In some circles, this won’t be popular.
Wanted to say it for a long time. But always struggled finding the words. Tonight that ends. Ink hits paper. Well not really. Always sucked at handwriting class.
Tragic they don’t teach cursive, art or PE or anymore. Robotics & Instagram baby. Less human, more automation. Good for profits & bad for everything that came before 1999.
But that’s for another sitting. We’ll need a whistle wetting session of white oak aged corn liquor & and quasi illegal cigars for that discussion. Cuss words & bottle rockets. Maybe a brush fire & spear to chuck. Definitely Doritos.
Not a popular opinion.
Because it hurts industry profits & cornerstone talking points long entrenched within that industry. My industry specifically. But that’s ok.
It’s the truth. At least in my opinion. And I’d like to share it. Here and now.
Don’t mind telling this truth. Because at the end of the day, keepin it real is right up there with Jesus, Allah & baseball.
Too much politically correct bullshit in this world. Everybody selling an agenda. Propaganda. Everybody gets butthurt. If you read far enough, I might bully you into agreeing with me. Won’t that be fun. Say Uncle. Bitch. Or better yet, comment on how wrong I am.
Cool with that too. I’ve been wrong on a lot of things in life. And occasionally need punked to correct course. Examples... WMDs in Iraq, Diet Coke & Bruce Jenner. If you’ve punked me before, thank you. I probably needed your bitter medicine. Carry on.
The biggest lie in Real Estate/Mortgages is your home is an Investment.
It’s a liability you live in. With a built in savings/equity account potential “if”...
-A) you bought low & sell high
-B) hold it long enough for the delicate balance between inflation & appreciation to outpace your original purchase price
-C) you have a fully amortizing mortgage. There is also a minor tax deduction for interest (if your AGI is within allowances).
Paper Investments pay dividends.
Investment properties pay dividends.
Investing in yourself pays dividends.
Investing in relationships pays dividends.
But not your primary home. Not a box.
Add it up. You pay taxes/insurance/interest/maintenance/HOA & utilities. All of that with POST tax money.
What about those recurring expenses are investments? Where are you getting a return?
You are paying money out & not getting anything back.
Industry clowns be like... “your home is your largest investment.”
When you hear that... run. Fast Forrest. Kiss Jenny on the way out & help Lieutenant Dan find his prosthetic under those canned Budweisers. Then run.
Bozo is selling you something expensive. And he ain’t got no ping pong balls for you to pitch into 6 buckets.
If your home is your largest investment... you are... well... up the creek without a paddle. Sweating like Dick Nixon getting interviewed by Frost. Elizabeth Warren playing blackjack at a Sioux casino.
You’ll sweat & toil away your life paying on one piece of earth. That in the end, will net you little in return. Your return is subject to selling/liquidating, market fluctuations, potential changes in tax laws, constant maintenance, sea level fluctuations & hoping those neighbors don't let Cousin Eddie's Recreational Vehicle sit in the driveway too long.
It’s a money pit. Plain & simple.
Think about it... “your largest investment” is tied up in 1 idle sitting piece of earth.
-there are intangibles such as happiness/memories/comfort/convenience. Those can’t be glossed over. I get it. Best science can tell, we only come around this 3rd rock from the sun once. Live it up. Party on Wayne. Party on Garth. Do what makes you happy. If sprawling square footage & Normal Rockwellish neighborhoods fall on this list, then mortgage away.
But Billions of humans have walked this earth before us. Few have etched in their headstone “Had Fat Crib.”
Most would probably say shit like... “shoulda took more vacation, shoulda learned Spanish, shoulda worked less, shoulda not listened to that King, shoulda planted potatoes on higher ground & shoulda not peed on that electric fence.”
-most traditional amortized mortgaged do have a portion of the payment going towards principle each month. That portion accelerates as the loan progresses, with slightly more $ going to principle each month. This basically serves as a built in savings account. Equity. But that equity grows relative to 2 parallel curves... inflation & appreciation/depreciation. That’s a lot of moving parts to bank on.
My long winded point is simply to diversify.
Not only in a house. And not only in a retirement vehicle targeting 59.5 years of age.
Seek out options which pay a return NOW.
If you can’t do that because of a mortgage payment, then sell that house & buy something smaller. Free up some income to play with. Experiment. Lose & learn, then double down to win. You have to swing the bat. Won’t always make contact. But in that effort & preparation usually lies pay dirt.
Don’t buy 1 mansion you can barely afford.
Buy a smaller decent house 1/3rd the price of that mansion then 2 other income producing properties to put money in your pocket NOW. Maybe those 2 will cover the cost of your decent house.
Or if properties aren’t your thing... divert 1/3 of that money to a mutual fund, & the other 3rd to learning a new skill/trade/hobby/education. INVEST IN YOURSELF. Demand a return now. Not 1 wooden box.
Why push off life to 59.5 years of age? Or when you finally pay off that massive mortgage?
What if you don’t make it that far?
I’ll certainly be happy to get you a mortgage on that fat mansion. Got a dude.
But I’m happier to see folks make wise financial moves. Responsible moves. Investing in themselves. Investing in vehicles that return dividends now. Both in dollar signs & peace of mind. Putting their eggs in a-lot of different baskets. It’s a formula. And in my unscientific observations, seems to be a winning pony.