Monday, May 3, 2010

asset diversification update

When accumulating wealth as we grow older I am a believer in diversification. I want to be able to grow our asset base at good average rates year after year. In order to accomplish this and at the same time build flexibility into our finances we set out to push down the percentage of our assets that our home value makes up. I believe that it only makes good wealth building sense to diversify and not be over concentrated in real estate assets like many North Americans are.

I check up every other month on our net worth and at the same time I look at a percentage which I call: HOUSE VALUE AS A PERCENTAGE OF TOTAL ASSETS. This is simply the appraised value of our residence as a percentage of our total assets. Total assets include our home, registered and non-registered investments, cash, vehicles, etc.
Below is our progress on this since May of 2006. Over the past four years we've driven down this percentage from 83% to about 59% today.


Dividend Lover said...

you don't have to avoid realestate investment all together, because you own your home.

yes you have an over allocation in single family home in whatever city you live in. sure

but that doesn't mean you should avoid all realestate, you could invest in appartment buildings / commercial / industrial realestate through REITS.

That would diversify you into different regions / types of realestate.

MG (moneygardener) said...

I feel that real estate in general is too small a slice of assets to deem diversifying into regions and types. My home is exposure enough for me.