Solid reasons for investing in real estate
If you invest in the stock market, which includes an assortment of equities, bonds, mutual funds and options, you may be in for a rocky ride. Many financial advisors suggest that if investors can not stomach the rapid rises and falls of a stock, they might want to consider investing elsewhere.
Stocks are not for the faint at heart. It takes a great deal of stamina to survive the roller-coaster ups and downs of an investment that is heavily dependent upon economics.
On average, most Canadians invest and earn more in their homes than they invest and earn from their savings accounts, stocks, bonds and other investments. Home equity remains a cornerstone of most families’ wealth.
Real estate is a solid, familiar investment
There are several solid reasons for investing in real estate:
Forced savings. Contributing towards a mortgage automatically forces a family to save. Rather than paying rent, these monthly payments contribute to future security.
Appreciation. By nature of demand and supply home prices generally tend to rise over the long term.
Tax-free profits. When your home is your principal residence and you sell it, you do not pay tax on any of the profits. This is one of the last and greatest advantages for building wealth left in Canada.
Equity build-up. Your home will naturally rise in price according to the market. In addition, you will be contributing to the reduction of your mortgage. The difference between what is outstanding on your mortgage and what your home is valued at, is your earned equity. Your equity is a valuable commodity that can be used to obtain additional financing, obtain a second mortgage, or move-up to a larger home.
Real estate has long been recognized as an inflation-resistant investment, providing homeowners with a tangible incentive to save. Buying your own home, or investing in one, is widely accepted as one of the soundest financial commitments you can make.