Subject: Re: OT-top 1% Net Worth
Regarding your house not being an investment, not counting towards your net worth:

I am a 67 year old probably top 10%'er in wealth who has lived in California for the last 28 years.

I don't know if there is a time since California became a state in the US (1850) that California real estate has not been an amazing investment. I heard the storie when I got here in '96 and thought "Darn it all to heck, I got here too late." Well the house I bought in '97 for $254,000 is now worth $2,060,000.

That's 6.5% CAGR for 27 years in REAL DOLLARS (inflation adjusted).

I don't know about where you live, but this is America and you would NOT have owned that house without a Mortgage. Mortgage is French for "leverage". In America, mortgages don't cost much more than inflation. Which means you could easily have made 12% CAGR a year after inflation and after paying for your mortgage if you had put 20% down.

So if you are the type who thinks whether or not you should include your house in your net worth is a MORAL question, then I have nothing for you. Go and skip the clams at the buffet, have extremely few sexual partners and don't do the stuff that most people think is fun with the one you are left with, Cover your head, and serve God.

But if you think it is a practical consideration than consider just the impact of home ownership on people in my family:

1) My sister hates stock, the one time I put some of her money into BRK for her she first asked me to set a stop loss for $1/share lower than the current price, and when I didn't do that she actually figured out the Schwab website for the first time so she could sell that thing! I'm sure she wondered how I could be so mean as to practically set her money on fire like that? But meanwhile, she has owned houses without mortgages for the last 35 years. Two years ago she put her $1,000,000 "not an investment" up for rent and moved into a brand new 3 bdrm home in South Carolina for $350,000. Consdiering she has probably not made more than $35,000 in a year for way more than 1/2 of her adult years, she seems to be doing OK living off her "not an investment."

2) My ex-wife is scared of the stock market and so has all the money I gave her in the divorce in cash. Meanwhile, she was renting a cute little 2bdrm townhome a mile from the beach. Well this is not only America, it is also California, and to make matters worse, San Diego. Her landlord was raising her rent by 10% a year. Now renting a townhome, THAT is definitely not an investment! And she was paying that growing nut from accounts that were not growing even 1/2 that fast. But recently she figured out she could buy a tiny 2 bedroom apartment about 4 miles from the beach and she could put more than 50% down. Her mortgage plus taxes plus HOA will be about what her rent is now. But her mortgage payment will not go up at all, her taxes will go up ~1% per year. And her equity, well, do you have any idea what real estate prices do in California? In San Diego? And we are having some inflation now? But no, her house is not an investment. If it were, it would be the best investment she was willing to make, but it isn't an investment.

3) My financial adviser is super cautious. He's not a goldbug, he's not an idiot, just very cautious. So while the SP500 was doing its thing the last 20 whatever years and quadrupling, my financial advisor only doubled the bulk of my retirement savings. Before inflation, which meant he at least didn't lose any money for me after inflation. Meanwhile, I have owned houses with significantly more than 20% equity in them during that entire time. I now have as much equity in my house as my financial adviser has for my retirement in the account he is managing. If I had kept every house I'd ever bought in California, I'd be about 3x as wealthy. But it wasn't an investment, so I gave it to my financial adviser who very prudently has not lost it for me. But meanwhile, 80% of the increase in my networth over the last 5 years has come from my house. But its not an investment, so it doesn't count. (I do have money I have managed for my retirement deriving entirely from my 401k contributions since 2008. I have as much money in those accounts as I have with my financial adviser because I am not a professional, so I took horrivying risks like investing in AAPL, BRK, TSLA, and unfortnately not much else of significance.)

Anwyay, whatever the reason, it is hard to find Americans who bought most of the houses they have lived in who are not doing better financially because of that. As some of you on this board may have noticed, Warren Buffett is not a typical investor. Warren Buffett probably could have been immaterially richer if he had rented his whole life. But most of us Americans are nowhere near as good at investing as Warren Buffett is, and many of us have inadvertently served ourselves well by buying houses.