specifically, at 0%) is because there is no reason to tax savings. If you tax income only, you tax a person who earns $100 and spends it today the same as you tax a person who earns $100, saves it and spends it tomorrow. When you tax capital, you charge the second person a higher tax rate.

This is doubly true in the presence of inflation - if a person earns a 1% nominal return in a 1% inflationary economy, then they break even. If you impose a capital gains tax, suddenly their rate of return needs to exceed (inflation + cap gains) just to break even.

<comment><USER17> Your argument is circular. Essentially, you say that capital should be untaxed because it was already taxed as income. But that's a value judgement that assumes your conclusion.

There is a good case for taxing capital (savings). See Picketty.

<comment><USER16> The actual detailed argument is that only two things can be taxed - consumption and investment. Consumption is the right thing to tax, since it measures the benefits a person receives from society. My argument isn't circular, however - it merely shows that once you have an income tax you don't need a savings tax.

Piketty's argument, near as I can tell, is merely that we might live in a world where the best way to create wealth is to allow super smart uber rich people to direct nearly all investment [1]. Further, if we allow wealthy people to do this, they won't actually consume the fruits of their labor - they'll allow the rest of us to. Why that's an argument for taxing capital I have no idea.

[1] His book doesn't justify this at all, it merely assumes it. [http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit...](http://www.chrisstucchio.com/blog/2014/piketty_and_inequality.html) But he has a couple of academic papers with models that I haven't fully read yet.

<comment><USER18> No, the correct argument is that many things can be taxed: creation, value enhancement, consumption, disposition, investment, wealth, transfers, transfers across borders, etc. (You're also still confusing savings taxes with investment taxes, which are not even remotely the same thing.)Which of these is taxed is a function of political ideology.

If you tax consumption, you might also tax wealth, if a large portion of the income of the economy is concentrated in the hands of those who consume very little. Indeed, that is the _entire point_ of having a wealth tax--to force consumption which can then be taxed.

You have misstated Piketty's argument, as has Chris Stucchio. Piketty's argument is that allowing wealth to concentrate in the hands of a few is the biggest threat to the stability of modern economic systems because it ultimately means that less money is available to everyone else, which restricts growth. He is very much _in favor_ of wealth taxes to force the distribution of this wealth to a wider range of the economy precisely to keep the cash flowing. He's not arguing for capital gains taxes--indeed, he opposes them, and has argued that capital gains should be taxed no differently from ordinary income.

<comment><USER19> > He's not arguing for capital gains taxes--indeed, he opposes them, and has > argued that capital gains should be taxed no differently from ordinary > income.

Please clarify. Up to the comma I thought you were saying that he thinks the capital gains tax rate should be zero, but the rest of the sentence says something quite different.

</comment></comment></comment></comment></comment><comment><USER20> One side of taxing work is that it creates an incentive for automation.

<comment><USER21> In time, this is going to become an increasingly important political consideration for those who are interested in low unemployment. To my mind, the business incentives for automation are inherent to the degree such that automation is basically inevitable. The same can't be said for human labor in a multitude of vocations.

I fully expect someone to come along and tell me government shouldn't give tax preference to obsolete jobs, but if you don't like that, you probably like the idea of paying displaced workers basic income assistance for no labor output even less.

</comment></comment><comment><USER22> first and most importantly, taxes has little to do with risk unless for some reason the government wants to encourage or discourage risk.

i wont go into capital gains being double taxed, thats covered bellow. what i will go into is how completely wrong the writer is on risk of labor vs capital.

its VERY easy to loose money in the market. unless you want to pay the same taxes on capital gains as your tax bracket (labor presumably), you have to dump money into a company and hope a year from then that after fees, taxes, and inflation that you broke even. even at the worst of our resession, the unemployment rate was around 8.1%, lets call it 10%. that means 90% of people were still working - in pretty much the 2nd worst time in US history for them. meanwhile investors lost about 50% of their capital.

</comment><comment><USER23> One thing to keep in mind is that capital has already been taxed once when it was first generated. Sure, you can bring up tax loopholes and inequality but generally it's true that the remaining capital is after taxes. So an investor risks losing 100% of their after-tax money. Labor risks their pre-tax money only and it is very likely they ca "re-invest" by moving to another job. Once capital is gone it is gone forever.

<comment><USER24> Oh really? My understanding was that due to loopholes corporate taxes are practically nothing compared to the numbers that people keep plugging into their "look, capital actually has a higher tax rate than labor!" calculations.

<comment><USER23> They are not practically nothing. After loopholes the average corporate tax rate is something like 17% [1]. This is far lower than the often stated 35% but it is not nothing.

