This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
Maybe it’s an invasive question to some, but to me, it’s a fundamental question with critical ramifications – depending on how you answer it.
Some of the responses I’ve received from people when I ask this question include:
I’m using my house as an investment. So, I’m not investing.
I’m banking on my house as my retirement nest egg.
I bought a house; this is my investment – and the largest one at that.
Many people don’t invest consistently, nor do they invest consistently in the right avenues.
Diversification is critical when it comes to investing.
Your house is a liability unless it’s reeling income in for you that exceeds the expenses you pay in return.
You may be hoping to cash in on the house one day; this is possible. For some people, the return on their house is considerable – the equivalent of winning the lottery, but this isn’t the case for most people.
According to Bloomberg, about 40% of people pay off their mortgages (realistically, this figure will dwindle over time due to the market’s pace of growth).
Most people will never own their home, and what I mean by this is to pay off their mortgage (you only own your home once the mortgage is paid off; if the bank can take your house away, the property isn’t yours).
Most people’s homes are liabilities.
If you have a house, you should also have other investments in your bank accounts.
How you invest is up to you, but a mix of liquid and illiquid assets is critical to building wealth.
Real estate is a strategic way to build wealth and is the way many wealthy individuals increase their wealth, but notice they rarely do that with a primary residence.
Keep The End In Mind
Is it better to have all of your money tied up in a physical liability or have a bit of money tied to a physical asset in addition to some liquid assets?
You’re likely familiar with the term “balanced portfolio.”
Balanced portfolios protect you from unnecessary losses.
When people claim their home (that’s not paid off) as their retirement and investment plan, they’re setting themselves up for failure unless they have an air-tight plan.
Leveraging your primary residence as your sole investment makes you over-dependent on the property.
Your house should never be your sole retirement plan or nest egg. Yes, it can be, but you should always have other investments in the pipeline. Diversification is key.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.