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How Does Home Ownership Fit Into An Investment Portfolio and Financial Plan?

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A great framework for developing positions and hypotheses is what Stanford professor Paul Saffo describes as strong opinions, weakly held. Using this approach, my ideas on home ownership have evolved over the years.

Is House Investment

Like most Americans, I started out believing home ownership is a great investment. A few months after finishing graduate school, I started my career and got married. My wife and I then put down 5% and bought our first house that came with a 30 year mortgage.

Later I read contrary opinions. JL Collins wrote “Why your house is a terrible investment.” James Altucher’s opined “It’s financial suicide to own a house.” My opinion began to shift.

I started viewing our home as a liability that tied up capital and drove our spending, rather than it being an asset that would help us achieve our financial goals. But that view is incomplete as well. 

Home ownership is not a great investment for everyone. But it can be a great lifestyle decision with financial upside. Ultimately, we decided home ownership was the right decision for us. 

That left us with a couple questions. How do we incorporate this asset, that represents a substantial piece of our net worth, into our investment portfolio? What role does home ownership play in financial and retirement plans?

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