First commit

own_vs_buy.py

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+def main():
+    """
+    Compare lifetime cost of home ownership vs. renting+investing.
+    Incorporates:
+    - House appreciation/depreciation
+    - Down payment and closing costs
+    - Monthly leftover investment if renting is cheaper
+    - Monthly compounding for investment returns
+    """
+
+    # 1. Define Constants
+    CURRENT_AGE = 35
+    AGE_AT_DEATH = 90
+
+    # Mortgage details
+    MORTGAGE_RATE = 0.04  # 4% annual
+    MORTGAGE_TERM_YEARS = 30
+    HOME_COST = 350_000
+    DOWN_PAYMENT = 50_000
+    BUYER_CLOSING_COSTS = 10_000  # e.g., typical closing fees
+
+    # Home-related costs
+    PROPERTY_TAX_RATE = 0.083      # 1% per year
+    HOME_INSURANCE_PER_YEAR = 1200
+    AVERAGE_YEARLY_MAINTENANCE = 5000
+
+    # House appreciation/depreciation
+    # e.g. 0.02 => +2% per year, -0.02 => -2% per year
+    HOME_APPRECIATION_PERCENT = 0.05
+
+    # Rent details
+    RENT_PER_MONTH = 1500
+    RENT_ANNUAL_GROWTH_RATE = 0.10  # 2.5% per year
+
+    # Investment details
+    INVESTMENT_RETURN_PERCENT = 0.07  # 10% annual
+
+    # 2. Calculate total months for the simulation
+    total_years = AGE_AT_DEATH - CURRENT_AGE
+    total_months = total_years * 12
+
+    # 3. Mortgage Payment Calculation (Monthly)
+    #    Formula: M = P * (r(1+r)^n) / ((1+r)^n - 1)
+    #    where:
+    #      P = (HOME_COST - DOWN_PAYMENT)
+    #      r = MORTGAGE_RATE / 12
+    #      n = MORTGAGE_TERM_YEARS * 12
+    principal = HOME_COST - DOWN_PAYMENT
+    monthly_interest_rate = MORTGAGE_RATE / 12
+    number_of_payments = MORTGAGE_TERM_YEARS * 12
+
+    if principal > 0:
+        monthly_mortgage_payment = (
+            principal *
+            (monthly_interest_rate * (1 + monthly_interest_rate) ** number_of_payments) /
+            ((1 + monthly_interest_rate) ** number_of_payments - 1)
+        )
+    else:
+        # If DOWN_PAYMENT >= HOME_COST, no mortgage needed
+        monthly_mortgage_payment = 0
+
+    # 4. Break down monthly home costs
+    monthly_property_tax = (HOME_COST * PROPERTY_TAX_RATE) / 12
+    monthly_insurance = HOME_INSURANCE_PER_YEAR / 12
+    monthly_maintenance = AVERAGE_YEARLY_MAINTENANCE / 12
+
+    # 5. Initialize tracking variables
+
+    # For the homeowner:
+    # Start with the home’s initial value; it will appreciate monthly
+    house_value = HOME_COST  
+    total_ownership_cost = DOWN_PAYMENT + BUYER_CLOSING_COSTS  # upfront out-of-pocket
+    
+    # For the renter:
+    # Lump sum investment is the down payment + closing costs that aren't spent on buying.
+    investment_balance = DOWN_PAYMENT + BUYER_CLOSING_COSTS
+    total_renting_cost = 0.0
+    
+    # Convert annual appreciation to a monthly factor
+    monthly_appreciation_rate = (1 + HOME_APPRECIATION_PERCENT) ** (1/12) - 1
+    
+    # Convert annual investment return to monthly
+    monthly_investment_return_rate = INVESTMENT_RETURN_PERCENT / 12
+
+    current_rent = RENT_PER_MONTH
+
+    # 6. Iterate month by month
+    for month in range(1, total_months + 1):
+        # House appreciates each month (can be negative if it's depreciation)
+        house_value *= (1 + monthly_appreciation_rate)
+
+        # Calculate monthly ownership cost
+        if month <= number_of_payments:
+            # Mortgage not fully paid yet
+            monthly_owner_cost = (monthly_mortgage_payment +
+                                  monthly_property_tax +
+                                  monthly_insurance +
+                                  monthly_maintenance)
+        else:
+            # After the mortgage is paid off, only taxes, insurance, and maintenance remain
+            monthly_owner_cost = (monthly_property_tax +
+                                  monthly_insurance +
+                                  monthly_maintenance)
+        
+        # Add to total ownership cost
+        total_ownership_cost += monthly_owner_cost
+
+        # Renter pays this month’s rent
+        total_renting_cost += current_rent
+
+        # Determine leftover that the renter invests if renting is cheaper
+        # difference > 0 => owning is more expensive => that difference can be invested by the renter
+        difference = monthly_owner_cost - current_rent
+        
+        if difference > 0:
+            # This means renting is cheaper by 'difference'
+            investment_balance += difference  # invest that difference immediately
+
+        # Grow the investment balance by the monthly return
+        investment_balance *= (1 + monthly_investment_return_rate)
+
+        # Increase rent once a year
+        if month % 12 == 0:
+            current_rent *= (1 + RENT_ANNUAL_GROWTH_RATE)
+
+    # 7. Final net worth calculations
+    # Homeowner's final net worth (simplified):
+    #   They own the house, which is now worth house_value.
