Your Home as An Investment Asset

Athena By Athena , 17th Jan 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/3u2e6zj1/
Posted in Wikinut>Business>Investment

Be realistic about your gains. In the long run, the value of your home can have an expected rise of about one to two percentage points over inflation.

How to Maximize Your Home as an Investment Asset

With the present economic crunch, many homeowners are left thinking if their house is a wise investment or merely place to stay. Is your home a valuable asset or a liability? Here are some of the major concerns of homeowners and tips on what they can do with the property given the present economic situation.

Is my home more of an investment or a liability?

Although your home can be considered your most valuable asset, it is unlikely to deliver greater gains in the long run as compared to investing in a diversified portfolio of stocks and bonds. This has been held true even before the drop of real estate values. Over the past two decades – including the period of the real estate investment growth—the average gains of home prices are just about 3.6% per annum as compared to stocks, despite their recent drops, were up 8.4% about the same period.

The Long-Term Advantages

There are, however, other important financial benefits of owning a home. A homeowner can benefit from tax breaks. These are deductions for property taxes and mortgage interests (plus, the first 500,000 that couples make after selling is tax-free). Owning a home could also be counted as an ideal savings tool— with every mortgage payment, you are forced to set aside money, thus keeping your savings intact in form of a tangible asset. This is also the key reason why most homeowners have a higher net worth than renters. Throughout history, real estate has been considered a good hedge against inflation.

Additional Tips

If you plan to resell your home in the future, don’t overspend in renovations, you might recoup when you sell. Instead, focus on fixing its problems and invest in projects that add functionality to the home.

Be realistic about your gains. In the long run, the value of your home can have an expected rise of about one to two percentage points over inflation.

Tags

Business, Equity, Finances, Funds, Investing, Investment, Mortgage, Property, Property Management, Real Estate

Meet the author

author avatar Athena
A mother, a musician, a teacher, a writer... in that order.

Life inspires me to write.

Share this page

moderator Mark Gordon Brown moderated this page.
If you have any complaints about this content, please let us know

Comments

author avatar ittech
18th Jan 2012 (#)

Very nice article.thanks..

Reply to this comment

author avatar ittech
25th Jan 2012 (#)

oh good to know this...:)

Reply to this comment

author avatar ittech
20th Feb 2012 (#)

You've smashed it again.

Reply to this comment

author avatar ittech
20th Feb 2012 (#)

Great write, really enjoyed my read.

Reply to this comment

Add a comment
Username
Can't login?
Password