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> The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment

> The truth is, buying a home is the only form of investing on margin for most. Also, it's compulsory investment and savings -- both with the principal payment and in the form of property improvements. I find it weird that people look at houses as "investments". For an asset to be an investment for me, it has to be productive. Buying stock in a company or starting your own is productive; buying farm land is productive (you can use it to produce food). A house in itself doesn't produce anything, it's just an asset. If you're relying on buying it cheap and selling it at a high price, that's speculation, not investment (that house still hasn't produced anything, it just happens to be more valued by other people).

eweise 13y ago
umm, it produces shelter.
- ahomescu1 13y ago
  You can rent for about the same money, and still get shelter. There are convenience advantages for owning your own home, but it still seems like a bad "investment" to me.
  - secabeen 13y ago
    True, but not at a fixed cost, and with no guarantee of residence. For people with families, the elderly, and people with strong community connections, the value of having a shelter that you own has substantial value. You can also customize and improve a home you own. Many people have housing needs that cannot be met in the rental market. With a home you own, you can make the modifications you need, and accept the impact to your home's value.
    - ahomescu1 13y ago
      > You can also customize and improve a home you own. Many people have housing needs that cannot be met in the rental market. With a home you own, you can make the modifications you need, and accept the impact to your home's value. Sure, I agree with all of that. However, none of these qualify as economic investments IMHO, unless you decide to start a business out of your home. Keep in mind I'm focusing strictly on investment in economic terms (production of goods or services). I agree that the house provides various benefits to its owners, just that none of them are economic returns.
      - encoderer 13y ago
        I think you have a very narrow definition of "investment" that doesn't match how others use it. I challenge you to explain why speculation in equities is an "investment" but speculation in real estate isn't. Suppose I create a corporation, sell shares, buy real estate, sell it for more money, and return value to shareholders. Is that an investment? I think your argument is thin here.
        ahomescu1 13y ago
        > I challenge you to explain why speculation in equities is an "investment" but speculation in real estate isn't. Speculation in equities is also not an investment in my book. I was referring to buying stock long-term for the dividends, not short-term speculation.
        encoderer 13y ago
        When does it become "long term investment" and not "speculation"? I think your argument is thin here, too.
        devdas 13y ago
        Dividends, as opposed to earning with a stock price increase.
aidenn0 13y ago
So commodities aren't investments?
- ahomescu1 13y ago
  "define: commodity" on Google gives me: "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee." By this definition, "commodities" are also materials that can be processed into something more complex, adding value, which makes them great investments. That's not why people usually buy a house.
  - aidenn0 13y ago
    I disagree. Commodities derive value from 2 things: 1) Usefulness 2) Scarcity Something useless and abundant has little value, something very useful and scarce has high value. A house is useful (it's a place to live, with varying personal usefulness based upon geographic location; a house 3 states away from my job is personally not very useful to me, for example) and scarce for any given geographic location. The fact that copper is useful because you can build stuff out of it, while houses are useful because having a place to live is useful is irrelevant. [edit] And the both the usefullness and scarcity of houses can change (just like with copper). Someone comes up with a cheaper way to mine copper? Price drops. A locality loosens their zoning laws? Price drops. Someone finds a new, valuable use for copper? Price rises. Big tech boom in the bay area? Price rises.
  - encoderer 13y ago
    But that's not at all what fuels the commodity market! People "invest" in precious metals so they can convert them into something else? Anyway, I'm done with this discussion. Feel free to have the last word. It's clear to me that you've made-up your own definition of 'investment' and cannot see past that. Totally your right. But for the rest of us, here's what investment means: investment noun : the outlay of money usually for income or profit : capital outlay; also : the sum invested or the property purchased

eweise 13y ago

umm, it produces shelter.

ahomescu1 13y ago
You can rent for about the same money, and still get shelter. There are convenience advantages for owning your own home, but it still seems like a bad "investment" to me.
- secabeen 13y ago
  True, but not at a fixed cost, and with no guarantee of residence. For people with families, the elderly, and people with strong community connections, the value of having a shelter that you own has substantial value. You can also customize and improve a home you own. Many people have housing needs that cannot be met in the rental market. With a home you own, you can make the modifications you need, and accept the impact to your home's value.
  - ahomescu1 13y ago
    > You can also customize and improve a home you own. Many people have housing needs that cannot be met in the rental market. With a home you own, you can make the modifications you need, and accept the impact to your home's value. Sure, I agree with all of that. However, none of these qualify as economic investments IMHO, unless you decide to start a business out of your home. Keep in mind I'm focusing strictly on investment in economic terms (production of goods or services). I agree that the house provides various benefits to its owners, just that none of them are economic returns.
    - encoderer 13y ago
      I think you have a very narrow definition of "investment" that doesn't match how others use it. I challenge you to explain why speculation in equities is an "investment" but speculation in real estate isn't. Suppose I create a corporation, sell shares, buy real estate, sell it for more money, and return value to shareholders. Is that an investment? I think your argument is thin here.
      - ahomescu1 13y ago
        > I challenge you to explain why speculation in equities is an "investment" but speculation in real estate isn't. Speculation in equities is also not an investment in my book. I was referring to buying stock long-term for the dividends, not short-term speculation.
        encoderer 13y ago
        When does it become "long term investment" and not "speculation"? I think your argument is thin here, too.
        devdas 13y ago
        Dividends, as opposed to earning with a stock price increase.

aidenn0 13y ago

So commodities aren't investments?

ahomescu1 13y ago
"define: commodity" on Google gives me: "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee." By this definition, "commodities" are also materials that can be processed into something more complex, adding value, which makes them great investments. That's not why people usually buy a house.
- aidenn0 13y ago
  I disagree. Commodities derive value from 2 things: 1) Usefulness 2) Scarcity Something useless and abundant has little value, something very useful and scarce has high value. A house is useful (it's a place to live, with varying personal usefulness based upon geographic location; a house 3 states away from my job is personally not very useful to me, for example) and scarce for any given geographic location. The fact that copper is useful because you can build stuff out of it, while houses are useful because having a place to live is useful is irrelevant. [edit] And the both the usefullness and scarcity of houses can change (just like with copper). Someone comes up with a cheaper way to mine copper? Price drops. A locality loosens their zoning laws? Price drops. Someone finds a new, valuable use for copper? Price rises. Big tech boom in the bay area? Price rises.
- encoderer 13y ago
  But that's not at all what fuels the commodity market! People "invest" in precious metals so they can convert them into something else? Anyway, I'm done with this discussion. Feel free to have the last word. It's clear to me that you've made-up your own definition of 'investment' and cannot see past that. Totally your right. But for the rest of us, here's what investment means: investment noun : the outlay of money usually for income or profit : capital outlay; also : the sum invested or the property purchased