This whole blog post seems to neglect the point that Labor generates Capital. Whether that money is invested or spent it has already been taxed once. Now if the capital generates more money as an investment it will get taxed again on the profits. Likewise if Labor continues to work the income will get taxed as well. The Capital investment has the risk of going to absolute zero. The potential Labor investment cannot go to zero unless the person dies.

[1] [http://economix.blogs.nytimes.com/2013/11/26/effective- corpo...](http://economix.blogs.nytimes.com/2013/11/26/effective-corporate- tax-rates/?_php=true&_type=blogs&_r=0)</comment></comment></comment>


One of the Worst Bits of Programming Advice I ever Got - <AUTHOR> http://ashfurrow.com/index.php/2011/09/one-of-the-worst-bits-of-programming-advice-i-ever-got/

<comment><USER2> The argument seems to be:

1\. I was told not to do X.

2\. I did X and I like it.

Therefore:

3\. "Learn from your own experiences and beware of anyone espousing the virtues of the One True Way."

This is motherhood and Apple pie. It _sounds_ like wisdom, but it doesn't follow logically from his example even if you agree with his feelings about his code.

By way of a counter-example, We could pick millions of lines of terrible PHP and Javascript. These were all written by people who learned from their own experiences and didn't follow any dogmatic rules or guidelines.

Why is it that sometimes breaking the "rules" is a good idea but sometimes it isn't? For a blog post to be _useful_ , it should propose some sort of repeatable criteria for when to defy thirty years of experience/folklore with OOP and when to respect it.

Again, I am deliberately avoiding agreeing or disagreeing with his example, just pointing out that the conclusion as stated isn't really useful.

<comment><USER3> There seems to be a pressure for coders to blog. Writing well (and creating _useful_ posts) requires the same attention to craft that coding does.

Thoughtfulness is a rare quality in both code and blog posts - I savor it when I find it. We probably need fewer coding frameworks and more mental frameworks that encourage thoughtfulness in coding and writing.

But I do think there is room in the blog world for writing as journaling. Maybe the usefulness of a blog post is limited to the author, but there may be some value for us as readers in simply seeing another's thought process at work rather than requiring the post to meet some metric of _useful_.

<comment><AUTHOR> >>> Writing well (and creating useful posts) requires the same attention to craft that coding does.

Yeah, for sure. And rushing through writing a quick response when I should be heading out the door for work was probably a bad idea. Next time I'll sit on it until I'm through my first cup of coffee.

<comment><USER2> Maybe, but then again, maybe not. A blog is not a hardbound book with gilt corners. You can read the responses, revise it, perhaps learn from the feedback. I certainly do, and in that respect my own writing resembles my code: Writing is rewriting.

Therefore, I'd rather see you write and be thoughtful about the responses you receive than hold back until you have researched every idea thoroughly in an attempt to avoid criticism.

That is my personal view, I am not sure I can provide any evidence that it is a good idea.

<comment><AUTHOR> I think the biggest problem I made with this particular post was conflating it with a code sample.

Few people who probably argue that OOP is the only way to code. But when faced with an example of another way, people are focusing on that specific example as a way that "I don't understand OOP." I'm finding more and more that what I don't include in my writing makes a strong piece.

</comment></comment></comment></comment></comment><comment><USER4> So to answer his own question, yes he's doing OOP the wrong way. The advice he's given is actually _really good_ if you want to learn how to think with objects, any "actionable" name like Helper or Fetcher implies that there's a behavior mismatch somewhere and you should refactor so that you're back to Objects doing their thing.

For the sake of the blog post, he should have refactored APIHelper to be something like ExternalApi, where it and it alone knows about how to fetch and how it's implemented. Then it's super simple to refactor ExternalApi's internals to be async instead of sync, but now he's got another object strictly dependent on the internal workings of another object, and will have trouble in the future.

The fact that he instead built an async wrapper around a sync call shows that he doesn't understand OOP and is himself stuck in procedural land with objects.

This article should be titled "How I threw away some of the best OOP advice I've ever been given".

</comment><comment><USER5> I think this is an instance of one of the hard problems in computer science: naming things.

When thinking about "-er" names to avoid, think about "Executor" and its ilk. Contrast that with this example and I see "APIHelper" and "ModelFetcher" that should probably just be called "MyBackgroundThread" or some such with methods for fetching models and making synchronous HTTP requests.

In other words, I think avoiding "-er" is a specialization of [http://steve- yegge.blogspot.com/2006/03/execution-in-kingdom...](http://steve- yegge.blogspot.com/2006/03/execution-in-kingdom-of-nouns.html).

