B.L.I.P. Heros
Wednesday, January 2, 2008
Buying versus Renting a Home
The Vancouver Sun had this article published on December 28th. Jim Yih explains his opinion about why it's better to own a house, rather than rent one. This topic of buying a house as an investment versus saving the extra money you WOULD have spent on the mortgage and investing it wisely, is a valid and interesting discussion. So let's discuss!
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Mr. Yih's article is a great one for the average person. For someone who is not willing to intently study investments and know EVERY detail about the fund in which they are investing, I would say follow this guy's advice. Pay off your house and dump the rest into your house! For me, however, I'm not normal. I am no longer willing to just toss money in the wind (after a stern rebuke from a seasoned investor) but I am also not willing to just sit there and let inflation eat away at my savings. That's called foolish and Jesus preached against that kind of fearful living. It is also funny to read this article because I have been approached by friends who are also 'financial advisors' and have handed me the example advice in the article almost verbatim. My response to them was "I'm sorry. If you can't tell me who the leaders are of every company in this fund are, I'm not comfortable giving them (you) my money." I also followed Rich Dad's advice and asked him "Are you willing to guarantee this investment?" To which they immediately replied 'No. Who can know the market's future?" Translation: I have NO idea what I'm doing in this advisor's chair! I'm just doing what I learned in fund sales training. Caution, people. I've lost enough money investing without research and these 'conservative funds' are no different. They are risky so don't buy the story that they aren't.
With all that said, I think it should be encouraged to 'consider' the idea of leveraging on your primary residence for buying more real estate. I think this is one area that the 'average person' is able to study and handle and can be very lucrative, or at least moderately so.
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