Any financial advisor will tell you that owning your home free and clear when you retire is an integral part of a solid financial plan. Both the equity that you’ve built up as well as eliminating most of your housing payment can be the difference between a rewarding retirement and struggling to maintain your standard of living or not being able to retire at all. On average real estate will increase in value to match inflation so it’s a very stable place to invest your money. It’s also a very necessary and tangible asset for which there will be no end of demand. People will not someday decide that they don’t need a place to live or it’s not fashionable to own a home. In the worst economies there is still much trading of real estate and if bought well it can always produce very good returns.
As an investment there are several benefits to real estate that other investments can’t match. One is its stability: it’s a tangible asset that can’t lose all its value like a stock can and there is always demand for it. The other major benefit is that it’s highly leveragable. You can own real estate for as little as 5% down (sometimes less) and receive the capital gains of the entire property value. If you put $15,000 down on a $300,000 house and the market goes up by an average 5% per year then you’re making $15,000 return; a 100% rate of return! You won’t get that from your RRSP’s.
The fact is that real estate has made more millionaires than all other industries combined. You have to pay for housing anyway so why not pay yourself instead of your landlord. And your senior years will be filled with the security required to have a comfortable retirement spent travelling and golfing instead of repeating “Welcome to Wal-Mart!”
