A recurrently hot topic in personal finance is the debate over whether to buy or rent a home. The conventional wisdom has always been that everyone should strive to be a homeowner and to stop paying rent.  Prices in some markets still haven't recovered from the drops in 2008/2009 and the government is still offering incentives to home buyers. But is buying a home always the best decision?

Kyle Fishman's recent article titled Seeking Alpha argues that renting is far superior to owning a home. 

His reasons include:

• Homeowners still have to pay rent in the form of property tax, maintenance/repairs, insurance, mortgage interest, and opportunity cost (the amount invested in the house could have alternatively been producing gains in the stock market)
• Transaction costs - you pay 7-10% of the cost of the house when you purchase it on legal, real estate agent, title check, inspections, ..)  You then pay another 7% to 10% when it comes time to sell.
• Convenience.  It's the landlord's responsibility to make necessary repairs, keep the driveway plowed, and the lawn mowed. 
• You are more mobile; it's easier to move quickly whether you find another job or have some other reason to move such as safety concerns, conflicts with neighbors, or changes in the neighborhood.

Given all of these issues, you might wonder why you should seriously think about owning a home. Here are some advantages and disadvantages to consider:

• Security - Owning a home will give you a sense of security that you cannot find in a rental unit.
• You can customize your home to your individual needs, as opposed to rental units, where your options are more limited.
• You will have a sense of permanence and a feeling of being part of a community when you own your home.
• Most homes do appreciate in value over time.  In addition, owning a home will reduce your federal and state tax obligations because of the deductibility of interest payments on your mortgage.
• A home is a vehicle for forced savings. You have probably heard the argument for term life insurance over your whole life: Buy term and invest the difference. The reality is that most people who buy term life insurance spend the difference. Having a mortgage payment due forces you to make payments. Over time, you will find that you have accumulated significant equity in your home.
• If you have a fixed-rate mortgage, your mortgage costs will be stable for the entire period of your mortgage, which is commonly 30 years. Rent typically increases yearly.

GETTING A HANDLE ON CASH FLOW

SUMMER READING LIST

My high school Algebra teacher, Mr. Sandler's motto was "Knowledge is Power."  I've taken that quote to heart and try to read at least 25 books every year.  

I usually try to knock out a book or two sitting by the pool or beach, but this year's vacation involved catching Charlotte jump into the pool a couple of hundred times and meeting the Sesame Street friends, her favorites are Elmo & Abby, for breakfast.

Here are a couple of the books I am planning to read this summer:

A Whole New Mind, Why Right Brains Will Rule the Future, by Daniel Pink - 

Pink believes the future belongs to the artists, inventors, storytellers-creative and holistic "right-brain" thinkers whose abilities mark the fault line between who gets ahead and who doesn't.  Being a left brained person I found the subject pretty interesting.

Flash Boys: A Wall Street Revolt, by Michael Lewis - 

Many people may know Michael Lewis as the author of Moneyball, the book made into a movie starring Brad Pitt and Jonah Hill.  In Flash Boys, he writes about how Wall Street has stacked the deck once again against the common investor

Talk Like TED: The 9 Public-Speaking Secrets of the World's Top Minds, by Carmine Gallo.  I picked this book off of the JP Morgan Bankers recommended reading list.  I admire great speakers and I've heard some great TED talks over the past couple of years.  My favorite one was by Jack Andraka on pancreatic cancer detection.  

I plan to review these four books by September's newsletter.  If you read any of them I'd love to hear your thoughts.

THE ECONOMICS OF THE WORLD CUP

Every four years Goldman Sach's releases it's most popular report.  It's not a report forecasting the growth of the  global economy.  Nor is it an analysis of how the new Presidents economic policies will impact the country.  Their most popular report is "The Economics of the World Cup."  Every four years Goldman Sachs does an analysis of the World Cup, predicting who will advance out of the group stage and who will win the tournament.  They put together an all tournament team.  A couple of things I found interesting from this years report were.

There is no doubt that the World Cup captures huge attention and, with it, generates a massive amount of passion. But does it have any impact on stock markets? Goldman's overall conclusion is that it does, at least for a brief period. Looking at history, there is a clear pattern of outperformance by the winning team in the weeks after the World Cup final. On average, the victor outperforms the global market by 3.5% in the first month, a meaningful amount, although the outperformance fades significantly after three months. But sentiment can only take you so far, in markets at least - the winning nation doesn't tend to hold on to its gains and, on average, sees its stock market underperform by around 4% on average over the year following the final. The message seems to be: enjoy the gains while they last...

They also did an analysis on when China and India would make the World Cup Final.  Together, China and India account for more than one-third of the world's population. China's sporting achievements include having won more Olympic medals than any other country, and India has a very young and growing population. Yet, they languish in football rankings because of the small number of players in both countries, China's limited success in team sports, and poor infrastructure and administration in India. While the popularity of the sport is high in China and increasing in India, Goldman thinks they are unlikely to participate in a World Cup final in the next 20 years unless significant changes are made.

You can read the report here - http://www.goldmansachs.com/our-thinking/outlook/world-cup-and-economics-2014.html?cid=corp-amplification-worldcuplinkedin1