Buy or rent – final decision or not so much

Kan 11 has begun broadcasting the series "Under the Surface" with Shaul Amsterdamski. The first episode dealt with the question of whether to buy or rent an apartment. I recommend watching it, even though I have many criticisms of the content. In general, I think it's a good habit to also be exposed to things you disagree with. I hope that beyond any criticism, you will gain one or two things from my "discussion" with Amsterdamski in general. Engagement with financial education is very rare in the media, and therefore the program itself is very welcome in general.

At the end of the article, there is a reference to the chapter itself for those who want to watch it. In my opinion, there is no obligation to do so before reading this article.

Obsession

The program begins with Shaul calling the desire to buy an apartment an obsession. In today's discourse, it's almost universally accepted to think that anyone who thinks differently is obsessive, emotional, a Bibi supporter, a leftist, etc. It's not enough to think that someone who thinks differently from me is simply mistaken (or that I am mistaken); there's a need to label them. This often stems from laziness. If I label someone once as a Bibi supporter or a leftist, a settler, Kehilat, or the New Fund, I won't have to invest more effort to see if there are things they say that have merit. This is how we lose the ability to cooperate and turn our lives into a Maccabi versus Hapoel game. This is harmful to everyone and erodes our ability as a society to progress. This is, incidentally, a problem that is intensifying throughout the free world for various reasons that are not relevant to discuss here.

Throughout the episode, I counted four instances in which those who think differently from Shaul were called obsessive, and several more instances in which they were called emotional. No facts were provided to support the notion that "Israelis" are different from the rest of the world’s population. The percentage of home ownership in Israel does not definitively indicate obsession. About 70% of Israeli citizens live in their own homes. Some countries have a higher percentage, and some have a lower one. Shaul notes that in the U.S., for example, the default is not to buy a home. He doesn’t provide data, and when I checked, I saw that about 65% of Americans live in their own homes. This is slightly lower than in Israel, but it certainly does not indicate a fundamental difference in worldviews, especially given the fact that the percentage of young people in Israel is much higher. Precisely from someone who mentions emotion versus logic several times, I would expect to see more data.

Renting an apartment is like leasing; renting is like throwing money away.

A common opinion is that renting is like throwing money down the drain. This is not true. There is no economic difference between renting money and paying interest, or renting blocks and paying rent. The statement that in the case of renting money, "in the end I will stop paying and I will still have an apartment" is true but does not help in making a decision. If you invest the equity and the difference between renting and a mortgage, then in the end you will have the money to buy an apartment in cash. Some say that mortgage payments are lower than rent. This is often because they pay rent, for example, in Tel Aviv, and when they want to buy, they move to Petah Tikva/Rosh Ha'ayin, etc. For an identical apartment, a mortgage will require a higher payment due to the need to reduce the debt in addition to paying for the money rental, the interest.

On the other hand, to say that renting an apartment is like "leasing" is, in my opinion, a misleading statement. Leasing is not renting a car. Leasing is a complex transaction involving a down payment, monthly payments, and at the end, an obligation to enter into another transaction of a down payment or purchasing the car we had. But a much bigger difference is that when we rent an apartment, assuming the rent never increases, it's a constant stream of payments for a property with a fixed value. The value of the car we leased in a leasing deal continuously depreciates, which is why the leasing company requires us to replace the vehicle every three years with another down payment. With a rental apartment, we have the freedom to rent an old or new apartment. To stay in the deal for a year or 10 years (assuming the landlord is okay with it). With leasing, the deal is always for three years. In fact, as much as Shaul supports renting an apartment and not owning, comparing it to leasing gives the impression that he also supports leasing as an alternative to buying a car. New. It's unfortunate because for most people, a new car, especially when you don't have the money to buy it, is a very significant step towards financial decline or at least giving up on financial growth.

