Paying Down Mortgage v. Investing

[shipo]

You know, I used to think investment in my primary residence was the best approach as well, and then that plan bit, hard. In 2002 we bought a brand new house in a nice neighborhood in one of the top two towns in our state; if memory serves we paid about $520,000 for the house. We then spent another $250,000 in upgrades, you know, stuff like finishing out both the attic and the basement yielding over 4,000 square feet. We upgraded the landscaping, put in a far better septic system, and generally took a good house to a great house. During the recession we both lost our main forms of livelihood but hey, we had plenty of cash to live off of, until we didn't; we were forced to sell the house in 2013 for $430,000 as that was all the market would bear, and even at that price it took six months on the market to sell. All in all we put $400,000 in cash into the house, and not even a dollar of that money was ever recovered.

Regarding diversification, I don't believe there is a competent financial advisor in the world who would argue for one to put all of their eggs in one basket.

[vhs]

You know, I used to think investment in my primary residence was the best approach as well, and then that plan bit, hard. In 2002 we bought a brand new house in a nice neighborhood in one of the top two towns in our state; if memory serves we paid about $520,000 for the house. We then spent another $250,000 in upgrades, you know, stuff like finishing out both the attic and the basement yielding over 4,000 square feet. We upgraded the landscaping, put in a far better septic system, and generally took a good house to a great house. During the recession we both lost our main forms of livelihood but hey, we had plenty of cash to live off of, until we didn't; we were forced to sell the house in 2013 for $430,000 as that was all the market would bear, and even at that price it took six months on the market to sell. All in all we put $400,000 in cash into the house, and not even a dollar of that money was ever recovered.

Regarding diversification, I don't believe there is a competent financial advisor in the world who would argue for one to put all of their eggs in one basket.

Thanks for your post.

Well, that housing mess was due to the NINJA loans, and was a unique period of time in the 2000s.

However, with loans more scrutinized and documented, this will not happen in the future unless people start not paying attention to the bank lending practices anymore.

As for financial advisors, they are going to do and say whatever they can to GET YOUR MONEY. If you must do stocks, I would learn from places like "Tasty Trade", one of the best investment websites around. I guess I just view investment advisors as I do lawyers. They are not people that I aspire to be like. I do appreciate BK attorneys, as they do more good. However, these "professionals" are in the business of making money, at our expense.

Regardless, the least savvy investors should stay put with their biggest asset of home ownership as their best investment. I am sure your house eventually recovered as well, but I am sure there were good reasons to sell then.

Finally, people that bought anywhere in the 2010s made out in this current market. I think they just got lucky for the most part, with most of these buyers not having any clue about investing or real estate.

[womanonfire]

Here is my Friday night ramble on this.

I would suggest retired folks go for a townhome or a condo, because there is low stress in managing those properties. Just make sure you buy in a low crime area, and consider who your neighbors are going to be, not the actual property so much. Homes in "mild" climates are also better investments, because of quality of life advantages and you can bypass stressful situations if the power grid goes out, etc.

The home (built in 1996) where we're currently living IS our retirement home. It's a small ranch, approximately 1300 square feet. Zillow shows are home at $325K we owe $115k. Our plan is to refi when the rates go down, take cash out about $50k to do any repairs and if we die with mortgage debt, the value of the home will be so much more, kids will still get $$$ when they sell. My husband is 60, I'm 56.

Interestingly enough, our neighbor's home caught on fire right before Thanksgiving last year. We have vinyl siding It melted the side of our house. The vinyl on it now is original and needed to be replaced and it was in our repair budget. Looks like the insurance company is going to have to replace the whole house and that is going to knock $13k off of our repair budget. The new siding should outlive us. We have saved enough cash to pay for the windows so that is going to get done when the siding comes off. Luckily my husband can do the home repairs himself, he's been in the residential home construction industry for most of his life.