+    #   total_ownership_cost is how much cash was spent over the period (plus the upfront).
+    #   You can show them both or compute net_worth as (house_value - total_ownership_cost)
+    net_worth_owning = house_value - total_ownership_cost
+
+    # Renter's final net worth is simply the investment balance
+    net_worth_renting = investment_balance
+
+    # 8. Results
+    print("----- Results -----")
+    print(f"Total Ownership Cost (cash outlay): ${total_ownership_cost:,.2f}")
+    print(f"Final House Value:                  ${house_value:,.2f}")
+    print(f"Net Worth (Owning) = House Value - Outlays = ${net_worth_owning:,.2f}")
+    print()
+    print(f"Total Rent Paid Over {total_years} Years:     ${total_renting_cost:,.2f}")
+    print(f"Final Investment Balance (Renting):           ${investment_balance:,.2f}")
+    print(f"Net Worth (Renting) = ${net_worth_renting:,.2f}")
+    print()
+    difference = net_worth_renting - net_worth_owning
+    print(f"Difference (Renting Net Worth - Owning Net Worth): ${difference:,.2f}")
+
+if __name__ == "__main__":
+    main()
+

own_vs_buy2.py

@@ -0,0 +1,233 @@
+def main():
+    """
+    1. Prints assumption values.
+    2. Calculates monthly living expenses (inflation-adjusted) for groceries, travel, schooling, healthcare, incidentals.
+    3. Calculates renting vs buying costs each month (both in terms of cash flow and net worth).
+    4. Compares the final net worth of renting vs buying, color-codes the final statement to indicate which is better.
+    """
+
+    # ANSI color codes for terminal output
+    COLOR_GREEN = "\033[92m"
+    COLOR_RED = "\033[91m"
+    COLOR_RESET = "\033[0m"
+    COLOR_YELLOW = "\033[93m"  # optional for neutral or headings
+
+    # ================
+    # Part 1: Constants
+    # ================
+
+    # Time horizon
+    CURRENT_AGE = 35
+    AGE_AT_DEATH = 90
+    total_years = AGE_AT_DEATH - CURRENT_AGE
+    total_months = total_years * 12
+
+    # --- Income & Growth ---
+    MONTHLY_SALARY = 5000.0          # Initial monthly salary
+    ANNUAL_SALARY_GROWTH = 0.02      # 2% annual salary increase
+
+    # --- Inflation for Monthly Expenses ---
+    ANNUAL_INFLATION = 0.03          # 3% annual
+
+    # --- Base Monthly Expenses (excluding accommodation) ---
+    BASE_GROCERIES = 500.0
+    BASE_TRAVEL = 200.0
+    BASE_SCHOOLING = 300.0
+    BASE_HEALTHCARE = 400.0
+    BASE_INCIDENTALS = 2500  # "catch-all" category
+
+    # --- Investment Growth ---
+    ANNUAL_INVESTMENT_RETURN = 0.06  # 6% annual
+
+    # --- Renting Details ---
+    RENT_PER_MONTH = 1500.0
+    ANNUAL_RENT_GROWTH = 0.025       # 2.5% annual
+
+    # --- Buying Details ---
+    HOME_COST = 350_000.0
+    DOWN_PAYMENT = 80_000.0
+    BUYER_CLOSING_COSTS = 5_000.0
+
+    MORTGAGE_RATE = 0.04             # 4% annual
+    MORTGAGE_TERM_YEARS = 30
+    PROPERTY_TAX_RATE = 0.01         # 1% of home value per year
+    HOME_INSURANCE_PER_YEAR = 1200.0
+    AVERAGE_YEARLY_MAINTENANCE = 5000.0
+
+    # Home appreciation (positive or negative)
+    ANNUAL_HOME_APPRECIATION = 0.02  # 2% per year
+
+    # ================
+    # Display Assumptions
+    # ================
+    print(f"{COLOR_YELLOW}----- Assumptions -----{COLOR_RESET}")
+    print(f"Time Span: {CURRENT_AGE} to {AGE_AT_DEATH} (Total {total_years} years)")
+    print(f"Initial Monthly Salary: ${MONTHLY_SALARY:,.2f}")
+    print(f"Annual Salary Growth: {ANNUAL_SALARY_GROWTH*100:.2f}%")