</comment><comment><USER6> I read that too, with a grain of salt and subsequently did a 'find . -name "*er.java"' just to see. 23 out 148 matched in one of my projects. Cursorily, half of them are nouns and the other half are a combination of Loader, Manager and Handler. :)

I think its more a case of doing what I've seen done before. Maybe some "angry monkey" but maybe more like "Hey, that seems like a good way to do it."

<comment><USER5> The mere existence of Loader, Manager, Handler, Factory, and the like classes/methods indicate a lack of expressive power in Java's constructors.

</comment></comment><comment><USER7> who? where? when? references?

everything is relative.

</comment><comment><USER8> typical hacker news: someone says something that someone else takes too literally and subsequent blog posts/arguments/flame wars ensue

<comment><USER9> A piece of advice: before posting, consider carefully whether you add something to the discussion. If you don't, maybe you shouldn't.</comment></comment>


RoboHornet: a benchmark designed around issues real web developers care about - <AUTHOR> http://www.robohornet.org/

<comment><AUTHOR> There's also an article about this on Tom's Hardware: <http://news.ycombinator.com/item?id=4567042></comment>


Inspiring innovation by swedish "3", live help taken to the next level - <AUTHOR> http://vimeo.com/21968394

<comment><USER2> There's more info at B-Reel's site [1] and the shop itself [2] (in english using Google Translate [3])

[1] - <http://www.b-reel.com/projects/3live-shop/>

[2] - <http://www.tre.se/Privat/Ovriga-sidor/3LiveShop/>

[3] - [http://translate.google.com/translate?hl=en&sl=sv&tl...](http://translate.google.com/translate?hl=en&sl=sv&tl=en&u=http%3A%2F%2Fwww.tre.se%2FPrivat%2FOvriga- sidor%2F3LiveShop%2F)

Edited to add Google Translate link

</comment><comment><USER3> Having worked as a CSR for three separate telco's, two car companies and an electricity provider, this would be a far slower system to access information than anything I've used.

Someone working a job full-time, 40 hours a week doesn't need a shiny interface, they need a fast interface. That means menus with up to fifty items, memorised TLA's and keyboard short-cuts. It's not pretty, but it get's the job done, and for a CSR that's really all that matters.

<comment><USER4> I don't think they consider doing this on a global scale. Probably much more like a flagship store kind of approach. If it is true (the jury is still out on that although Teenage Engineering is involved)</comment></comment>


Ask HN: What is the end game for cryptocurrency? - <AUTHOR> As crypto starts to enter the mainstream consciousness, Im curious what the killer app or utility crypto currency will provide? Aside from the theoretical, what is the end game of crypto? Is it just an elaborate digital pyramid scheme? Is there some near term utility that could be derived from crypto? Is this really just going to end up being a way to semi anonymously send payment for legal gray area goods and services? I see several barriers to widespread adoption: 1) Governments cannot universally agree how to treat it 2) Its still hugely volitile 3) It is able to be manipulated with both FUD and outright misinformation 4) probably a dozen other things.<p>I would like to hear objective discussion around this, and just curious what some of the better minds that lurk on HN have to think about this. <comment><USER2> The end game for cryptocurrency has already been achieved, which is for significant monetary value to be attached to it. That alone is a preposterous idea that has nevertheless become a reality.

The question now is how much value? And that depends only on what the wealthy people of the world decide to do. Do they keep it as a risky speculation game, or a capital flight escape hatch? Or do they build it into the global economy on a more permanent basis? Only time will tell.</comment>


Ask HN: Interested in an e-book on building web apps with Node.js and React? - <AUTHOR> Hey guys,
I just wanted to gauge interest levels in an e-book that goes through building a complete web application using React and NodeJS?
It would explain how to:
- Create a webserver with user authentication
- Hook up and work with databases via an ORM. - Generate API endpoints
- Connect API Endpoints with a front-end framework like React - Explain how React and Flux works with APIs - Tips and Best Practices on building out a CRUD application using this framework - Security
- Maintenance - Best practices in Production
Questions: 1) Would you be interested?
2) Would you pay for it if it was good, and had sample chapters?
3) Where do you get this information now? <comment><AUTHOR> Just to add why I'm asking this:

I've just been building stuff out in Node/JS-land for a while and just want to give something back to the community. So I'm thinking about starting an e-book or a series of blog posts to educate people in things that I've learned. Learning people's use cases gives me a better understanding of how I can write things that genuinely solve pain points.

I would really appreciate it if people could PM me some type of contact info so I can keep in touch with anyone who is interested. My email is tilomitra[at]gmail[dot]com.

</comment><comment><USER2> I'd pay for it even if it was just empty repo => dumb site _w / user auth_. Haven't found a good concise tutorial for that.

<comment><USER3> [https://www.udemy.com/react-redux-tutorial/](https://www.udemy.com/react- redux-tutorial/)

Section 6 & 7 - maybe this is what you are looking for?

