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^^^^^ Then do some people have a portfolio for major emergencies or what? A sincere desire to leave an estate to someone? What is the point, may I ask?
^^^^^ Then do some people have a portfolio for major emergencies or what? A sincere desire to leave an estate to someone? What is the point, may I ask?
to live on .
ss accounts only for 28% of our budget .
our own money has to be pensionized to provide a self created pension .
that is the job of many portfolios , to provide a safe , secure income stream that fills the gap in spending needs .
In general I think homeownership offers several benefits over renting….they certainly aren’t universal truths, but I think they generally hold true.
(1) Being a homeowner generally provides for a higher quality living experience. It is your home, you can do pretty much what you want in terms of painting, remodeling, etc. My own experience has been that nicest places I have ever lived (both in terms of the structures and neighborhoods) have been when I have lived in non-rental properties. I have no doubt that there are absolutely plenty of rentals that are nicer and in better neighborhoods than any home I have ever owned, but I think for the common person in most situations, owner occupied housing is nicer.
(2) Owning a home provides one with an asset that helps to hedge against inflation and helps to diversify your asset base. If you have a fixed rate mortgage and inflation amps up, your future payments tend to be lower in real terms. To the extent inflation impacts the price of rental housing, you are protected against that increase as well. The house itself will likely serve as a hedge against inflation, and real estate may not always be correlated with the returns of other financial assets, so you get the benefit of reducing the variance/risk of your entire financial portfolio.
(3) Generally speaking residential owner occupied real estate gets some preferential tax treatment at the time of sale. I am not 100% certain, but I believe the current tax rules allow for a couple to exclude $500,000 of any capital gain from the sale of a primary residence from their income tax.
I know there are downsides to ownership…..relatively high cost of buying/selling property, aggravation of home maintenance for many people, the owner absorbs all of the risk of real estate price drops whereas the renter has no risk, easier to pick up and go if renting. All are certainly valid reasons to rent. I think in total, though, homeownership suits me better.
I have never wanted to live through the pricing-out real estate wars again after multiple runs. I'd own a condo before I'd rent again. Where I've lived, rentals go through the roof or get sold out from under. It's not tenable in a lot of areas.
by the same token owning may be no safer or comforting then not owning and having all that cash spinning off a hefty income . so whats your point then with the cant live in a portfolio comment ?
that portfolio from selling that house , pays all living expenses while renting so it does not even make sense .... it is a senseless comment in that respect because having that money in that portfolio can pay for whatever one needs.
you dont live in a portfolio , you live off a portfolio .
The point of my comment (that I can't live in a portfolio) is that I can't live in a portfolio, what other point could there be? :-) A portfolio is not a home, it is not any kind of physical shelter from elements and other intrusions from the outside. The need for a physical shelter is one of the essential human survival needs, while the need for a portfolio isn't. You can live off of various stuff, but you can't physically live inside things that do not provide shelter. A housing provides physical shelter, in addition to also having a financial value. No, you can't use that financial value to pay your ongoing daily expenses, but you can use it to decrease your ongoing housing expenses by at least half and usually more than half (compared with rentals), and you can store the increasing value of the home you own for future needs - all of that while actually using the home as a physical shelter.
The most specific subject of the thread is whether to fully own your home, or pay a small deposit and take a mortgage that (a) may be cheap to pay off over the years due to low % interest on mortgages (at least low compared with % inflation), and/or (b) you are not even planning to pay it off since you might die much earlier than the end of mortgage, and you don't care if the bank takes your cheaply acquired last home after you are dead.
My position is that (in addition to my preference to own my own space, and to not think about debt) I like the fact my home ownership (which happens to consist of 3 condos far apart from each other :-) greatly decreases my monthly cost of housing (compared with rental), particularly during inflation, plus has some other travel-related financial benefits, and increases my total value of assets even though I am actively using some of those assets for living in them, which increase would be also particularly major after an interval of high inflation. None of this would matter if I knew that I would drop dead next month, or next year, but a lot of people in my family have lived very long, I resemble those people physically and healthwise, and I have to consider a possibility of a long haul. So, I don't believe I can even think about NOT owning my home free and clear until I am either very ill, or about 95 years old.
In other words, I would finally sell my home only to maximize supplemental funds in my final years - but I would need to know with reasonable probability that they are my final years. Otherwise, I do not see a point in either paying rent, or paying back a mortgage, every month.
I imagine many people will live fine with their home and incomes only. Knowing the spending habits of a lot of people with big portfolios, it’s not likely they will use much of it.
Old habits die hard.
It provides the security of the unknowns old age may bring. Health being the biggie. And leaving inheritances.
and there is nothing wrong with having a hippopotamus habit.
Oh, definitely!
(I walked right into that one, didn't I...)
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