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The Best Investment
As a fairly general rule, homes
appreciate about five percent a year. Some years will be more, some less. The
figure will vary from neighborhood to neighborhood, and region to region.
Five percent may not seem like that much
at first. Stocks (at times) appreciate much more, and you could earn over six
percent with the safest investment of all, treasury bonds.
But take a second lookâ¦
Presumably, if you bought a $200,000
house, you did not pay cash for the home. You got a mortgage, too. Suppose you
put as much as twenty percent down â that would be an investment of $40,000.
At an appreciation rate of 5% annually,
a $200,000 home would increase in value $10,000 during the first year. That
means you earned $10,000 with an investment of $40,000. Your annual "return on
investment" would be a whopping twenty-five percent.
Of course, you are making mortgage
payments and paying property taxes, along with a couple of other costs.
However, since the interest on your mortgage and your property taxes are both
tax deductible, the government is essentially subsidizing your home purchase.
Your rate of return when buying a home
is higher than most any other investment you could make.
If you are moving to a home for the first time, you are
going to be very pleased with all the new space you have available. You may
have to even buy more "stuff."
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