cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Hey L...you get it!!!!!
Retire@40.. are you 40? are you retired? (sorry if I admit to not taking the time to investigate)..
As has been explored already in many posts here: implicit "cash flow" comes from NOT having to pay rent. Rent MAY be inferior at times, but what renting brings one may also be inferior.
Personal housing (to me) is an asset class unto itself.. one that precludes me -largely- from having to WORRY about other asset classes. My accounts can go to near zero and as long as I can somehow come up with prop.taxes this baby is MINE. Try that with most any other kind of investment.
My old house in the US was definitely an investment, though I did not intend it as such. I just knew that buying into that neighborhood would not do me wrong. Nor did it. I would not be sorry to've kept holding that property to this day nor into the future, notwithstanding the general downturn; its proximity to the city center is and was key. I sorely regret not hanging onto it, but didn't want the hassles of overseas prop. mgmt. So be it.
NOW, what I have traded for.. is "a castle" (sez my mom).. and not nearly as liquid an "investment" (Italians mainly and Europeans generally do not change houses easily as do Americans). I may have made a mistake, but it will be seen what rich Italians or foreigners may want to pay tomorrow for a no-need-of-restructuring stone villa with 3/4 acre of land <15 minutes from the A1 (major) h'way, halfway btw. Rome and Florence. Who knows? I only know it could be worse.
Anyway.. if I hold shares of CITI.. what? Even If I were to have 100,000 shares.. will they let me camp out/sleep rough in one of their many atria in NYC, London, Dublin?? in the kiosk of one of their ATMs in Dubuque or Dakka?
No.
Here, however, I freely camp out in MY atrium. You are all welcome to come pitch a tent and see the Milky Way free of charge, weather permitting.
Another small aspect for you to re-assess, retire@40:
Unless it pays a dividend.
To me,
Stock dividend = money to live on.
House paid for outright = freedom from vagaries of market rent and random (land)lords.
This is a bad thing?
Answers:
1.) Own
2.) Yes
3.) Yes, to an extent
4.) Yes, to an extent
The "extent" is the difference between our current home size/value and the lower limit of a future 'livable' home size/value for us.
Retire@ 40: I really tried, but could not comprehend, your distinction between "a 'cost' asset" and "an 'investment' asset".
To me, a cost is a cost; an asset is an asset. A house has cost aspects and investment aspects .. but so do most all other assets. A mere house is less impegnative than a Van Gogh. Wanna buy a 'Banksy' for £200,000? Wanna try and INSURE it?
W2R: ayuh!
you can say the same thing about a car, as long as you can make the payments its yours and as long as you own it the cash flow comes from not leasing a car . while all that may be true i still wouldnt count the car for figuring net worth for retirement purposes. it may count on a balance sheet for figuring expenses but other than that i dont see the point of counting it and i say the same thing about my house
One big caveat....a CAR is a DEPRECIATING asset, and a HOUSE is an APPRECIATING asset.........but in the end I agree...........
In any case, a spent dollar that will not generate future proceeds in one way or another is a cost.
This notion that other people make about getting some benefit from the asset is all fine and dandy, but it's only the beneficial use of dollars already spent.
I have been trying to follow your arguments, but can't really tell which side of the fence you are on.
I think your statements above are true only when something depreciates in value as you use it. In that case, you have indeed traded your money for some beneficial use. HOWEVER, if for whatever reason, you sell at a higher price, then there is no "spending". In the case of home ownership, there is a good chance that the investment aspects will overwhelm the spending aspects in time.
It doesn't seem like a good idea to ignore the investment aspects of home ownership and pretend that the entire cashflow is an expense.
We always have the same argument and none of us can resist participating even though we probably all realize that we are arguing different things. The problem may come from the OP's question #3 "Do you count your home into your net worth equation?" As if there is an argument in the financial community about what "net worth" is. Your house counts, the current value of your car counts, your furniture counts, your coin collection counts, ... Otherwise you are not describing net worth, you are describing something else.
Most of this disucussion is about another topic - something like, "what assets do you consider in evaluating your ER readiness and in what way?" Or maybe OP should have asked on #3 something like, "If you own a home do you view it as a source of cash during retirement?"
True if you plan on extracting in dollar form the value of that home at some point in the future. The people on here that say they do not include the value of their home for purposes of retirement assets are not planning on extracting any dollars from that home.
...
In this case, what difference would it make in their retirement if their house is worth more than they paid for it?
We always have the same argument and none of us can resist participating even though we probably all realize that we are arguing different things. The problem may come from the OP's question #3 "Do you count your home into your net worth equation?" As if there is an argument in the financial community about what "net worth" is. Your house counts, the current value of your car counts, your furniture counts, your coin collection counts, ... Otherwise you are not describing net worth, you are describing something else.
Most of this disucussion is about another topic - something like, "what assets do you consider in evaluating your ER readiness and in what way?" Or maybe OP should have asked on #3 something like, "If you own a home do you view it as a source of cash during retirement?"
One big caveat....a CAR is a DEPRECIATING asset, and a HOUSE is an APPRECIATING asset.........but in the end I agree...........
As a practical matter people don't include their home in SWR calculations because the SWR studies were done assuming you are invested in stocks (and/or bonds) but not real estate.
One big caveat....a CAR is a DEPRECIATING asset, and a HOUSE is an APPRECIATING asset.........but in the end I agree...........
If you own a piece of land and rent it out for RV users do you get to depreciate the land?Agreed but in reality the land appreciates while the structure depreciates without serious upkeep and updating to current trends. Have taken on enough back breaking rehab projects to atest to this
If you own a piece of land and rent it out for RV users do you get to depreciate the land?
What's the useful life for unimproved land? It's indestructible and permanent, isn't it?
Hey, people are still living in Royal Gardens (starbulletin.com | News | /2008/01/03/) despite the lack of road access.Unless it's near an active volcano or close to the San Andreas fault........
but I don't think that the IRS is giving them a depreciation allowance on their land. Many of them can't even file an insurance claim.