The biggest financial decision you are likely to make is buying a home, closely followed by less expensive must-haves like a vehicle. But the one deal you should aim to get right is the decision on life insurance. This is the difference between leaving your dependents with an adequate amount of cash to see them through the times of economic hardship after your income is lost, and leaving them with nothing. In this, the decision on term as against permanent insurance is the key. Put the wrong key in the lock and you open a door into real financial hardship. So what’s wrong with term insurance? Think of this as like a bet. If you die within the term, your dependents are the winners. If you prove healthy and live too long, you lose the premiums you paid and your dependents get nothing. Now, when it comes to permanent insurance, this builds up a cash value. The longer you have the policy in place, the more valuable it comes as the premiums you pay attract investment returns. During your own life, you can take some of this money back or borrow using the fund as collateral. When the sad day finally comes, the benefits are paid out to your dependents less whatever drawings or borrowings you have made.

From these short sentences, you will immediately suspect the other difference between the products. Term life insurance is the cheap option. It gives you security in the amount of the benefits for the number of years you select. If you buy one term policy after another, the premiums are higher each time because your life expectancy is less on each renewal. Permanent insurance premiums are higher because a percentage of what you pay is invested on your behalf to generate the cash value. So your fund receives the benefit of the interest, dividends and other returns the investments generate. This makes the total of the cash value the key factor. Do you want a higher rate of return on the premiums? This can be for your own benefit should there be an emergency during your life. Or it can build up over the years for your dependents. If the answer is yes, you must be prepared to pay more to start off the policy – the first year’s premiums often disappear into a black hole representing set-up costs and the selling agent’s commission. But the amount you pay stays the same throughout the lifetime of the policy. So, with inflation, what starts out a struggle slowly grows easier to pay.

The real problem is the uncertainty of the future. Who knows how inflation may affect different aspects of life. What may be cheap now, may be expensive tomorrow and vice versa. So here are a few simple rules. If all you want is cover over the next few years (no more than ten), get life insurance quotes for a term policy. Ten years is not a long enough period of time to build up a worthwhile cash value. Estimate what benefits might be needed, e.g. your daughter will need $50,000 to cover her college tuition fees, and the total will set the amount of the insurance. If you are looking at a period of at least twenty years, you should think seriously about permanent insurance. Again, get life insurance quotes but you should also take advice on the different types of policy available and create or review your estate plan. Between ten and twenty years is a gray area and whichever way you decide is not going to be wrong.

There comes the time we decided to become independent. Empowerment is another step in personal development because everyone needs sooner or later, of their own space.

In Spain, unlike other countries in northern Europe or America, has always clearly dominated the culture of home ownership versus rental property. But …
Is it always better to buy a home? When renting is right for me?

It is clear that fundamentally, the act of buying or renting housing will depend on costs. And within them, separating the initial operation to make the purchase or lease, and the totals given the long-term horizon.
Initial costs

From the standpoint of the initial costs, the rent is more affordable. Costs often exist only as a liability insurance or bond, offset the high initial costs involved in purchasing: notary, registration, VAT, taxation, etc. For this reason, the rent is a good choice for easy access to a first home at the time of emancipation.
Total costs in the long term

As for the long-term total costs, may become a factor by which we decide for a more appropriate rental or purchase. We may add the mortgage payments with their initial costs and other expenses and compare the cost of rent for life. But this is not the primary factor.
The level of interest rates

In the situation that has historically occurred in Spain, buying was more profitable than renting, because although it involves more than the purchase cost (higher monthly fee, the homeowners association, taxes, maintenance …), the high rates of growth of house prices made the brick property was the best investment. Therefore, the key to deciding whether to rent or buy a home, would know the performance of existing investment opportunities and the cost of borrowing, ie the level of interest rates.
Example if it is better to rent a home or buy

For example, if you rent a house for 200 € / month for 30 years, I will have paid at the end 72.000 €.

Depending on the rate of growth of house prices, my heritage within 30 years, in the case of acquiring the property, the greater or lesser than if he had rented.

If the average growth rate of housing in a 2% per year, in 30 years my house (bought for € 150,000) worth € 271,704. The odds that I have been paying € 752 per month, totaling € 519,000 to finish paying the mortgage, at age 30.

If he had rented, I have left over each month from 752 to 200 = 552 €, that investing in the fund at 5% I had reported € 454,407. As the costs of hiring in 30 years is 72,000, the net result of 30 years of my heritage is an increase of 382,000 €, while shopping, my heritage at age 30 added 271. 704 to 519,000 = -247,000 €!

This is an extreme case, but it serves to understand that if market interests (investments and loans) are greater than the rate of growth of housing prices, what we do year after year is losing money, because what we pay in interest on housing and what we receive in investments far outweigh the increase in home values.

Still, there are cases where the rent could not agree more for other reasons. As mentioned earlier, the initial outlay is more affordable: insurance against bond and notary fees, registration, etc.. Furthermore, the rent increase the mobility and we can live closer to work, saving on transportation and gaining in quality of life (eg in areas where we can not afford the high price). And the monthly costs are also lower: usually lower fees than buying, do not pay the share of the community or the annual tax, and therefore not compromise our future revenue, because the rent is usually short and medium term. It is faster to find a rental house that a buy. And there are a number of incentives and state subsidies for access to a car. If our financial situation is not very comfortable, rent will be a more convenient way to access housing.
Conclusion

In short, we can say that buying a home is better than renting when the rate of growth of house prices is greater than the yield we can get with other investments, and greater than the costs that we pay for the mortgage. However, the most common situation that has occurred is the opposite: that the interest on loans and income from other investments not reach the growth levels of housing prices, so shopping was better from the point of economically.