+    print(f"Annual Inflation (non-housing expenses): {ANNUAL_INFLATION*100:.2f}%")
+    print(f"Base Monthly Expenses (Groceries + Travel + Schooling + Healthcare + Incidentals): "
+          f"${(BASE_GROCERIES + BASE_TRAVEL + BASE_SCHOOLING + BASE_HEALTHCARE + BASE_INCIDENTALS):,.2f}")
+    print(f"Annual Investment Return: {ANNUAL_INVESTMENT_RETURN*100:.2f}%\n")
+
+    print("Renting Assumptions:")
+    print(f" - Initial Monthly Rent: ${RENT_PER_MONTH:,.2f}")
+    print(f" - Annual Rent Growth: {ANNUAL_RENT_GROWTH*100:.2f}%\n")
+
+    print("Buying Assumptions:")
+    print(f" - Home Cost: ${HOME_COST:,.2f}")
+    print(f" - Down Payment: ${DOWN_PAYMENT:,.2f}")
+    print(f" - Buyer Closing Costs: ${BUYER_CLOSING_COSTS:,.2f}")
+    print(f" - Mortgage Rate (Annual): {MORTGAGE_RATE*100:.2f}%")
+    print(f" - Mortgage Term: {MORTGAGE_TERM_YEARS} years")
+    print(f" - Property Tax Rate: {PROPERTY_TAX_RATE*100:.2f}% of home value/year")
+    print(f" - Home Insurance/Year: ${HOME_INSURANCE_PER_YEAR:,.2f}")
+    print(f" - Avg Yearly Maintenance: ${AVERAGE_YEARLY_MAINTENANCE:,.2f}")
+    print(f" - Annual Home Appreciation: {ANNUAL_HOME_APPRECIATION*100:.2f}%")
+    print(f"{'-'*50}\n")
+
+    # ================
+    # Part 2: Derive Monthly Rates and Setup
+    # ================
+    monthly_salary_growth = (1 + ANNUAL_SALARY_GROWTH) ** (1/12) - 1
+    monthly_inflation = (1 + ANNUAL_INFLATION) ** (1/12) - 1
+    monthly_investment_growth = ANNUAL_INVESTMENT_RETURN / 12
+    monthly_rent_growth = (1 + ANNUAL_RENT_GROWTH) ** (1/12) - 1
+    monthly_home_appreciation = (1 + ANNUAL_HOME_APPRECIATION) ** (1/12) - 1
+
+    # Base standard expenses total
+    base_standard_expenses = (
+        BASE_GROCERIES +
+        BASE_TRAVEL +
+        BASE_SCHOOLING +
+        BASE_HEALTHCARE +
+        BASE_INCIDENTALS
+    )
+    current_standard_expenses = base_standard_expenses
+
+    # Mortgage payment
+    principal = HOME_COST - DOWN_PAYMENT
+    monthly_mortgage_rate = MORTGAGE_RATE / 12
+    number_of_payments = MORTGAGE_TERM_YEARS * 12
+
+    if principal > 0:
+        monthly_mortgage_payment = (
+            principal *
+            (monthly_mortgage_rate * (1 + monthly_mortgage_rate) ** number_of_payments) /
+            ((1 + monthly_mortgage_rate) ** number_of_payments - 1)
+        )
+    else:
+        monthly_mortgage_payment = 0.0
+
+    monthly_property_tax = (HOME_COST * PROPERTY_TAX_RATE) / 12
+    monthly_insurance = HOME_INSURANCE_PER_YEAR / 12
+    monthly_maintenance = AVERAGE_YEARLY_MAINTENANCE / 12
+
+    # ================
+    # Part 3: Tracking & Simulation
+    # ================
+    total_income = 0.0
+    total_standard_expenses_accum = 0.0
+
+    # Renting scenario
+    total_rent_cost = 0.0
+    rent_investment_balance = DOWN_PAYMENT + BUYER_CLOSING_COSTS  # Freed up capital if you don't buy
+    current_rent = RENT_PER_MONTH
+
+    # Buying scenario
+    total_buy_cost = DOWN_PAYMENT + BUYER_CLOSING_COSTS  # upfront cost
+    buy_investment_balance = 0.0
+    house_value = HOME_COST
+
+    # Starting salary
+    current_monthly_salary = MONTHLY_SALARY
+
+    for month in range(1, total_months + 1):
+        # --- Income
+        total_income += current_monthly_salary
+
+        # --- Standard Expenses (inflation-adjusted)
+        total_standard_expenses_accum += current_standard_expenses
+
