Most people believe buying stocks or CDs, or even just using a savings account, are all common ways people try to build net worth. However, recently, Jonathan Eggleston, an economist, and Donald Hays, a survey statistician, both from the U.S. Census Bureau, revealed what really influences how much wealth we accrue.
“The biggest determinants of household wealth [are] owning a home and having a retirement account.”
This can be seen in the chart below:
Homeownership: The simple tool that can increase your wealth in your sleep
Seeing that home equity comes out ahead for the composition of net worth isn’t shocking. Owning a house is known to be one of the most effective — and accessible — options for any family or individual to build their wealth without much effort.
The Census study supports this:
“Net worth is an important indicator of economic well-being and provides insights into a household’s economic health.”
Cumulative home equity can move your family in an economically healthy direction, contributing to noteworthy financial gain. As the report above also noted, homeowners are not just building net worth through the homes they’re living in.
Investment properties can also help people gain a considerable amount of equity:
John Paulson, a billionaire seen to be one of the most respected names in finance, summarizes:
“If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.”
Homeowners gain both non-financial and financial benefits. Renters who are prepared to make their monthly housing cost work for them, can take an important first step by owning and beginning to build their investment. Homeowners can compound their already growing equity by investing in a second property.
Fact: You can start building wealth in 10-days
The faster you move into your new home, the quicker you could see your equity rise. So, why not get there faster? It doesn’t have to take over a month to buy a house. Connect with a local loan officer and find out how to get from contract to closing in a little over a week.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.