Wealth is Good
Cash Flow Is Better

A while back, during a housing boom (remember those?), I watched a TV news segment about homeownership. The reporter was interviewing a young married couple shopping for a house and the wife said: “My parents told me to buy the biggest house you can afford, so that’s what we’re doing.” After all, her parents probably saw the value of their home rise to many times its original price, eventually becoming one of their biggest assets — just in time for retirement.

In fact, on average home values do rise — by about 4% per year, keeping pace with inflation — and over the long term this growth can be substantial. So on the surface, this “buy the biggest” strategy seemed to make sense. A bigger purchase price must lead to a bigger ending price, right? Maybe so, but something bothered me about this advice; a piece of the puzzle seemed to be missing, but I just couldn’t put my finger on it at the time.   Read the full article

Keith Whelan is Cashflownavigator's founder and author of the "Wealth is Good, Cash Flow is Better" e-booklet. He is a graduate of Columbia University Business School, teaches at Rutgers University, and has over 30 years experience in the banking and financial services industry. Keith, his wife Cindy, and their two sons live in New Jersey.