Myth Buster: Home as Best Investment
Some Canadians may in fact ‘down size’ and realize some additional capital to help with their retirement…BUT that ASSUMES that they have more home now than they will need at retirement. That is not always the case particularly for those selling and moving into a desirable condo or a bungalow. Bungalows are often situated on larger lots (because they are wider) and a smaller home situated on a larger lot may be more, not less expensive.
Rather than look at a home to provide retirement income it may be more prudent to understand that your personal residence will continue to CONSUME capital in retirement as you need to replace the roof, windows, driveway, furnace, air-conditioner, flooring and other maintenance items. A conservative estimate is that home ownership has at least a 2% annual cost for upkeep. A $400,000 home will have needs of about $80,000 over the next 10 years so instead of generating additional income your home will in fact consume some of the cash flow that you had earmarked for that trip of a lifetime!
The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision.