The Definitive Guide to Buying Your First Home

Can't buy a house? Don't worry—here's how you can still build wealth

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If buying your own home seems out of reach, don't worry. Experts agree there are other ways to build wealth for the future besides investing in real estate. Maybe even better ways.

For many young people, home ownership is a distant goal. Although 80 percent of millennials would like to purchase real estate, according to recent data by Apartment List, 68 percent said they have saved less than $1,000 for a down payment.

Neglecting to save for a down payment, student loan burdens, and poor credit scores are all reasons young people might face difficulty buying homes, says personal finance expert Jean Chatzky. And, although there are often advantages to investing in property, she says property ownership is not always the best fit.

"Buying a home and paying off a mortgage gives you another kind of saved money that you can tap down the road," she says, "but there are times in life where it does not make sense at all."

Why some experts say, "Don't bother"

Some other experts also argue that buying a house can be a bad investment. Self-made millionaire Grant Cardone, for example, advises young people not to buy.

"Never think a home is a way to create financial freedom," he writes on his blog. "A house should be looked at as an expense, not an investment and merely a place to live."

Co-founder and CEO of millennial-focused investing company Wealthsimple Michael Katchen tells CNBC Make It that a house can be a downright lousy place to put your money. He says that he would "pick a diversified portfolio over a house as an investment."

Millionaire: Your home is NOT an asset — it could be a trap
Millionaire: Your home is NOT an asset — it could be a trap

Indeed, there are other ways to build wealth in the long-term. If you can't afford a home, consider these approaches instead.

Put your money to work in other ways

Young people who aren't ready to buy a house should still use strategies to be smart about their finances, Chatzky tells CNBC Make It.

"The goal, if you're not saving money in the form of paying down a mortgage, is to essentially save it in other ways," she says. Though retirement may seem far off, her number one strategy for financial success without buying a house is saving for the future.

"Making a contribution into some sort of a retirement plan is the biggie," she says, "and maxing out that contribution if possible."

Save for retirement with 401(k)s and IRAs

Author and financial expert Farnoosh Torabi agrees. "If you have access to a 401(k), if you can open up a Roth IRA, those are great places to start," she says.

An IRA is an individual retirement account, while a 401(k) is a retirement account that is sponsored by your employer. If you opt into a 401(k), a percentage of your paycheck is automatically deposited into the account, and some employers match the amount you contribute.

Chatzky points out that 401(k)s work for a lot of people because they're automated, so individuals don't have to remember to contribute, while Roth IRAs rely on your choices. Many experts advise that young people start and contribute to both. And, once you add your contributions, "you want to invest it for long term growth," Chatzky says.

Retirement in America is changing rapidly
Retirement in America is changing rapidly

Save for the future with low-cost ETFs

After you have contributed to your retirement, Torabi suggests using any extra money to open a brokerage account and making investments in the stock market through low cost ETFs, which are a diverse mix of stocks of individual companies. These investments should be for the long run, made with money you won't need to access for 20+ years.

"You can open one up at a site like Betterment, Wealthfront, or Ellevest. These sort of automated platforms that typically invest your money in ETFs and index funds which carry very low fees relative to a mutual fund or stocks," Torabi says.

Torabi suggests considering the automated platforms over working with a financial planner, because those can sometimes carry an extra layer of fees.

Billionaire investor Warren Buffett sticks by index funds as a strategy, calling them "the thing that makes the most sense practically all of the time," on CNBC's On The Money.

The stock market may also be a better bet than real estate. Recent research by, which cites a study from the London Business School and Credit Suisse, points out that "housing returned only 1.3 percent per year after inflation from 1900 to 2011, while stocks tended to perform more than four times better."

Save for the near future, too

If you are looking to have access to your money relatively soon, you still have .

Bonds, typically have lower returns than the stock market but can help you avoid the short-term ups and downs, or volatility, of stocks.

High-yield accounts via online banks like Ally, American Express Bank and Barclays can offer slightly higher returns on your cash than regular savings accounts. And bonds preserve capital in a low risk way.

Mistakes to avoid

For Torabi, one of the biggest mistakes young people can make with their money is taking advice that doesn't line up with their values, especially when it comes to buying a home. Make sure, in the end, you're doing what you want and what's best for you.

"If you want to buy a home and someone is telling you all of the benefits of it and you're listening and you're taking notes, that is a good thing," she tells CNBC Make It. "But if you are somebody who doesn't have the money or the psychological wherewithal to take on this mass investment, and you're thinking you have to do it because your big brother is telling you it is the best thing he's ever done and so you should do it, that is not wise."

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Don't miss: The No. 1 mistake young people make when buying a home

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