Will Our House be a Good Investment?  

 

We finally decided to build a family. Before the thought of marriage, we consider our house first. Our family should have a place to grow and that means buying a house. We finally saved and bought a house but the next question is, will it be a good investment? Many Singaporeans firmly believe that a house is a good investment.

house_investment

They are not wrong but sometimes, we have to evaluate whether owning a house or renting it out is a good choice. Buying a house will probably be our largest purchase next to our cars that is why it should be thought carefully. The question whether our house will be a good investment or not depends. Do we actually want to be a homeowner or are we just doing what other people dictates us to do next?

Robert Kiyosaki shared some of his thoughts about good investment. Robert is a famous personal finance author of Rich Dad, Poor Dad. According to him, a good investment refers to something that can pay us more than what we paid for. His definition of asset and liability are easy to comprehend as well. He refers asset as “anything that puts money in our pocket” and liability as “anything that takes money out of our pocket”.

investment-at-home

Assets and liabilities define whether it is a good investment or not. In order to understand whether our house will be a good investment, we have to put it in the context of asset and liability. When we decide to have our house, we pay mortgage every month not to mention the insurance and the taxes. Even if the house is paid off, we still need to spend some money maintaining it and paying more insurance and taxes. This situation shows that a house “takes money out of our pocket” which is the definition of a liability.

However, there is home value appreciation. It can make our residence an asset but if the purchase is at the right time – but most of the time it is not. If we rent out the house, there are still expenses that we must pay but the difference is that we are not making the payments – our tenants will. Our tenants give us more each month. Now that house is an asset.

The question here now is where will we live? The secret is to look at our life and determine if we want to live in the same area 5 or 10 years from now. If we do not want to be locked down into one area all our lifetime, buying a house is impractical.

Real estate

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