Ask The Compound: Should You Buy a House Right Now?

Date: January 7, 2026
Hosts: Ben Carlson, Duncan Hill
Guest: Bill Sweet

Episode Overview

This episode tackles a broad range of audience financial questions, focusing primarily on whether now is a bad time for first-time homebuyers from an investment perspective. Ben, Duncan, and returning guest Bill Sweet engage in a spirited, practical discussion about home buying, Roth vs. traditional 401(k)s, margin usage, asset allocation in retirement, and young people’s retirement saving. The conversation is full of data, real-life stories, memorable moments, and actionable advice for a variety of financial situations.

Key Topics & Insights

1. Home Buying in 2026: Is Now a Bad Time?

[02:56 - 09:36]

• Key Question: Should a couple in their late 20s buy a house right now given high prices and low affordability?
• Historical Data: Since 1950, U.S. housing prices have only had 7 nationwide down years—scarce and tightly clustered.
• Time Horizon Matters:
  • 1-year holding: ~90% positive returns (Case Shiller data)
  • 3 years: 92%
  • 5 years: 93%
  • 10 years: 98%
  • 15 years: 100% (housing never down nationwide over this timeline; [04:35])
• Investment Considerations:
  • Market specifics matter more than national aggregates—some regions (TX, FL, Southeast) see real declines.
  • Consider a smaller down payment to maintain liquidity, but be aware of increased leverage risk.
  • The most significant investment gains come from staying in a home long-term (10+ years), not rapid speculative flips.
  • Buying a “forever home” rather than a starter, and planning to stay for at least a decade, can help offset high transaction costs and low potential equity gains in the near term.

Memorable Quote:

“Over 15 years, 100% of the time nationwide, housing prices have never been lower. Pretty impressive… This is much better than the return profile for the stock market.”
— Ben Carlson [05:48]

Practical Advice:

• Don’t Count on Price Appreciation Short-Term: If you might move within 5 years, the frictional costs and flat prices could stall equity growth.
• Be Realistic About Homeownership: Maintenance costs and surprises can hit hard, e.g., "Joys of being a homeowner—a squirrel died in my furnace vent, cost me $1,600." [09:00]

2. Roth 401(k) vs. Traditional: The Ongoing Debate

[11:00 - 17:12]

• Key Question: Is it better to have tax diversity by using some traditional 401(k), or go all-in on Roth, even in a relatively high tax bracket?
• Bill Sweet’s Take:
  • Go full Roth if you can stomach the upfront taxes: “Nobody goes back and regrets it, because the tax is done. It's over with.” [14:14]
  • People almost always spend the tax break from traditional contributions instead of investing it.
  • The real-world impact: Most people fund Roth and forget, simplifying future withdrawal planning.
  • Reminder to increase annual contribution limits when possible ($24,500 for 2026; [16:43]).

Memorable Quotes:

“Nobody goes back and regrets a Roth conversion or a Roth IRA contribution.”
— Bill Sweet [14:14]

“Increase your savings rate a little bit every year. If you get a 3% raise, take 1.5% and put it towards your savings…”
— Ben Carlson [16:58]

Additional Tip:

• Avoid front-loading 401(k) contributions unless you’re sure your plan offers a “true-up” match; generally, steady contributions every pay period are safer and easier for cash flow.

3. Is Using Margin for Investing Ever Worthwhile?

[18:59 - 26:53]

• Key Question: For disciplined investors with aggressive contributions and a large portfolio, does limited margin (5-10% of portfolio) make sense?
• Hosts’ Perspectives:
  • Borrowing to buy index funds over long time horizons can theoretically improve returns, but risk is real.
  • The current hurdle rate: Margin loans are expensive (5-7%+), but alternate borrowing via “box spreads” or leveraged ETFs can sometimes be more efficient (3.5%+ implied rates).
  • For sophisticated investors, return-stacking and box spread strategies open up PhD-level opportunities, but these tools require meticulous planning.
  • Leverage cuts both ways: "If you get a 90% loss, you're going to get a margin call. There is risk involved... It's not free." — Bill Sweet [23:15]

Memorable Quotes:

“This is PhD-level stuff. But the pros have been doing this for decades… these portfolios, their technology providers are trying to democratize a lot of the tools of finance.”
— Bill Sweet [24:20]

“Getting a margin call would not be fun. Make sure this is an account you’re probably putting more money into.”
— Ben Carlson [26:32]

Summary Advice:

• Limited, responsibly used leverage may be appropriate—but only if you understand the costs, risks, and mechanics.

