Question

How is buying a house to live in a type of financial investment?

Short answer

Purchasing a home is recognized as an asset because this asset generates income.

Step-by-step solution

Definition of financial investment.

Financial investment is an investment that yields a profitable asset.

Explanation of solution.

A profitable investment is one that yields a profit. Purchasing a home is also considered an investment at the time of purchase. It is less expensive, but when it is sold, it commands a premium price. As a result, the difference is money-making by the owner. The residence will undoubtedly have a mortgage, security, and other maintenance costs. Even if we include all of these costs, the proprietor will still be in the black. Because staying in one's own home provides flexibility to design, eliminates the inconveniences of moving, eliminates moving costs, and provides mental fulfillment, these advantages should not be overlooked when making the choice to invest in a home.