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10 Steps to Building a Complete Financial PortfolioPurchase a HomeThe next step to constructing a complete financial portfolio is to save for a down payment on a house. By owning your own home, you are converting what was previously an expense (rent) into equity. To sweeten the deal, not only is the interest paid on your mortgage tax-deductible, but you are permitted a lifetime capital gains tax exemption of $250,000 (single) or $500,000 (married) if you sell your home at a profit.
From an investment standpoint, this is particularly attractive. As financial guru Suze Orman frequently reminds her fans, most homes appreciate at 3-4% per year and are purchased with 20% down. A $100,000 house, for example, would appreciate $3,000 to $4,000 per year, or nearly 20% on the $20,000 cash investment (the down payment.) There is no other investment in the world that is practical, generates a comparable return, and diversifies ones asset allocation into real estate at the same time.
Additional Costs of Becoming a HomeownerThe costs of becoming a homeowner are significantly more than the basic mortgage payment. Costs that you need to consider include:
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