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Re: Newbie making a start in value investing
Vixxxx
07-09-2008, 1:47 AM | Post #2537068
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A home isn't a bad investment, but it's not tax-free. You will have to pay property tax proportional to the value of the home. You will also need to pay home owner's insurance (and possibly flood insurance) proportional to the value. You will need to pay for maintenance. Also, you cannot buy a house with pre-tax money. A home purchase would be an after-tax investment, so it would make more sense to compare it to a roth IRA than to a traditional IRA or 401k. Other down sides to using a house as your primary/sole investment strategy are lack of diversification (a lot of money in one place), and low of liquidity (selling might take some time and effort, and you'll probably shell out a big chunk of money to a real estate agent. Also, you have to sell it all at once. You can't sell half of it now and half of it later).
Topics
401(k)
insurance
liquidity
Roth IRA
Traditional IRA
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