3 ms·

How do they "invest" in their home? Renovate it to the max, keep buying a more expensive one or paying off your loan?

pimmen 9y ago
They buy more expensive homes than they need (or stay in the one that housed a family of four way after their kids have moved out) and pay off the mortgage. That's "saving" for retirement; they expect to get the money they've payed on their mortgage back when they sell it. Some practically only pay off the interest because we can do generous deductions off it and we have low demands of paying off the principal (or at least we used to have, now the Department of Finance is advising the government to require that banks make higher demands of paying back the principal) and why should I pay off the mortgage in full if the property prices always go up? At least that's the reasoning. I have nothing against paying off your loan, but seeing it as your one and only retirement investment is something I have serious problems with. You should live where you are most comfortable living, I don't want people speculating in their homes on a casual basis "knowing" it always pays off. If you're going to really invest in your home, renovate a floor and rent it out. That way, you're contributing to the economy, you're not just speculating you're value investing and you know what the revenue stream of your investment really is. I had the privilege of growing up in a wealthy household with 7 bedrooms and after me and my brother moved out my parents decided three rooms was enough and converted the house into three apartments, living in one and renting out the other two. Many of the neighboring families however don't like the idea since it means work, but they also don't want to move into something that won't grow as much over time. They're staying put even after the kids have moved out in hopes of cashing in right before retirement.

They buy more expensive homes than they need (or stay in the one that housed a family of four way after their kids have moved out) and pay off the mortgage. That's "saving" for retirement; they expect to get the money they've payed on their mortgage back when they sell it. Some practically only pay off the interest because we can do generous deductions off it and we have low demands of paying off the principal (or at least we used to have, now the Department of Finance is advising the government to require that banks make higher demands of paying back the principal) and why should I pay off the mortgage in full if the property prices always go up? At least that's the reasoning. I have nothing against paying off your loan, but seeing it as your one and only retirement investment is something I have serious problems with. You should live where you are most comfortable living, I don't want people speculating in their homes on a casual basis "knowing" it always pays off. If you're going to really invest in your home, renovate a floor and rent it out. That way, you're contributing to the economy, you're not just speculating you're value investing and you know what the revenue stream of your investment really is. I had the privilege of growing up in a wealthy household with 7 bedrooms and after me and my brother moved out my parents decided three rooms was enough and converted the house into three apartments, living in one and renting out the other two. Many of the neighboring families however don't like the idea since it means work, but they also don't want to move into something that won't grow as much over time. They're staying put even after the kids have moved out in hopes of cashing in right before retirement.