Is your home an investment?

[rowech]

Curious what people think...

[JonInMiddleGA]

Yes ... unfortunately it's an incredibly bad one.

[molson]

Yes, just because the only advantage to owning v. renting (in my own situation) is that I might end up with money a long time from now. If I end up with more than I put in, it was a good investment. If I break even, or lose a little, it was still a pretty good investment v. renting.

[PilotMan]

Rich Dad/Poor Dad says no.

[Peregrine]

I don't consider it an investment, but a lot of people do, and some of them get into trouble for that reason.

[Sweed]

Yes, just because the only advantage to owning v. renting (in my own situation) is that I might end up with money a long time from now. If I end up with more than I put in, it was a good investment. If I break even, or lose a little, it was still a pretty good investment v. renting.

I voted no but still agree with all of this. To me it is just a cheaper cost of living that also allows me to do pretty much whatever I want with my property. Whatever the value at the end is just a side thought to me and so puts it in a non-investment category. Hopefully me or my kids get something out of it in the end but that was not the reason for buying over renting.

[SportsDino]

It is not an investment, if you find the place you want to die in, good for you, otherwise you are dealing with an illiquid asset with vicious maintenance and transaction costs, and oh, for most people often associated not with true equity but a shit-ton of debt.

Get rich quick schemes are always fail, and the stupid mass psychology behind flipping houses accelerated bubble price growth.

You can make money buying and selling houses... no let me rephrase that, someone who knows what they are doing can make money, you are lucky if you don't lose your shirt.

Buy a house to live in it and your valuation is more like a depreciating asset than an 'investment'. Anyone who is doing things the right way should not care if their house is 'underwater' on price. Those that do are either dangerously over-leveraged or caught in a bust with their get rich quick scheme.

If anything it would be nice macroeconomically if prices stay on the low side for a stretch. Get the speculators out of the market and you might actually have home owners instead of foreclosures waiting to happen (I'm assuming the next recession as inevitable of course).

[revrew]

No. I will never, ever get back a fraction of what I put into this money pit. Can't even sell the dang place, because it's worth about $20G less than what I owe on it.

FYI, I built a new house (after our old one was wasted by a tornado) in 2005.

That said, before the housing bubble burst, I made money on 2 previous houses. But I don't think houses, which can be very difficult to sell in some markets, are liquid enough to be considered an "investment."

[rowech]

Interesting responses. I got into this with some people and I take the stand that it's not worth it. If we never have kids, I will regret buying a house because with all the money we've put into it for upkeep, repair, etc. there is no chance we would ever get that money back no matter how much profit we got from the house.

[sterlingice]

When my wife and I end up buying a house, it will be to live in. I'm hoping to buy it so that we don't lose too much money but the ultimate purpose is still to live in the darn thing and I don't see 3000 sqft condos with yards and garages and no walls that border that annoying guy who likes to blast music. At least not for the price I could buy a home like that in, say, Indy or Houston

SI

[jeff061]

Yes, just because the only advantage to owning v. renting (in my own situation) is that I might end up with money a long time from now. If I end up with more than I put in, it was a good investment. If I break even, or lose a little, it was still a pretty good investment v. renting.

This.

[jeff061]

Interesting responses. I got into this with some people and I take the stand that it's not worth it. If we never have kids, I will regret buying a house because with all the money we've put into it for upkeep, repair, etc. there is no chance we would ever get that money back no matter how much profit we got from the house.

Compare it to how much you'd lose renting though. You put more into repairs than you would paying rent?

[DougW]

I voted no but still agree with all of this. To me it is just a cheaper cost of living that also allows me to do pretty much whatever I want with my property. Whatever the value at the end is just a side thought to me and so puts it in a non-investment category. Hopefully me or my kids get something out of it in the end but that was not the reason for buying over renting.

Ditto.

[SteveMax58]

Compare it to how much you'd lose renting though. You put more into repairs than you would paying rent?
Yep...plus the fact that when you rent, you are subject to the landlord selling the place, or simply not wanting you to live there any more for whatever reason. So moving costs will certainly go up and be more frequent, etc.

I think whether people choose to look at it this way or not...the idea of "home" is of course, an investment. No different than your investment relationships, stock market, education, or acquired skillsets. You can choose to ignore them as investments...but that doesn't mean it isn't one.

