Do You Think of Your House as an Investment?—Pat McKeough on YouTube

This is the latest in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. This time, the topic is one that figures into the retirement planning of many Canadians. Is my home an investment? Make sure you’ve made careful and complete calculations before you come to that conclusion, advises Pat.
Planning for Retirement: Your House as an Investment Q: When I’m planning for retirement, where does my home fit in? To what extent should I treat that as an investment? Pat McKeough: I think you should take a more neutral view of it: don’t think of it as an investment, think of it as an asset. An asset could be your stamp collection, or it could be your swimming pool, or a racehorse. A racehorse is not a good investment and a house isn’t necessarily a good investment. You need to think of what it’s costing you to own it, to run it, to maintain it—the repairs. Of course you also need to think that if you sell the house you’ll need to invest the money and have a stream of income you use to rent someplace to live. And that gets to be expensive, too. Compare those two streams of income: the income you save by staying home plus the cost of staying there, and the income you get from investing the value of the house minus the sales commission. Once you do that, you have a pretty clear idea of whether your house is an investment, or just a hobby. [ofie_ad] COMMENTS PLEASE Did you buy your house as an investment, or did you think first of a place that suited your family’s needs? Does the equity in your house figure prominently in your retirement planning? Do you have a plan in mind for the day when you sell the house? Let us know what you think in the comments section below. Click here.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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