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lets talk risk

now there's been lots of talk about the banks' risk-taking folly in playing with highly leveraged, illiquid, difficult-to-value investments.

However not many people look at their own situation. Many individuals are guilty of taking the same risks...

and that is in the housing market. for most people buying a house is highly leveraged (10 to 1 if it is 90% LTV mortgage), supremely illiquid (tried selling recently?) and difficult to value. Furthermore, it lacks any diversification of risk.

so if you viewed your house purchase as an investment, this is something to think about. you took on all of this risk but maybe didn;t realise it.

Any comments?

PS
IMHO a house is somewhere to live and raise a family, not an investment.

Comments

  • My first house cost £5,500 1964
    Sold for £36,000 in 1980

    My second house did a lot better.

    However the past is not a guide to the future and prices may go down as well as up.

    Risk is all around us.
    ...............................I have put my clock back....... Kcolc ym
  • malik999
    malik999 Posts: 376 Forumite
    Bazn wrote: »
    now there's been lots of talk about the banks' risk-taking folly in playing with highly leveraged, illiquid, difficult-to-value investments.

    However not many people look at their own situation. Many individuals are guilty of taking the same risks...

    and that is in the housing market. for most people buying a house is highly leveraged (10 to 1 if it is 90% LTV mortgage), supremely illiquid (tried selling recently?) and difficult to value. Furthermore, it lacks any diversification of risk.

    so if you viewed your house purchase as an investment, this is something to think about. you took on all of this risk but maybe didn;t realise it.

    Any comments?

    PS
    IMHO a house is somewhere to live and raise a family, not an investment.

    I don't understand the reason for the thread. Can you be more specific as to what you're trying to achieve or information/help you want?.
  • Bazn
    Bazn Posts: 183 Forumite
    malik999 wrote: »
    I don't understand the reason for the thread. Can you be more specific as to what you're trying to achieve or information/help you want?.

    just want to raise debate about attitudes to house buying. do people realise the parallels with the banks in terms of leverage and illiquidity?
  • Blah99
    Blah99 Posts: 486 Forumite
    Bazn wrote: »
    PS
    IMHO a house is somewhere to live and raise a family, not an investment.

    That would make it a liability, then :D
    Mmmm, credit crunch. Tasty.
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