Get help from the right experts

I once worked at an IT consulting firm. I provided consulting services to large companies (Bank Hapoalim, Migdal Insurance, David Lubinski car importers, Mizrahi Bank, the Israel Prison Service, etc.). We used to joke that the most important thing for an external consultant is to figure out who signs their check, and then to parrot that person’s words in sophisticated language so they’ll keep signing our checks. This method may provide a living for the consultant, but it often does not advance the consulting process. It creates a fixed, self-perpetuating mindset, and while the cost in 99% cases is not a major tragedy, it certainly does not contribute to good decision-making. Shaul developed a concept, called anyone who disagreed with it emotional or obsessive, and then brought in an author of a book on stock market investing to explain why it’s better to rent and invest the money. When you want to make a decision, it’s worth listening to people who challenge your thinking, not those who reinforce your opinion. We all suffer fromConfirmation bias A tendency to interpret data in a way that reinforces what we initially thought. When bringing in a professional, it is advisable to bring someone who will diversify our opinions and not necessarily someone we know will reinforce them from the start. People who have come to me for advice have heard me say the sentence many times: it doesn't matter what I I would. What matters is what I thinkTo you Based on what I heard from you {X, Y, Z}, it is better to do this. Years after that meeting, I remember the woman who wanted to instill "logical thinking" in her husband and therefore brought him to me for counseling in the hope that I would reinforce her opinion regarding the logic of the move he was considering. I don't know if, in hindsight, she was disappointed about the money the counseling cost, but my conclusion for her was: If you go your way, in a decade you might have more money. During that decade, your spouse will be unhappy, and the chances of you having to split the money in half will increase. Logically It's better for you not to go the way you were thinking, or what you want is to increase your capital as much as possible.

How to choose a consultant?

I think the thing that bothered me the most about the program was that the word Professional advice Or any derivative of it was completely absent from the discussion. Shaul presumed to dictate what people should do. It doesn't matter if he honestly admitted that he lost hundreds of thousands of shekels as a result of a decision he made for himself or that he would have gained hundreds of thousands of shekels. The idea that on such a matter one could provide a "school solution" that would fit everyone through television was a mistaken idea and could even be harmful to someone who would automatically act on the recommendation received from someone who doesn't know them, their data, or their preferences. It was interesting to see that precisely someone from the street casually told Shaul, It suited you like that, and it suited us differently.. This is the entirety of the Torah. Economics is a social science, not an exact science. Saul lost hundreds of thousands of shekels, as mentioned, due to a decision he made, but in my opinion, he increased the extent of the loss by Choose To lose also the lesson/experience from the event. For example, if before he made the decision not to buy the apartment for investment because he doesn't have the energy for tenants, etc., he had consulted with someone who has experience in investments and had heard about the possibility of handing over all the management to someone else for a fee, perhaps his opinion would have changed?

Investing in the stock market as an alternative to buying an apartment

Tamir Mandelboim, whom Shaul hosted to strengthen his opinion. Tamir is the author of the recommended book "Investments for Lazy People," which I might write about in the future. I finished reading it a few weeks ago. Tamir is a star. His book became a bestseller and he is certainly a very important link in spreading the issue of correct financial management. His casting for the program was, in my opinion, unsuccessful both because he did not diversify the main opinion and, much more importantly, because he lacks real experience in the subject he came to talk about. Financial Advancement Consulting for Families. From what he said, it seemed that the stock market yields higher returns than the real estate market (one could argue with this claim, but that’s not really important right now), and therefore it is better to invest in the stock market. In his own book, he states that before investing in the stock market, one must assess one’s ability to tolerate volatility. If a loss of, say, 30% of one’s capital within a short period of time keeps them awake at night, then perhaps investing 100% of their capital in stocks is not a good idea for them. Real estate may appreciate less (as mentioned, this is debatable), but it appreciates in a way Relatively Consistent. Stock market On average It may rise further, but its upward trend is highly volatile. We are now seeing, in April 2025, how the market has dropped by 5% in just a few days. Someone who chooses to invest their capital in the stock market instead of in an apartment should ask themselves how they would feel if their million shekels turned into 950,000 within a week. If that would keep them up at night, they’d be better off buying 100% shares in the capital market, where the risk-return profile is completely different.

^{The board in my office is up for some consultation this week.}