[mauchow]

Yes. We had a chance to move into a house last year that would have been even a bigger and better investment but my wife didn't like the house enough to make the jump into this particular foreclosed home that was priced $100k under the assessed value (I'm still shaking my head now and again).

The house we moved into was a new home, priced well below all the comps in the neighborhood. We'll be very happy if we come out 40-50k (realistically probably 20-30 after five plus years of being here..) ahead after doing most of the work ourselves (landscaping, finish basement, nice deck, sprinkler system, etc).

This of course depends on if we stay here long term or not. We could definitely see ourselves staying here for a long time but we could also see ourselves moving, too. I guess it will depend solely on my working situation, since it won't be difficult for her to get a job anywhere.

[kcchief19]

I don't consider it an investment, but a lot of people do, and some of them get into trouble for that reason.
It's a long-term investment, but people who get into trouble are because they treat it like a short-term investment. It's pretty easy to bet underwater if you buy anything financed 100% or close to it.

We bought our house 10 years ago -- had our offer accepted just before 9/11. We saved to put 20% down. Our house is now appraised just barely more than our purchase price, which is about 20% down from its peak. However, that leaves us with half that value in equity.

From an investment standpoint, we've essentially seen a return of 250% on our downpayment after you take taxes, maintenance, etc. into account. Mortgage vs rent is a wash ... It's going out one way or another. Even if we took another drop in housing values, in five years our home will be paid off, and even if there is a continuing erosion of home values, we'll likely have a better than average return on the investment of our downpayment.

The vast majority of people underwater on their home are there because they were in it for a short-term investment or invested more in their house than they could afford. Borrowing $300,000 and putting all of it in real estate is just as dumb as if you put it all in the stock market.

[tyketime]

We did not buy our current house as purely an investment, but surely hoped the value increased over time. We've been in it for over 11 years now, and just had it appraised. We are fortunate that it is "worth" almost 50% more than what we paid for it. I put worth in quotes because when we do look to sell it (probably another 8+ years), that will finally be the time to see its real value.

4 years ago, we bought a shore house. We absolutely purchased that as an investment. Instead of continuing contributions to my IRA (my wife still does contribute to her 401K), we make mortgage payments instead. We are able to use it year round, so I look at it as an investment that we also get to use. We just had that recently appraised, and it is currently "worth" 10% more than what we paid for it. We've certainly sweated this decision a few times, but thought we were buying towards the bottom of the housing decline. Little did we know it would continue until today. I think the 10% increase is really due more to us making a great deal when we purchased it versus it truly raising since then. Our goal is to eventually sell our main house, and move fulltime into the shore house.

[wade moore]

It's a long-term investment, but people who get into trouble are because they treat it like a short-term investment. It's pretty easy to bet underwater if you buy anything financed 100% or close to it.

We bought our house 10 years ago -- had our offer accepted just before 9/11. We saved to put 20% down. Our house is now appraised just barely more than our purchase price, which is about 20% down from its peak. However, that leaves us with half that value in equity.

From an investment standpoint, we've essentially seen a return of 250% on our downpayment after you take taxes, maintenance, etc. into account. Mortgage vs rent is a wash ... It's going out one way or another. Even if we took another drop in housing values, in five years our home will be paid off, and even if there is a continuing erosion of home values, we'll likely have a better than average return on the investment of our downpayment.

The vast majority of people underwater on their home are there because they were in it for a short-term investment or invested more in their house than they could afford. Borrowing $300,000 and putting all of it in real estate is just as dumb as if you put it all in the stock market.

kcchief stole my thunder.

People who think it's a good way to make money and/or a short-term investment are the ones that are wrong.

However, it most certainly is an "investment". So is a car. You still don't make money on a car and you shouldn't be eyeing "making money" on a house.

But it's a very good long-term investment that you will live in for years and yes, if you stay in it long-term you can "make money", but that's not really the goal. As others have said, even if you break-even, you're "making" a ton of money compared to renting.

[spleen1015]

I don't consider mine to be. It is just the place I am going to live for about 15-20 years, then when my daughter graduates, I'll move. I'll likely make money when I sell it, but I'm not worried about that right now.

[DanGarion]

It is a LONG TERM investment that people shouldn't be so quick to try to take money out of.

[jeff061]

I don't consider mine to be. It is just the place I am going to live for about 15-20 years, then when my daughter graduates, I'll move. I'll likely make money when I sell it, but I'm not worried about that right now.

