I went to my grandad's 80th birthday celebration yesterday and I was a little perplexed that even at his age, he still hadn't realised the irrelevance of the price of his house. He said "My house has increased in value by £8000 per year since we bought it [40 years ago]".
Had it not been his birthday, I'd have probably said something like "Wow, and what have you spent all that money on?", but as it was, I decided to just brush the comment under the carpet and change the subject.
They had bought the house 40 odd years ago when it was probably only about £2000, and now it will be worth several hundred thousand pounds. He's an intelligent, middle class man. And yet he still hasn't understood that the value of his house is completely irrelevant. His house could still be worth £2000 and he would be no worse off. But he is convinced that because the market has "gone up", he is a rich man.
None of that value in his house will ever be realised. They have no intention of selling the house to move to a smaller one. They are happy there, and it's a very nice house. Nothing too big.
They have no intention of "releasing equity", they have no need for the money and they have enough savings to cover everything they want and they have very good pensions.
The house will probably be sold once the last of them passes away and the proceeds distributed amongst the children. And I'm sure the children will be very grateful for that.
But they will never see the "value" in their home.
It is this absence of logic which keeps the middle class where they are, whilst the rich (who understand what actual value is) just keep getting richer.
This is explained very well in the Rich Dad Poor Dad* series. If you want to be middle class, keep burying your head in the sand, ignore the logic, and keep listening to other middle class people about how to become rich.
My advice is don't take advice from people who are middle class about how to get rich, take that advice from the rich instead. The rich do not "invest" in their home. It's just a roof over their head (usually a very nice roof over their head), and they don't mistake it for an asset in their portfolio.
Stop confusing your liabilities with your assets, and stop trying to convince yourself that your home is an investment. It isn't, it's just your home.
