If you invest in a dividend paying stock or bond it will generate cash for you every month/quarter/year. You don't need to pay the stock or bond to produce. If you send money to a fund every month it goes to buying additional shares of that fund.
If you have an income producing residential rental property your net of your rent minus mortgage, taxes, insurance, etc. will hopefully be a positive cash flow to your pocket every month.
Now lets look at your house. After paying mortgage, insurance, taxes, etc. does it pay you back every month? Not a chance. To add insult to injury that house eats up a lot in decorations, furnishings, upgrades, etc.
The fact that your house may go up in value after a few years does not make it an investment. That's speculation. It's just like buying bare land holding it for years and hoping it goes up one day.
A year ago you might have argued that house prices are going up, up, up. It was tough to sit in the sidelines in Houston while homeowners in the East and West coast were getting 'rich'. Well now that we're back to normal we can assume a historical average of 4% annual appreciation.
With 4% appreciation and after deducting all the expenses associated with a house it can hardly be considered an investment per se.
Does that mean you shouldn't buy a house? Not at all. I believe in the long run homeowners will always come out ahead financially vs renters albeit for different reasons.
So yes, even after all I said go out and buy a house. I'll explain why in the next post :-)
The fact that your house may go up in value after a few years does not make it an investment. That's speculation. It's just like buying bare land holding it for years and hoping it goes up one day.
A year ago you might have argued that house prices are going up, up, up. It was tough to sit in the sidelines in Houston while homeowners in the East and West coast were getting 'rich'. Well now that we're back to normal we can assume a historical average of 4% annual appreciation.
With 4% appreciation and after deducting all the expenses associated with a house it can hardly be considered an investment per se.
Does that mean you shouldn't buy a house? Not at all. I believe in the long run homeowners will always come out ahead financially vs renters albeit for different reasons.
So yes, even after all I said go out and buy a house. I'll explain why in the next post :-)
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