Wealth Accumulation: Home Ownership and Investments

Home Ownership
Home ownership is a financial goal for many people. A home is often the largest investment, and sometimes the only investment, that many people make. Given the low appreciation rate of real estate in some areas, it is probably better to think of purchasing a home as buying shelter, not as an investment that you expect to rapidly appreciate (increase in value). Home equity, the dollar value of a home in excess of the mortgage owed on it, is considered an asset against which you can borrow. This strategy must be used with extreme caution, however; you could lose your home if you do not repay the amount borrowed.

Investments
You don. t have to be a big-time, high-income investor to have an investment plan. Even if you have only a small savings account, investments can become part of a long-term strategy to achieve specific goals.

A diversified investment portfolio can be developed after building the blocks of a firm financial foundation. Until adequate cash management, an emergency fund, insurance plans, tax management, and credit usage are under control and functioning effectively, it is probably unwise to begin an aggressive investment program.

A diversified investment plan begins with a well-defined philosophy and encompasses strategies designed to specifically accomplish financial goals (e.g., children. s education and funding retirement) without having to sacrifice one goal for the other.