10/06/2023
If Youβre A Spender, a House Can Force You to Save
Some people consider buying a home a forced savings account. If youβre someone who tends to burn through money, a house can be a way to direct those funds toward something that typically appreciates over time.
βGenerally, a person will make the most money by investing their money into these three things: private businesses and ventures, private real estate, or mutual funds and publicly traded stocks,βIf you invest in a home, you can make money in a hot real estate market. But once you figure in taxes, insurance and the upkeep on a home, itβs the least desirable. Of course, itβs better than spending your money on depreciating assets like automobiles and recreational equipment.β
Retirees who have paid off their mortgage have a huge advantage over lifelong renters. Although they still have costs of homeownership (property taxes and maintenance), they also have major benefits such as equity and the ability to leverage this asset in several ways, such as renting out space, getting a home equity loan and downsizing into a less expensive house and pocketing the profit.
βFinancing a home purchase with a mortgage offers an opportunity to continuously save for the future by paying down the mortgage each month, βOwning your home also offers the potential for earning a return on the money you put into it.β
