savings

5 money myths that are financial nonsense

No. 3: A home is a good investment
Myth No. 3: My home is a good investment © V. J. Matthew/Shutterstock.com

No. 3: A home is a good investment

Not these days. In many areas, housing prices are still below the levels seen during the bubble years. Then, there are the increasing costs of property tax and maintenance.

This doesn't mean you shouldn't own a home. Just be aware that your house shouldn't be looked at as an investment opportunity.

"We know from the recent financial crisis that the value of a home can fluctuate dramatically and that a home is certainly not a foolproof investment," says Antenucci.

And, he says, the more you borrow to make that "investment" in a home, the more risk you're taking on.

Which raises the question: Should you pay off your mortgage as soon as possible?

It depends on whether you plan to live in your home for the rest of your life, says Adam Koos, president of Libertas Wealth Management Group Inc. of Dublin, Ohio.

"If the answer to that question is no, then it doesn't make sense" to pay off the mortgage quickly, he says.

The reason? You are tying up your money in an illiquid asset and can't get it back unless you sell your house, he says.

"Now, if you want to live there forever and this is your true retirement home, it's OK to pay it off for peace-of-mind sake," he says. "(However), one should still weigh the cost of debt versus the rate of return earned (on that extra money) elsewhere."

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