Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

Your Home is Not an Investment

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Your Home is Not an Investment

    Your Home is Not an Investment

    By Neville Kennard

    Contributing editor, www.economics.org.au

    One of the underlying causes of the Global Financial Crisis was a government-induced over-investment in houses and property. Governments found it to be politically convenient to make special concessions and incentives to people to own their own home. In the USA, for example, home interest-payments have been tax-deductible. In Australia a home has been Capital-Gains Tax Free. Many countries have relaxed-lending criteria for home-ownership leading to people spending and borrowing more than is prudent on their home.

    All this has lead to an over-investment in houses. On top of this the house-market in many places has been buoyant, leading people to think they have made a "good investment" in their home.

    For many people their home, the house or apartment they live in, is the single biggest purchase they make in their life. People tend to keep their home for a long period, sometimes changing and moving as needs and wants change. Quite often the value of their home increases over their life or ownership period. This is often due to inflation, where it just seems to increase in value, but doesn't in real terms. Sometimes supply and demand pushes the price up, or down. Actually it is mostly the land on which the house sits that increases in price or value; the house itself mostly depreciates with age and declines in value.
    Last edited by donna; 07-02-2011, 11:10 AM. Reason: shortened quote
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    F F S !

    Anybody interested in paying market rates for rent for life?
    www.3888444.co.nz
    Facebook Page

    Comment


    • #3
      You what?

      Steady, Keys; steady, there . . .

      It's not just that; just the obvious. It's the
      whole superficial overview explicit or implicit
      in such fillers. Fillers kept for slow or no news
      days, or times when too many staff are on
      annual leave and the media/paper may look thin.
      Originally posted by Daily what?
      Look for investments that will hold their value or increase in value (in real terms) and give a return. A business, shares, investment property may do this. Enjoy your home, and if it does actually give you a financial return when you sell it, look upon that as a bonus.
      If those 3 items mentioned are equal in that
      they all may, just may, give a return, then
      the next paragraph makes little, if any sense.
      Originally posted by Daily what?
      Over-investment in housing and home-ownership has meant less investment is available for business-investment and more productive uses, Let's hope the home-ownership binge is behind us. Politicians can't be trusted to make good investment-incentive rules, so we must each think for ourselves and choose what is in our individual long term interest.
      The words 'politicians' and 'trusted' do not fit well
      together in the same sentence. That aside, with
      lots of NZ businesses struggling and many more
      'falling over,' who (in their right mind) would want
      to invest in what's euphemistically called "more
      productive uses."


      Ignoramus!

      Bah! Humbug!
      .
      Last edited by Perry; 08-01-2011, 11:06 PM.
      Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

      Comment


      • #4
        Yep, the sort of article Bernard Hickey might write.
        I liked this bit:
        Politicians can't be trusted to make good investment-incentive rules, so we must each think for ourselves and choose what is in our individual long term interest.
        After thinking for ourselves about our long term interest we've ended up picking our home as an investment and it's turned out to be a winner.

        Comment


        • #5
          But the property we purchase is an investment , In that case we also have purchased our house so it is indirectly an investment . We can utilize it as an investment too , there is no harm in using it as an investment .

          Comment


          • #6
            Not to mention that some people use the
            equity in their PPOR as a good investment
            tool, to start their life as a PI!
            .
            Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

            Comment


            • #7
              Originally posted by Perry View Post
              Not to mention that some people use the
              equity in their PPOR as a good investment
              tool, to start their life as a PI!
              .
              Or use the equity to invest with Hanover Finance, Blue Chip, Five Star Finance, et al.

              Just because people have equity in their own homes, it doesn't mean that they have to access that equity and it doesn't make them good PI's or investors in ANY product.

              Yes, I am aware that I opened a can of worms with those comments.
              Patience is a virtue.

              Comment


              • #8
                Originally posted by Essence
                Just because people have equity in their own homes, it doesn't mean that they have to access that equity and it doesn't make them good PI's or investors in ANY product.
                Absolutely. Fools and their money do
                get parted in damnable ways. Plenty
                of financial planners/advisors around
                to help with that.
                Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

                Comment


                • #9
                  Originally posted by essence View Post
                  Or use the equity to invest with Hanover Finance, Blue Chip, Five Star Finance, et al.
                  essence,

                  Are you saying that you think there are people out there who borrowed money on their house mortgage, and then invested that money in finance companies?

                  Comment


                  • #10
                    Certainly was the case with Bryers & Boo Chip.
                    .
                    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

                    Comment


                    • #11
                      I understand that Perry, thanks.

                      But that wasn't the question.

                      Comment


                      • #12
                        Originally posted by speights boy View Post
                        essence,

                        Are you saying that you think there are people out there who borrowed money on their house mortgage, and then invested that money in finance companies?
                        SB,

                        Whilst I don't have documentary proof, yes I am convinced that there are people who have done this.
                        Patience is a virtue.

                        Comment


                        • #13
                          Yes essence, I do agree that some people do make some real silly decisions with their home equity.
                          As Perry said, often with the assistance of some conflicted advisor.

                          If people were stupid enough to borrow to invest in fixed interest then hopefully they know better now.

                          Comment

                          Working...
                          X