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RentingForHalfTheCost
2012 Mar 28, 3:25pm
I would love to see the asset allocation of BA families. I would guess it is more like
80% house, 5% cash, 15% equities, 150% debt
:)
For some of us, at some point, something like 1/3 house, 1/3 cash, and 1/3 equities may feel more comfortable. That's not the exact asset allocation we went with, but we are not able to stomach 100% allocation in equities.
Your house isnt an asset, you need to stick to stocks and bonds as investments. You can sell your securities any time, cant do that with your home.
Forget about your home being an asset. Dont go there!
80% house, 5% cash, 15% equities, 150% debt
only way out!
Number of Deaths Due to Suicide per 100k / Foreclosure rates
http://www.datamasher.org/mash-ups/number-deaths-due-suicide-100k-foreclosure-rates
Hi All,
I don't believe I suggested house to be an investment. The same way that cash is not an investment but part of your overall asset allocation, house is not an investment but still part of your overall asset allocation.
WRT Renting's specific question, in our specific case, we're at 40% house, 30% cash, 30% equities, and 30% debt.
RentingForHalfTheCost
2012 Mar 29, 12:58am
Hi All,
I don't believe I suggested house to be an investment. The same way that cash is not an investment but part of your overall asset allocation, house is not an investment but still part of your overall asset allocation.
WRT Renting's specific question, in our specific case, we're at 40% house, 30% cash, 30% equities, and 30% debt.
If everyone had them numbers we actually be able to fund our local services. You are one of the few with these numbers in the BA. Bravo.
I work with people making 200k and not able to put any money into their 401ks or ESPPs because everything goes into their 1500sqft cottage. Incredible.
Your house isnt an asset, you need to stick to stocks and bonds as investments. You can sell your securities any time, cant do that with your home.
Forget about your home being an asset. Dont go there!
I agree in principle with OP, I think a house is an asset/investment because it tends to go up with inflation plus it gives you a return in terms of the rent you save.
Nevertheless, I would agree that a BA houses are generally overpriced and so they make for poor investments at this point in time.
If OP is mostly interested to get diversification and exposure to real estate as an investment, there are a lot of alternatives to buying your own house, for example REITs and mortgage backed securities. There are also funds that invest in distressed areas such as Nevada and Arizona, where price/rent ratios are twice as good as in the BA or better.
SJ
2012 Mar 29, 1:29am
I spent a lot of time last year looking at real estate under 600k in the bay area and all that I found for this price range for 3/2 SFH were dumps or homes in ghetto parts of the bay area so I gave up looking.
house is not an investment but still part of your overall asset allocation.
It does not even look like an asset to me... An asset brings in cash flow while house is a money pit... taxes, repairs, mortgage!
Renting - Thanks!
E-man - Yes, I was thinking along the lines of some kind of hard asset. In the end, I decided to go for the one that I can also use while I have it, i.e. live in. Ok, I will do my best to make sure the escrow goes through!
drtor - Thanks for the tips; I'll look into them as part of my equities portfolio.
SJ - I hope you can try again later and find something that works for you.
RentingForHalfTheCost
2012 Mar 30, 12:57am
Having lack of diversification can lead you to riches, but it can also ruin you. I don't like risk, so seek out a good balance in my investments. Even if the person who is leveraging up on one asset/investment gets richer than me, I still believe my approach is better for me. Currently, if I had 100% of my money in a house in the BA and not much else to all my own, I would have a hard time sleeping at night. Being diversified means (rentals, stocks, bonds, etc.) I can sleep well each night. I really don't need to be rich in life and retire early. I love to work, and am just searching for stability and security. This whole get rich and be better than your neighbor foolishness is feed to us from the moment we can listen. It is utter bull.
bubblesitter
2012 Mar 30, 1:25am
Is a home an asset? No.
Is a home an equity builder? No - people need to do their math rent/buy on the same property,put all those repairs,maint.,taxes,tax refunds etc. before saying yes. It could make sense to say yes in some areas,not for BA.
Is a home a hedge against inflation? Never,if one has bought a depreciating value asset.
DO THE MATH. :)
dunnross
2012 Mar 30, 2:08am
. An asset brings in cash flow while house is a money pit...
Remember that movie. It came out when RE hit a bottom back in 1986. We are a long way from people in the BA looking at their houses as money pits. When we finally get there, that would be a bottom.
Hi All,
We're in escrow for a house in BA. I think the one point I do want to make is that for some of us, asset allocation does lead us to buying a house even in the BA. I agree saving money and putting that into investments such as stocks and bonds is a very good idea. However, for some of us, at some point, we can only put so much money into equities. I admire people who are able to put 100% of their assets into equities, even as their savings continue to grow. For some of us, at some point, something like 1/3 house, 1/3 cash, and 1/3 equities may feel more comfortable. That's not the exact asset allocation we went with, but we are not able to stomach 100% allocation in equities.