The Biggest Investment Of Your Life

One of the most common statements when people talk about financial planning is that buying your home will be the biggest investment of your life. I have a problem with this because it implies that by purchasing a home to live in you are solidifying your financial future. The problem is that most the time, the purchasing of a home, is not treated like an investment at all.

A home, a place where you are going to live, is usually purchased with a great deal of emotion with little thought to how it will actually impact your financial future. This is totally fine, the important thing is to realize that when making the purchase. If what you want to do is buy a place where you want to live and raise your family then do that and be happy about it. If you want to buy a piece of real estate as an investment, and you happen to be living there as well, then it is a much different approach. You need to factor in, not just home value, but all the costs that go into living there versus somewhere else. So property taxes, insurance, mortgage payment, maintenance and repairs, buying costs, selling costs, etc. They all impact what your return on “investment” will be in the end.

I am not advocating not purchasing a home. My point is be aware of the purpose in purchasing that home and buy accordingly. If you buy smart the home you live in just may be the biggest investment of your life. If you buy without the investment in mind you may find yourself down the road with a home that did nothing but keep up with inflation. So, when buying really think about why you are buying and what your goals are for that home.


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