Read? Home for Living and not for profit taking (5)
Reading is easy and writing is hard. To keep writing more to defend a particular view is even harder. When it becomes necessary to defend it further, I will have no choice but to do it.
I will have no issue when peoples start debating Property vs. Stocks investing. Each side will share their own investing experiences and performance results. Each side will try to convince each other that one of them is more right than the other and I have no problem in accepting either conclusion. But, when some people start to compare their HOME vs. Stock investing, then I will have strong view. That is the reason why I have been writing several blog posts on "Home for Living and Not for Profit Taking."
Stocks are for investing or speculating. There is no doubt about it. If you have two or more houses; one of the houses will become your home and the rest of them can be for investing or speculating. But, if you only have one house and that is your home. Home is for living and not for investing or speculating for profit.
Why do we buy a house?
We will want to buy a house when we plan to get married and start a family. Some married couples may choose to remain as DINK (Dual Income No Kids) while some other married couples may SINK (Single Income aNd Kids) and most family will have kids.
Most of us when we married we will want to buy a HOME to begin a different phase of our life. A family life either with kids or without kids. A home is for living with our family. Unlike singles, they can choose to live in their existing home (in fact, it is their parents' home but one day can became theirs too). Singles can choose to buy a home for living and then have absolute freedom to do what they like within their home. Their parents cannot stop them.
Single can also choose to buy a house as second home to live and at the same time it can be a house (property) for investing or speculating. He/She can later sell his/her house for profit and return to his/her home (parents' home).
Home has Utility Value
Home has utility value. We utilize it for our living as a creature of comfort. Stocks don't have any utility value and we don't utilize our stocks for our living at all. Because home is a utility when we sell our home we have to replace it either by renting, buying a second home or moving back to stay with parents. But, when we sell our stocks, it is not necessary to replace them as stocks have no utility value.
Even if you sell your first home and replace with it a second home to live. The utility value of the two home can never be the same. One of the them will have higher utility value.
Let get back to the case study of my ex-neighbour as it is easier to understand the utility value using real life example.
His first home sold will have higher utility value since it is just one bus stop away from the MRT station and his second home bought is a few bus stop farther away from it. In the past, he and his family members can comfortably walk to MRT station from their home within 5 minutes. But now, he and his family will have to walk so much farther distance to the MRT station or incur additional transport cost to take bus to the MRT station. So there is some hidden cost in his second home.
Profit taking from stocks are pure monetary gains and there is no hidden costs associated with it. Profit taking from home will have monetary gains as stocks; but it is never pure monetary gains like stocks. Your monetary gains in your sold home may come in the way of lower utility value in your second home with hidden costs often are unaccountable.
Do you still want to compare HOME vs. Stock Investing in term of monetary gains?
Think again. Home for Living and Not for Profit Taking.
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