Why is it we’re taught to classify our home as an asset?
Yet with every other commonly held investment class:
- savings accounts
- stocks and shares
- bonds
- pensions
- insurance policies
- businesses
…there is one very distinct difference…
They are cash generating. And in the case of most of us – are homes are not.
Sure they carry a market value, which can appreciate with time, leaving us with a capital gain. But remembering that a follow on house purchase similarly will increase in price too, which means a neutralised benefit.
But cash generation, is a different story. Sure, the value of cash depreciates with time. But cash flow is a ‘present benefit’ that adds instant value whilst you hold the asset.
Even if its a very small amount. The compounding effect can be astounding.
It’s time we consider acquiring true asset value with our house purchases.
For an equivalent price, a house with amenity e.g. land, outbuildings, natural water source, landscaping etc. offers so much income potential that it’s almost harder NOT to earn.
And it doesn’t all have to be agricultural – the labour may not necessarily suit all (though, I’d argue we’d be better off with the exercise). Creative pursuits can abound in the plentiful setting of a smallholding.
Think it through…
The Smallholdings Team.