It is a common myth in personal finance that renting is always 'throwing money away' and buying a home is always a smart investment. While buying can build equity, real estate transaction costs—such as closing fees, notary taxes, and agent commissions—can severely damage your net worth if you do not hold the property long enough.
To properly evaluate Rent vs. Buy, you must compare the net wealth of both paths. Renting allows you to invest your down payment in higher-yielding index funds, while buying consumes significant capital upfront in non-recoverable transaction fees (often 8% to 10% of the purchase price).
Using this simulator, you can analyze the net cost delta after a custom holding period, accounting for S&P 500 opportunity cost.