What Would Ben Felix Say?
Two evidence-based tests, calmly applied to your numbers: the 5% Rule for whether renting or owning wins on unrecoverable costs, and the 2.7% Rule for a safe retirement withdrawal rate.
Not affiliated with or endorsed by Ben Felix. An educational interpretation of ideas he published in PWL Capital research notes (2021–2023). Not provided, reviewed, or approved by Ben Felix or PWL Capital Inc.
You vs the evidence-based line
Your figure next to the target the rule implies.
What the evidence would have you check next
Understated, in order, and always caveated.
This is an educational tool, not financial advice, and it is opinion rather than statute. All verdict lines are respectful paraphrases in Ben Felix's evidence-first register, not real quotes. He is a practising Chief Investment Officer and Portfolio Manager at PWL Capital; nothing here is provided, reviewed, or approved by him or the firm. For advice about your own situation, speak with a qualified, regulated professional. If you are Ben Felix or represent them and want this changed or removed, email [email protected] and we'll act promptly.
How this is calculated
The 5% Rule (rent vs own)
The unrecoverable annual cost of owning is estimated as home value × (property tax % + maintenance % + cost of capital %), defaulting to 1% + 1% + 3% = 5%. The monthly break-even is that figure ÷ 12. If your equivalent monthly rent is below the break-even, renting and investing the difference tends to win on unrecoverable costs alone. Each component is adjustable above.
Source: PWL Capital, "Rent or Own Your Home? A Handy 5% Rule."
The 2.7% Rule (safe withdrawal)
Safe annual spending = portfolio × withdrawal rate (default 2.7%, adjustable 2–4%). Required portfolio = desired annual spend ÷ rate. The rate sits materially below the 4% rule; a flexible 2–3% band is preferred for long horizons.
Source: PWL Capital, "The 2.7% Rule: Rethinking Safe Retirement Spending."
Why the 4% rule is treated with caution
Using roughly 2,500 years of returns across 38 developed countries (1890–2019), the 4% rule carried about a 17% chance of depletion for a 65-year-old couple.
Source: Anarkulova, Cederburg & O'Doherty (2023), "The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets."
His own free material
Ben Felix co-hosts the Rational Reminder podcast, where these ideas are discussed in depth for free: rationalreminder.ca.
What this does not model
No home price appreciation, rent inflation, leverage timing, taxes on withdrawals, sequence-of-returns simulation, or annuities. These are single-point comparisons meant to frame a decision, not to settle it.
Common questions
What is the 5% rule for renting versus owning a home?
It estimates the unrecoverable cost of owning a home at roughly 5% of its value per year — about 1% property tax, 1% maintenance, and 3% cost of capital. Divide that by 12 for a monthly break-even. If you can rent the equivalent home for less than that, renting and investing the difference tends to leave you better off on unrecoverable costs alone.
What is the 2.7% rule for retirement withdrawals?
It is a safe withdrawal rate materially below the classic 4% rule — closer to a 2–3% band, with about 2.7% cited for long horizons. Required portfolio is your desired annual spending divided by the rate; safe spending is your portfolio multiplied by the rate. Flexible spending beats a fixed rule.
Why not just use the 4% rule?
The 4% rule was derived largely from U.S. historical returns over 30-year horizons. Using roughly 2,500 years of returns across 38 developed countries (Anarkulova, Cederburg & O'Doherty, 2023), the 4% rule carried about a 17% chance of depletion for a 65-year-old couple, so a lower, flexible rate is more prudent.
Does the 5% rule mean renting is always better?
No. It isolates unrecoverable costs — money gone either way. Local prices, rent growth, leverage, time horizon, and behaviour all matter. The rule is a starting comparison, not a verdict.