Future Investments

There’s a term used in business to describe assets that aren’t being put to use to create value: lazy assets. Inventory that’s sitting around, for example, or business assets that aren’t making any money. Lately, though, we’re hearing the term used to describe home equity.

Think about it. If you’re like most Canadians, a big chunk of your wealth is probably tied up in your home. You work hard at pounding down that debt. Cash flow may be tight, and you may not have much set aside in investments, but hey – you’re building up wealth in your home, right? The problem with that thinking, of course, is that –despite years of disciplined mortgage payments –you don’t have much to show for it. Your debt is going down, but you’ve got more and more of your wealth tied up in an asset that isn’t really working for you.

A growing number of informed homeowners, however, are figuring out how they can enjoy their home, but put their lazy assets to work to build family wealth.

Let’s imagine, for example, that – through years of mortgage payments and rising home values – you’ve managed to build up $300,000 in equity in your home.

What could you do?

Purchase investment property with good cash flow
Invest in stocks, bonds or mutual funds

Benefits?

Tax Savings

When you take out a mortgage for the purpose of investing, the interest on your mortgage may be tax-deductible. Now, the tax you save can be poured back into your mortgage – building your wealth even faster.

Diversity

Use your assets to buy other assets. It’s a way of spreading your wealth among different asset classes: you don’t want to have all your wealth tied up in your home, which isn’t the most liquid investment because you have to qualify and apply to a lender to take it out (or of course sell your home). You may have $300,000 to comfortably take out now, but if home values decline, your wealth shrinks too. Moving those funds into more diversified investments can strengthen your overall financial picture. You can also increase your rate of return on your assets. Equity, of course, has a 0% return. Remember that if the housing market goes up, your home will appreciate regardless of how much or little equity you have in it.


		Home \| Contact
About Us Apply Now Learning Centre Calculators Rates Free Reports Contests
	Future Investments There’s a term used in business to describe assets that aren’t being put to use to create value: lazy assets. Inventory that’s sitting around, for example, or business assets that aren’t making any money. Lately, though, we’re hearing the term used to describe home equity. Think about it. If you’re like most Canadians, a big chunk of your wealth is probably tied up in your home. You work hard at pounding down that debt. Cash flow may be tight, and you may not have much set aside in investments, but hey – you’re building up wealth in your home, right? The problem with that thinking, of course, is that –despite years of disciplined mortgage payments –you don’t have much to show for it. Your debt is going down, but you’ve got more and more of your wealth tied up in an asset that isn’t really working for you. A growing number of informed homeowners, however, are figuring out how they can enjoy their home, but put their lazy assets to work to build family wealth. Let’s imagine, for example, that – through years of mortgage payments and rising home values – you’ve managed to build up $300,000 in equity in your home. What could you do? Purchase investment property with good cash flow Invest in stocks, bonds or mutual funds Benefits? Tax Savings When you take out a mortgage for the purpose of investing, the interest on your mortgage may be tax-deductible. Now, the tax you save can be poured back into your mortgage – building your wealth even faster. Diversity Use your assets to buy other assets. It’s a way of spreading your wealth among different asset classes: you don’t want to have all your wealth tied up in your home, which isn’t the most liquid investment because you have to qualify and apply to a lender to take it out (or of course sell your home). You may have $300,000 to comfortably take out now, but if home values decline, your wealth shrinks too. Moving those funds into more diversified investments can strengthen your overall financial picture. You can also increase your rate of return on your assets. Equity, of course, has a 0% return. Remember that if the housing market goes up, your home will appreciate regardless of how much or little equity you have in it.
	Mortgage Architects™ Corporate Address: 6505 Mississauga Road Unit A and B Mississauga, On \| License# 10287 Copyright © 2012 Mortgage Architects™ All Rights Reserved	Privacy / Sitemap