Are you paying attention to your ROE?

[Dan Travieso]

Are you treating your home as an asset or as a liability? You are growing equity as you pay down the mortgage and the value of the home appreciates but is that equity creating wealth?

Return On Equity (RoE) is defined as a "percentage measure of the return received on a real estate investment property as related to the equity in the property" (www.thebalancesmb.com) and is calculated by dividing the amount of money your asset is creating by the equity in the property. So if your equity is just sitting there, unused, it is creating $0, therefore your ROE is 0%. You might as well be saving money under your mattress.

However, if you invested that equity, you can increase your ROE and wealth. Speak to your financial advisor about leveraging your equity via refinancing, HELOC, etc. in order to invest and supercharge your wealth!