4. Pension vs. Roth vs. Traditional Assets in Retirement

[27:05 - 32:23]

• Question: For a recently retired couple with a substantial public pension and large IRA balances but relatively less Roth, should they convert traditional assets to Roth for themselves/kids, or just draw down the IRAs?
• Discussion Points:
  • Roth inheritance is superior (no income tax for heirs vs. deferred income taxes on traditional IRAs).
  • But, conversions often trigger higher taxes (including IRMAA—Medicare premium surcharge).
  • Large Roth conversions only make sense if coordinated with other strategies, such as major charitable gifting to shelter taxable income.
  • The 10-year rule (SECURE Act): Inherited IRAs—traditional or Roth—must usually be emptied within 10 years, limiting long-term deferral.
  • Consider estate planning and coordination of retirement distributions, Roth conversions, and charity for maximum tax efficiency.

Memorable Quotes:

“If you inherit a Roth IRA, there's no income … The tax is in the rearview mirror.”
— Bill Sweet [29:05]

“Did you accumulate all those assets in one year? ... It works the same way in reverse—either you or your children will pay tax. The question is when, and who.”
— Bill Sweet [29:28]

5. Best Retirement Saving Path for High-Earning 20-Somethings

[32:29 - 38:10]

• Case Study: Listener’s 22-year-old daughter, making $100,000+ in California, maxes Roth IRA, contributes 10% to 401(k). Should she use Roth or traditional 401(k)?
• Hosts’ Consensus:
  • Go Roth—she’s early in her career, likely to earn more (and face higher taxes) over time.
  • Effective tax rate a bit over 26% in CA at her income; Roth builds in future tax-free withdrawals.
  • Saving at a high rate young massively multiplies wealth by retirement, and establishing good financial habits early is key.

Memorable Quotes:

“This might be the least amount of money she makes in her entire career ... This is the time to fund a Roth.”
— Bill Sweet [35:53]

“That’s the power of compounding ... doing what she’s doing, if she never gets a raise would mean $5–6 million by retirement.”
— Ben Carlson [33:15]

Notable Quotes & Memorable Moments

• On Homeownership: “If you go to sell after 18 months, and you’ve put money into updates, the realtor may say: ‘You can’t, you’re not gonna get all your money back on this.’” — Ben Carlson [08:48]
• On Maintenance Surprises: “A squirrel must have decided there was some heat coming out of there and crawled into the tubing and died ... $1600. Joys of being a homeowner.” — Ben Carlson [10:00]
• On Tax Planning: “No one does life on a spreadsheet. They make a quick decision. Once you fund a Roth IRA, you’re done with the taxes and you’re gone. That’s the prison I want to free Ted of.” — Bill Sweet [15:09]
• On Complex Strategies: “If someone says ‘late stage capitalism’, leave the table.” — Ben Carlson [25:04]
• On Good Parenting: “Just great, great job economically, Drew. Mrs. Drew. You nailed it.” — Bill Sweet [37:20]

Timestamps for Major Segments

• Home buying in 2026 / Historical returns: [02:56 – 09:36]
• Roth 401(k) vs. traditional / tax strategy: [11:00 – 17:12]
• Margin usage and leverage in portfolios: [18:59 – 26:53]
• Managing pension/Roth/traditional distributions in retirement: [27:05 – 32:23]
• Retirement saving for 20-somethings: [32:29 – 38:10]

Episode Tone & Language

The hosts keep the vibe light, irreverent, and conversational—especially around the pain points of homeownership and the quirks of tax law. Jokes about home repairs, “old man talk,” and art school friends pepper the technical commentary, making complex topics more accessible and fun.

Bottom Line Takeaways

• Home Prices: Rarely fall nationwide—but stay long-term for investment to really work.
• Roth vs. Traditional: In most cases, especially when young or growing in earning power, Roth is the favored option.
• Leverage: Adds complexity and risk—suitable only for the well-informed and those with strong financial discipline.
• Retirement Drawdowns: Strategic Roth conversions may make sense for inheritance, but only in tandem with broader tax, Medicare, and estate considerations.
• Early Savers: Starting strong, even at a high tax rate, pays off massively through compounding.

Useful Resources

Full transcript: Ask The Compound | Podcast
For questions: askthecompoundshowmail.com

For more questions or details on specific financial scenarios, email the show or join the live chat during episodes!