Maybe I just see it differently because I rent and every check I write is money down the drain. But bottom line. Even if you don't "make money" on the purchase price, even if you sell for half of what you bought it for you are still getting cash back at the end of it all. If you rent it's a 100% loss, you never see it again.

[stevew]

Yes ... unfortunately it's an incredibly bad one.

Do you still have the other house as well?

[JonInMiddleGA]

Do you still have the other house as well?

Yep :(

[BYU 14]

Yes ... unfortunately it's an incredibly bad one.

This, we bought at the wrong time, but it was out of necessity as we needed more space when one of my sons came to live with us when he was still in HS. If we stay here a long time we may eventually get even/ a little ahead again, but for now we are definitely under.

We have no reason to complain as we made about 50 K on the house we sold to buy this one and our interest rate is a very decent 4.25% so about a push overall.

[ShaneTheMaster]

I owe $180,000 on my townhouse, and it is literally worth $20,000.

[Edward64]

It is definitely an investment for me. I expect it to increase in value over time while providing for tax breaks, steady domicile in a nice school district etc.

It is not a speculative investment, don't expect it to double in value etc. and not banking on selling it to fund my retirement.

[RainMaker]

Yes, just because the only advantage to owning v. renting (in my own situation) is that I might end up with money a long time from now. If I end up with more than I put in, it was a good investment. If I break even, or lose a little, it was still a pretty good investment v. renting.
Pretty much this. It's sort of a pseudo-investment. Assuming the value of the home doesn't go down and your interest rates are not super high, it's a better investment than renting.

At the same time, like any investment, it can't be your entire portfolio. A lot of people went into home buying as an investment when they didn't have anything else invested elsewhere and got burnt.

[Marc Vaughan]

My home isn't an investment - yes I tried to purchase it in a sensible manner so if/when I have to sell it I shouldn't have to dig myself out of too big a hole ... but ultimately I bought it as a home if it shot up in value I wouldn't be looking to sell it off at a 'peak', so no its not an investment.

I own a house because I like being able to live in the manner I want to, have animals on the property and redecorate as I (well my wife really ;) ) prefer .... do I expect it to make money in the long term comparative to other potential investments, not really - but theres more to life than money.

[wade moore]

I just don't understand how anyone can argue it's not an investment.

As I said, it's not a "money-making plan", but not all investments make a lot of money.

[Logan]

dictionary.com defines it as "the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value."

[Marc Vaughan]

I just don't understand how anyone can argue it's not an investment.
An investment to me is something I expect to make money on.

A purchase is something which is bought for reasons which don't involve making money.

I haven't bought my house as an investment, I've bought it as a purchase ....

[Ksyrup]

It's a money pit. We bought from a new builder who it turns out didn't know jack shit, didn't pay subcontractors and got idiots to finish stuff others wouldn't because they weren't getting paid, apparently paid off someone to either pass us on inspection or skip it altogether, etc. And now he's out of business and has been sued for about 100 times what he's worth, so I'm stuck with paying to make it right. We're in the middle of a $25K "renovation" to fix structural issues and leaks. It's been a nightmare.

After he left the construction business, dude opened a pizza shop. It caught fire about 3 months ago and put him out of business. I'm surprised I didn't get a visit from the local police.

[Desnudo]

I just don't understand how anyone can argue it's not an investment.

As I said, it's not a "money-making plan", but not all investments make a lot of money.

I view as an investment in that I'm looking to buy a house that has factors like location that will drive up the value in the long run. However, I'm not attaching it to my retirement plan success either. Part of the investment pay-off if that you get the enjoyment of living in your own place and watching your kids grow up there, having a family history. I think the economists fail to account for that in their calculations when they tell you to rent.

[sterlingice]

After he left the construction business, dude opened a pizza shop. It caught fire about 3 months ago and put him out of business. I'm surprised I didn't get a visit from the local police.

Coin flip as to whether he did it for the insurance money or whether someone he owed money to did it for revenge.

SI

[Rizon]

I heard this on the radio this morning and I laughed my ass off. If you're flipping your homes by buying them in a down market and selling them in an up market, then yes. Or if you're keeping your home for 30+ years, yes. Otherwise, you're taking huge losses from massive interest payments over time and that's not really an "investment" to me.

[jeff061]

When the alternative is renting then yes, even with interest it's a good investment.

