Finance expert Scott Phillips has challenged the long-held belief that renting is dead money, arguing that mortgage interest is equally a waste. Speaking on the Money Talks podcast powered by Vanguard, Phillips said Australians have misunderstood the concept for decades.
“Interest on a mortgage is dead money too. On a 30-year mortgage, up to two-thirds of what you pay can be interest — that’s just money going to the bank,” Phillips said. He argued that renting only becomes dead money if the difference between rent and a typical mortgage repayment is not invested.
“If the mortgage would’ve been $2,000 a month and you can rent for $1,000, invest the extra $1,000. You could actually be further ahead than paying down an expensive house,” he said.
Phillips warned that Australians are too emotionally attached to property and risk assuming the next 50 years will mirror the past. “It’s mathematically impossible for property to keep growing faster than wages forever. The last 50 years won’t repeat themselves,” he said.
The message from Phillips is clear: you don’t have to own property to build wealth, but you do need a strategy. The Money Talks podcast, hosted by Tim McMillan, aims to help Australians take control of their finances with insights from leading personal finance minds.
