It also depends on where you are in your life. As young as Travelfreek sounds, still with kids under roof, (?) the security of a paid off home ...
What is this "security of a paid off home" that people speak of? It seems that not only does that appear to be a myth, it seems the exact opposite. Isn't a young person
more secure with a mortgage?
A common risk a young person has is a long stretch of unemployment. A $200,000 mortgage has a monthly P&I of ~ $940/month. While unemployed, they still need to pay taxes, ins, utilities, maintenance & repairs.
With $200,000 in the bank, they could pay that mortgage for over 16 years. Maybe less, considering some would be in equities, and
might be down when needed. But even an aggressive 75/25% AA would provide many years of cushion, and be available for all those other bills, which could lead to a loss of your home if left unpaid.
[edit/add] - And don't forget that $200,000 invested would likely be kicking off ~ 3% in divs, ~ $500/month. That would pay 1/2 the monthly mortgage w/o selling a thing. Probably some cap gains distribution at end of year as well.
So no, I think a paid off home leads to
insecurity for a young person.
Separately:
... I know it is not common practice to include ones home as part of their AA, but I do. It is a large percentage of my NW. ...
If you are in a position to sell (and pay any cap gains due), and downsize, then I think it could make sense to include the portion that you'd have after liquidating in your portfolio. The definition of NW includes all assets & liabilities anyhow, so that should not be debated.
But if you would just replace the house with another of equal value, I don't see the point of treating it as part of your liquid investments.
-ERD50