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Proprietary Data Insights Top Stock Searches This Month
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‘With The Cost Of Renting Today … There’s Nothing Left Over’
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Right to it today. We love to run numbers in The Juice to illustrate reality. So, in response to the following comment from a Juice subscriber, we make some investing and personal financial calculations. The comment was a reaction to Tuesday’s Juice, called In This Market, Are You A Winner Or Loser?: With the cost of renting today, who can afford to invest what’s left over into the stock market? There’s nothing left over. Please get real. We like to think we keep it real around here. But, without doubt, sometimes we lose sight of reality. Oh, it’s too expensive to buy a house, so just rent and use the money you save to invest in the stock market. This is what we said the other day. While this strategy can work for many people, it tends to actually work for the privileged who simply can’t afford or don’t want to own a home. What about everybody else? What’s their reality? Let’s explore this. There’s this misnomer that if you have been in the stock market over the last few years, particularly in the names that populate today’s Trackstar top five, you’re crushing it. But, as the earlier comment more than implies, money is tight, so how much do you really have left over to invest if you’re not (and have not consistently been) in a comfortable financial position? Let’s play it super optimistic. You were prophetic five years ago and took the $2,000 your Grandmother gave you for your birthday and spread it across Nvidia (NVDA), Tesla (TSLA), Apple (AAPL), Amazon.com (AMZN) and Microsoft (MSFT). A $400 investment per stock five years ago would have turned into:
Those numbers include dividend reinvestment where applicable and total to $21,357. Not really a ton of money, especially when you consider the cost of things today. Without significant disposable income to invest, it would have been difficult to make anything close to a killing, even in these stocks. Plus, here again, it’s so easy to look in the rearview mirror and say, you have bought NVDA in 2019!? But, we’ll say you have $25,000 in the bank (including that $21,357). And you make $4,000 a month, after taxes. The median rent across apartment sizes in the top 50 metro areas was $1,732 in May 2024. That’s up $10 from April, but down $24 from the August 2022 high. So, as we say repeatedly in The Juice, the price fluctuations we see in housing — rent or buy — simply don’t add up to affordability. Call the rent $1,800 (though if you need a two-bedroom, it’s likely closer to $1,900 or $2,000), which right off the bat takes your monthly cash down to $2,200. Let’s assume you live someplace (i.e., most of America) where you need a car. We did some back-of-the-envelope math behind the scenes here at The Juice and came up with these conservative results for car ownership:
This brings your monthly take down to $1,425. Of course, you need groceries. For this expense, we went back to a Juice we did earlier this year where we relayed how much we paid in a typical week for groceries for two people in California. The total was $190. And that included working hard to secure deals. So that’s about $760 per month. This takes you down to $665. If you don’t have health insurance through work (or even if you do) this expense could completely deplete your monthly income. And we haven’t even gotten into utilities, internet, eating out and any other common monthly payments people make. So the reader was right. In many cases, there is no or very little money left over. And, if at some point, you did get into the market, odds are you would need to tap that nest egg to supplement your earnings from work. Similar to what many people have been doing with retirement accounts lately. Which only serves to reinforce the reader’s point. As we said in the above-linked installment: But it makes sense in a country where the financially struggling live paycheck to paycheck and the relatively well off live hand to mouth. You spend your income. You’ve exhausted your savings. You’ve maxed out your credit cards. You need cash. So tap the 401(k) or IRA any way you can. We received more subscriber feedback to our recent housing discussions. This one patted The Juice on our back: Great to see that someone is writing about these issues and keeping people informed about what is realistically happening. The cost of renting has no were to go but up also. We sincerely appreciate it. And we would love to hear your two cents via the feedback link at the bottom of this page. Also, feel free to give us a look into your monthly expenses and how they match up to your income. We won’t use your name if we publish any of your data. The Bottom Line: People at the top aside, much of the country has seen their income increase much more slowly than the cost of housing and pretty much everything else. This is not sustainable. And, frankly, the whole situation — on housing, cost of living and income — doesn’t get covered enough. When it does, it’s lame. Such as this is the new normal or housing prices will come down. Each shallow and generic statement disregards the reality that many people in America are in crisis or, if they do manage to get by, they have no choice but to work too much to make it happen. So, we’ll keep beating the drum. And, of course, we’ll continue with more investing ideas for folks with budget surpluses at the end of most months. We’ll do a bit of that during the upcoming and abbreviated 4th of July week for the stock market. For now, all of the links in today’s Freshly Squeezed section contain investing insight and ideas. |
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