+        # --- Renting: Pay Rent, Invest Leftover
+        total_rent_cost += current_rent
+        leftover_rent = current_monthly_salary - current_standard_expenses - current_rent
+        if leftover_rent > 0:
+            rent_investment_balance += leftover_rent
+        rent_investment_balance *= (1 + monthly_investment_growth)
+
+        # --- Buying: Pay Mortgage/Costs, Invest Leftover
+        if month <= number_of_payments:
+            monthly_ownership_cost = (
+                monthly_mortgage_payment +
+                monthly_property_tax +
+                monthly_insurance +
+                monthly_maintenance
+            )
+        else:
+            monthly_ownership_cost = (
+                monthly_property_tax +
+                monthly_insurance +
+                monthly_maintenance
+            )
+
+        total_buy_cost += monthly_ownership_cost
+        leftover_buy = current_monthly_salary - current_standard_expenses - monthly_ownership_cost
+        if leftover_buy > 0:
+            buy_investment_balance += leftover_buy
+        buy_investment_balance *= (1 + monthly_investment_growth)
+
+        # House Appreciation
+        house_value *= (1 + monthly_home_appreciation)
+
+        # Increase Salary, Rent, Standard Expenses (monthly growth)
+        current_monthly_salary *= (1 + monthly_salary_growth)
+        current_rent *= (1 + monthly_rent_growth)
+        current_standard_expenses *= (1 + monthly_inflation)
+
+    # ================
+    # Part 4: Final Output & Comparison
+    # ================
+    print(f"{COLOR_YELLOW}----- Final Results -----{COLOR_RESET}")
+    print(f"Total Income (All Sources):           ${total_income:,.2f}")
+    print(f"Total Standard Expenses (Excl. Accommodation): ${total_standard_expenses_accum:,.2f}")
+
+    # Costs including renting
+    total_rent_incl_expenses = total_standard_expenses_accum + total_rent_cost
+    print(f"Total Costs (Incl. Rent):            ${total_rent_incl_expenses:,.2f}")
+
+    # Costs including buying
+    total_buy_incl_expenses = total_standard_expenses_accum + total_buy_cost
+    print(f"Total Costs (Incl. Buy):             ${total_buy_incl_expenses:,.2f}\n")
+
+    # Compute a simplified 'final net worth' approach
+    # - Renter's net worth: final investment balance
+    # - Owner's net worth: final investment balance + house value
+    rent_net_worth = rent_investment_balance
+    buy_net_worth = buy_investment_balance + house_value
+
+    print(f"Renter's Final Investment Balance:    ${rent_net_worth:,.2f}")
+    print(f"Homeowner's Investment Balance:       ${buy_investment_balance:,.2f}")
+    print(f"Final House Value:                    ${house_value:,.2f}")
+
+    print()
+    difference = buy_net_worth - rent_net_worth
+    if difference > 0:
+        # Buying scenario is ahead
+        print(
+            f"{COLOR_GREEN}Buying is ahead by ${difference:,.2f} "
+            f"({buy_net_worth:,.2f} vs. {rent_net_worth:,.2f}){COLOR_RESET}"
+        )
+    elif difference < 0:
+        # Renting scenario is ahead
+        print(
+            f"{COLOR_GREEN}Renting is ahead by ${abs(difference):,.2f} "
+            f"({rent_net_worth:,.2f} vs. {buy_net_worth:,.2f}){COLOR_RESET}"
+        )
+    else:
+        # Exactly the same (unlikely in real life)
+        print(f"{COLOR_YELLOW}Both scenarios come out exactly the same!{COLOR_RESET}")
+
+
+if __name__ == "__main__":
+    main()
+