- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
In fact, however, I'd have to pay tax on the income from the released and reinvested capital, while paying my rent out of after tax income, which would be a year-on-year loss for the period I was out of the housing market.
And that assumes a "normal" rate of return on my investment. With interest rates of 0.5% I would be out-of-pocket by most of the rent each month.
And I might even have invested the capital in equities. Gulp.
Assuming, of course, that you want to treat your home as an object of speculation. Me, personally, I wouldn't want to do that, but then again, I don't particularly want to own a house in the first place...
But in any event, equity in your house isn't money - it only becomes money when you use it to collateralise a loan.
I think that was my point in the first place :)
However, I'd been predicting the housing crash for at least four years, so I think we could agree that my punditry skills aren't quite tight enough to speculate with the roof over my children's heads. ;)
Well, maybe a hedge with a charging point and wifi. Or double chocolate ice cream.
When I was a kid we had to walk across the house to answer the telephone.
Barefoot.
In the snow.
Uphill, both ways.
Well, presumably it would have been monetised by selling it, because the other dude would have had to take out a mortgage on the full value (unless he had some cash stashed aside for some reason) :-P
Obviously that's not as profitable as a building society account, especially one of the higher paying ones, but it's more secure than equities.
It's probably one of the ironies of the situation that over the last year a basic ISA will have been the most profitable of all possible investment vehicles.
Some hedge funds will have done better, as usual, but others will have done worse.
