It’s often said that a house is our biggest investment, yet the primary function of any house is to simply provide us with a place to live. Yes, handsome gains can be had for those with good timing. However, as investments go, houses rarely match the long-term returns of stocks. And most people forget that property taxes, maintenance costs, insurance, and even real estate agent fees eat into those returns.
The bottom line: It’s a mistake to rely on your home as a sure-fire piggy bank of future wealth. It’s wiser to diligently save and soundly invest your income over time.
Photo Credit: Charles D P Miller
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Your home is not an investment, it is insurance, and those who are least able to acquire it are the ones who need it most.
Owning a modest home with a 30-year (or shorter) fixed-rate mortgage and a decent interest rate means you can expect to eventually retire the mortgage as long as your income holds up if you are adequately insured and do not refinance the mortgage.
For low earners, this is crucial to being able to retire with a reasonable standard of living, as opposed to paying half your income for ever-rising rent and never being able to retire.
if you know how to play the real estate market, you can get much much higher returns than stocks, especially in todays economic environment. your articles seem to be very one sided and for the extremely frugal.
Not frugal, keith, so much as pragmatic. By your own words (“if you know how to PLAY the real estate market…”) you’re advocating using the housing market to gamble. You’ve missed the entire point of this article.