Kristy Shen and Bryce Leung are a 30-something couple who retired last year with more than a million bucks in the bank. Now they travel the world.
Their secret? They say they're only living the dream because they rejected that dream we're all told to strive for: home ownership."It's a cult," said Leung, 34, shortly before he and Shen took off for Japan. "All made up."
"My parents have been screaming at me to buy a house for the last eight years," said Shen, 33. "'If you're a renter, you're a loser.'"
But she argues the opposite is true in expensive real estate markets.
"Ditch the house," is part of the couple's manifesto titled The Millennial Revolution. It's all laid out on their website where they tell young people how to achieve financial freedom.
Their advice includes investing your money instead of blowing it on a house — at least in pricey cities like Toronto and Vancouver where homebuyers are often saddled with a big, fat mortgage.
"As soon as they sign those papers, stick a fork in them, they're done," said Leung. "They're not going to have any money for the next 20 years and they're going to be stressed out at work to pay their mortgage."
Home ownership dream goes bust
Shen and Leung say they too once bought into the home ownership dream. Both established successful careers as computer engineers in Toronto. They married in 2010 and then took the next step: house hunting.
They say they had managed to save $500,000 by working hard and living modestly. The couple was ready to spend it on a down payment — until they saw what was on offer.
They scoped out dilapidated houses selling for half a million dollars, including one Shen decided was possessed. "Whoever bought that house is probably finding lots of bodies under the floorboards. The house was scary."
Shen says the stressful environment at her job also helped kill their home ownership buzz. "People were working crazy hours. There were people getting blood clots and actually like collapsing at their desk."
She says it made her think, "Do I really want a house that is so overpriced that I just am going to feel like it's prison and I am going to have to keep working at my desk until I die?"
So the couple decided to nix the house hunt. Instead, they enlisted the help of well-known Toronto financial adviser Garth Turner and invested their $500,000.
Living their dream
They put 60 per cent in stocks and 40 per cent in fixed income investments like corporate bonds. That ratio shifted when the market turned volatile.
By late 2014, Shen and Leung say they doubled their money to $1 million.
Their investments continued to grow so the two decided to ditch their jobs last year. They don't even pay rent now because they're always travelling.
They live on $30,000 to $40,000 a year, money that largely comes from dividend payments generated from their stock portfolio.
Unlike owning a million-dollar home, says Leung, "if you have a million-dollar portfolio, it pays you."
The two say they now get to do whatever they want. Besides travelling the world, they do volunteer work, take on the occasional freelance job and have published a children's book.
"I had a recent checkup with my doctor and, after giving me a clean bill of health, he diagnosed me with being 'obnoxiously happy,'" said Leung.
Of course, not every millennial has $500,000 to invest and there are no guarantees in life that the markets won't let you down. But Shen and Leung claim anyone can easily learn how to build on their savings, no matter how small the amount. They say the returns will likely be better than buying a home with a big mortgage and related expenses like property tax.
"If you have a house, you either sell off the entire house, or you get nothing," Shen said. "You can't take off a shingle and use it to pay your debt."
Not all renters do well
According to Statistics Canada, household debt in Canada is at near-record levels, largely due to money owed on mortgages.
But University of British Columbia professor Tsur Somerville argues investment savvy renters aren't necessarily better off than homeowners. When he studied the topic, Somerville concluded that, on average, homebuyers and renters achieved equal financial gains.
He says renters only do well if they're disciplined investors.
"It's hard to be that disciplined," said the director of the UBC Centre for Urban Economics and Real Estate.
One advantage of home ownership, he says, is "the mortgage payment forces you to be disciplined. Otherwise, the bank kicks you out."
Still, Shen and Leung are adamant that they have found the solution to financial freedom, and it involves not committing yourself to eternal mortgage payments on an expensive home.
But the couple claims home ownership may be in the cards for them in the future — in a smaller city or town where a house would be much more affordable.
"We are not anti-house," said Shen, "we are anti-debt."Aiming for a house is pretty old school. But it gave a young couple a common goal. It taught them to work in harness with each other and the pay-off was owning a chunk of this planet that no one could take away from them. And it provided a good environment to raise a family.
The world has changed. The economy is always shaky and volatile, interest rates on your savings hit the bottom and never bounced back, taxes are going up, real estate is off the chart and even the price of food is escalating at a rate never witnessed before. This is not the world I grew up in. It always seemed a very safe world but now you have to constantly be on guard from people who want to scam you, cheat you or trick you out of your hard earned dollars, or get you deep in debt at exorbitant interest rates. Your own identity is not even safe. It can be stolen along with your credit and bank accounts.
Maybe keeping all your assets fluid and keeping on the move is the brave new world we are facing. I would like to know how this would impact retirees. It is probably not a lifestyle they could sustain for long. And the market is so risky and volatile, how can you know what is safe to invest in. You would have no fall back position. Owning real estate is safer than money in the bank. I think this young couple will enjoy their lifestyle for a few years and then buy a home. We are nest builders. We like to put down roots, always have a place to come home to.
What works well for Kristy and Bryce may not work for you. Before you make such a life choice, study the way your parents came up in the world. 'Old school' ways do not necessarily mean unsound or erroneous ways.