<comment><USER4> The tutorial you linked definitely requires a good grasp on React & Redux, I suggest starting with this course: [https://www.udemy.com/react- redux/](https://www.udemy.com/react-redux/)

Udemy frequently has sales on holidays and all courses are ~$15

</comment></comment></comment><comment><USER5> There are people with all kinds of experience level, someone would definitely find it useful.

I did build a complete web app (basically a Reddit clone) in NodeJs from scratch recently (though Angular2 instead of React), most of the things that you described in your book's contents were in the official documentation or tutorials (and Stack overflow).

Still, I don't know things like server-side rendering, and although I was able to configure SystemJs I have no idea how to configure it (or its de/merits over bable/webpack), 3rd party authentication (Google/FB login) was a pain, and now I realize I should have used the Flux architecture and also used TDD. But then all this is just a google search away anyway.

However, I would have paid for the book you describe if a) I wasn't broke, b) was just beginning with web dev, c) the book built a complete nontrivial app (something like the Meteor/Telescope).

PS: Which nodeJs framework would you suggest/use?

<comment><AUTHOR> I would recommend SailsJS. It's built with Express, so you get the Express ecosystem, but it comes with a lot of things that production-apps need out of the box, like security (CORS, CSRF), REST API generation, code conventions (models, controllers, views), etc.

I believe they went through YC, actually.

</comment></comment><comment><USER6> Yes.

Yes, after an introdutory free and useful by itself chapter/course.

Constantly looking for this kind of learning resource right now. I had a very good experience with this one: [http://trysparkschool.com](http://trysparkschool.com)

In my personal case, as I'm learning to code from scratch, it is essential that the course do not assume too much about my previous knowledge. Check the Twitter course. It teaches me how to install everything from the most basic tools, like Terminal. It actually taught me what Terminal is.

I hope you do it, I very much need it. Get my email at the profile and please let me know if you do it. Good luck!

<comment><AUTHOR> Thank you for your feedback!

</comment></comment><comment><USER7> Not really.

A book is by definition 90+ pages long (probably a lot more). I will only want that much information if I'm completely new to the area.

I have never used Node.js nor React, but I did a fair amount of web design. A book will feel slow and repetitive.

Case in point: the last book I read was about Opencl. About a whole Chapter was dedicated to configuration parameters and C data types. I know that stuff has to be there in case the book is your only reference, but otherwise I can just check the Internet for that.

I know lots of people like technical books for pretty much the same reasons I don't, so keep that in mind too.

</comment><comment><USER8> I would love to read this if you published it! I would pay for something that was really well written (gauged off of sample chapters). I would probably only pay around $5 for it.

Most importantly, if there was a way for you to host the ebook online and provide a way for someone to type code into your website and mess around with the source code. Think like Codecademy, with code on one side and the result on the other.

</comment><comment><USER9> I would definitely be interested if you threw Electron in as well. I would pay $20-$30 for an ebook on that as I'm struggling with getting React to work with Electron and all the tutorials have their stuff just work and it doesn't work for me when copying what they have. It is beyond frustrating!

</comment><comment><USER10> Yes--absolutely. There are a lot of video tutorials for React, but it feels that there's a lack of written guides at the moment. Not everyone learns best from videos, so having more choices to learn is huge. You should go for it.

</comment><comment> angry-hacker I don't want to sound snarky but I'm interested in ebook of writing web apps/pages in old ways. Send a request, receive a request without js. :))

<comment><AUTHOR> Are you talking about server-rendered websites with NodeJS?

</comment></comment><comment><USER11> No thank you. This isn't of interest to me.

</comment><comment><USER12> Yes please, learning react and modern JS (coming from a simple jQuery background) has been hellish.

</comment><comment><USER13> NodeJS is generally not an appropriate backend choice given the dynamic nature of the language. I would not be interested and would hope that it comes with warnings that such development stacks are usually only appropriate for small projects if at all.

<comment><USER13> I don't see why this is getting downvoted so heavily. OP asked a question and I gave an honest answer. Most people here understand that dynamic languages are a bad choice for big projects so I don't see why that would get downvoted either (even if I were wrong, I believe the rules state that downvoting isn't for things you disagree with, but things that add no value to the discussion).

<comment><USER14> I suspect that the reason it is downvoted is because there is a strong claim that is not supported by examples, rationals, or reasons. In addition I suspect that the technical claim is contrary to some people's experience. I suspect that it's boldness and absent support are likely to correlate with poor internet behavior in other people's experience.

The guidelines do not advise people not to downvote for disagreement. The guidelines do ask people not complain about them.</comment></comment></comment>