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Discussion Starter · #21 ·
Thanks for the replies.

Yes, I know that everyone has to find the balance between house and investments that suites their situation. Also the ratio will vary as one ages. At the time that I paid off the mortgage on my previous house, it comprised almost all of my assets. Then I started investing the money I would have paid into a mortgage, and the value of the house began to diminish as a percent of the total. So it's reasonable for younger people to have a higher percentage.

arrow1963: You make an interesting point about including the present value of pensions in one's net worth. If I do that calculation, it adds roughly 1/2 million to my total assets, and the house percentage goes down to 18%. By Garth Turner's rule of thumb, 90 minus my age equals 26% so I'm not out of line by that standard.
MorningCoffe: Yes, I like you, and never considered my house to be part of my net worth until I built this place. After signing several large cheques for the land and to the builder, and selling securities to cover them, then spending more to finish the place, I began to think a little differently.

Whether to even own a house and if so how much to have tied up in it is a very personal decision and I appreciate everyone's thoughts on the topic.
 

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When I bought my house it was initially about 2000% (yes about 20x) my net worth and has slowly shrunk down from there.

I know people who were still paying off student loans when they bought their house, I'm not sure how you'd even consider those with negative net worths.

It matters, what stage of life you were at, what you value, and your overall net worth. Your house will be a massive portion of your assets when your net worth is low.


I consider home value as the market price.
I consider mortgages just another liability.
 

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Ours is about 35%, we have no mortgage and are 41.

Ideally it would be 5%:tongue-new: but if we get it to that stage, we will buy a big place.

I think early on it was a much higher percent as we paid down he mortgage, and now that we are just focusing on investments, it will go lower and lower until we upgrade our house.
 

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Just crunched some numbers - looks like our home comprises about 17% of our net worth. Like PA, mortgage free at 41! Every available nickel now going to ER fund!!!
 

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Not sure you can really call it "retiring" if your wife still intends to work. But I may quit my current career next year and become a "kept man". :tongue-new: Although, to be fair, between managing our investments, maintaining our gulf island properties and building a cottage on one of them, there is no shortage of things that need to be done. My career, while lucrative, has left me very little opportunity to work on the things that truly make me happy - soon, this won't be an issue. When the time comes to walk away from my career, I don't think its going to be easy leaving that much income on the table - and my family may very well try to have me committed.

I wouldn't be opposed to working part time here and there, if something strikes my fancy.
 

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I think the original question is a good one. It can be helpful to assess your financial wellbeing using a variety of metrics.

Age: mid 50s.
Wife retired.
Me retired in two years.
No pension.
Location: Calgary
Mortgage free.
Net worth calculated using real estate, stocks, bonds and cash. Present value of CPP and OAS were excluded from the calculation.

House worth about 22% of total net worth.

Taking into account our location and age, I'm fairly comfortable with the figure.
 

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I think that it is very much a function of your income, your net worth, your age, your location, and your lifestyle and family requirments.

We sold our home several months ago. |We are in a furnished rental. We had planned to buy but have decided to rent for at least a year. Going to try a lock and go apt/condo.
Travelling, and our desire for more extended travel. If we do buy, it will probably be at 15 percent of our net worth, inclusive of the value of my DB. If extensive travel was not in our plans, then our real estate choices would change-as would would the percentage spent. Conversely, if we decide to relocate to another city that happens to have much lower housing values, our percentages would drop accordingly.
 

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Mine is about 42% which would be worrisome at my age (70) except for two things - I have a federal government db pension and my house is fully paid for, so I don't need a lot of income beyond my pensions and my savings. Then again, I live in the Greater Vancouver area, where house prices are ridiculously high!
 

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I not so sure. You can do anything with numbers, so let's take $1 M as the baseline. I'd rather have my paid off home (eventually) as a lower % of my net worth than my investments.

@summer, you can't live off your home; you gotta live somewhere.
 

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I not so sure. You can do anything with numbers, so let's take $1 M as the baseline. I'd rather have my paid off home (eventually) as a lower % of my net worth than my investments.

@summer, you can't live off your home; you gotta live somewhere.
Well, no you cant live off your home. I agree.
However, these numbers dont say too much.

Person A may have a 1.5 million dollar home and a net worth of 2 million.--home is 75% of net worth

Person B may have a 100 000 home with a new worth of 300 000. --home is 33% of net worth

I would rather be Person A. So, I just dont see why having your home as a smaller % of your net worth really means anything.

Plus, I enjoy having a nice home. To me that is important (not from an investment standpoint but from a life enjoyment standpoint). My point is the percentages are meaningless.
Plus, most people do downsize when they retire. That frees up cash too.
 

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Plus, most people do downsize when they retire. That frees up cash too.
But we have seen from the US meltdown that home equity should never be counted on for living.

But I am of the old school that any net worth of residence above 35% of your total puts you in the house poor range. Granted it may be required in Vancouver and maybe Toronto when you are young, but you should be striving to push it down.
 
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