1. I am considering this topic for myself, and I find the reasons you cite to leave your home off your allocation unpersuasive. Most particularly in your discussion of your home as undiversified, and susceptible to major losses of wealth, wouldn’t you want to account for that? You’re taking a risk, and if you’re home goes down in value you are losing real wealth. Shouldn’t your strategy, allocations and stock investments account for that?

    • Thanks for reading Juggalo! I'll admit that this isn't a completely straightforward topic.

      First, I believe that you are correct in that having your home go down in value is not something that should be taken lightly.

      But, the trouble in incorporating a single home in to my asset allocation is that it is not the same type of diversified asset as the other components of my portfolio (index mutual funds). If one of my index mutual fund classes goes down, I would simply buy more.

      On the other hand, if your home goes down in value (or up in value), what can you do? You can't buy or sell more really. I suppose that if your home decreased in value, you could buy more REIT shares, but your home and a REIT (in my mind) are almost not the same asset class. REITs represent thousands of real estate properties across the country. If you home increased in value, I suppose you could also sell REIT shares, but in my mind, that takes away your exposure to the COMPLETE real estate market and upside potential there.

      Overall, I think that since my investing strategy uses index funds and not individual stocks, I think of it slightly different. I'd be interested in hearing your take on this again! Thanks for reading!
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