[JediKooter]

I'd rather rent for 1500 a month than have to pay a 3500 a month mortgage. I don't have to pay for water, garbage, sewer or anything like that. I don't have to pay any home owner association fees. I can up and leave when my lease expires. I'm sure there's parts of the country where buying is actually the better choice, but, here (unfortunately) that's just not the case, unless you're pulling in 200K a year or more.

[molson]

I'd rather rent for 1500 a month than have to pay a 3500 a month mortgage. I don't have to pay for water, garbage, sewer or anything like that. I don't have to pay any home owner association fees. I can up and leave when my lease expires. I'm sure there's parts of the country where buying is actually the better choice, but, here (unfortunately) that's just not the case, unless you're pulling in 200K a year or more.

That's a pretty extreme example though. I left a $600/month apartment to pay a $500/month mortgage. ($90,000 house in Idaho, a hell of a lot cheaper than just about everywhere else, I realize). No home owner association fees, some water/garbage expenses (well under $100/month though). Some of those mortgage payments are going to interest, and there are maintenance costs, but I'll have a decent amount of equity pretty quickly. Either way you're pissing away money (taxes, interest, maintenance for homeowners, rent for renters), but at the end of the day you have something that's worth something if you buy. (as long as you can stay above water in the mortgage, obviously).

[Rizon]

I'd rather rent for 1500 a month than have to pay a 3500 a month mortgage. I don't have to pay for water, garbage, sewer or anything like that. I don't have to pay any home owner association fees. I can up and leave when my lease expires. I'm sure there's parts of the country where buying is actually the better choice, but, here (unfortunately) that's just not the case, unless you're pulling in 200K a year or more.

My wife and I bought a house last summer, and our friends rent the same exact type of house in our neighborhood. Our mortgage is about $2200, and I think they rent for about $1500. The landlord has landscapers that mow the lawn and keep the plants looking real nice, my ass has to mow my lawn and whack weeds, pick up leaves, etc. When their contract expired and they renewed the landlord repainted the interior of the house, redid the carpets, etc. I have to pay for all that myself. They have a new roof, and mine has about 3 years left before I have to have it replaced ($$$$). In the long run, you'll pay way, way, way, WAY more owning than renting. There are of course downsides to renting ... not being able to do what you want to the house, having equity to lessen the hit of all those payments, roommates (ugh), etc.

Now, if you know what you're doing and buy in down markets and sell in up markets, you've got a nice investment. I bought a townhouse for $63k in 1997, last appraised at 109 and at the peak of the market went for 380. Our house now we bought for $320k, last appraised at the same value (surprise!) and at the peak of the market went for over 500k. I think over the time of the loan we'll end up paying a bit over $600k in principal, interest, property taxes, etc. We're selling the townhouse when the market goes back up again, and haven't decided if we'll sell the house or make it a long term residence.

[JediKooter]

That's a pretty extreme example though. I left a $600/month apartment to pay a $500/month mortgage. ($90,000 house in Idaho, a hell of a lot cheaper than just about everywhere else, I realize). No home owner association fees, some water/garbage expenses (well under $100/month though). Some of those mortgage payments are going to interest, and there are maintenance costs, but I'll have a decent amount of equity pretty quickly. Either way you're pissing away money (taxes, interest, maintenance for homeowners, rent for renters), but at the end of the day you have something that's worth something if you buy. (as long as you can stay above water in the mortgage, obviously).

That was my point actually. You can't do that here in the town where I live, where the median house is around slightly over 1Mil (trust me, very very few would qualify as million dollar homes though). The county median house price is over 650K. That's a bit out of my league. I would love it if I could find a house that isn't 3/4 burnt down for 90K. I'd buy in a heart beat. So until then or I start making A LOT more money, renting is the wiser move in my opinion.

[JediKooter]

My wife and I bought a house last summer, and our friends rent the same exact type of house in our neighborhood. Our mortgage is about $2200, and I think they rent for about $1500. The landlord has landscapers that mow the lawn and keep the plants looking real nice, my ass has to mow my lawn and whack weeds, pick up leaves, etc. When their contract expired and they renewed the landlord repainted the interior of the house, redid the carpets, etc. I have to pay for all that myself. They have a new roof, and mine has about 3 years left before I have to have it replaced ($$$$). In the long run, you'll pay way, way, way, WAY more owning than renting. There are of course downsides to renting ... not being able to do what you want to the house, having equity to lessen the hit of all those payments, roommates (ugh), etc.

Now, if you know what you're doing and buy in down markets and sell in up markets, you've got a nice investment. I bought a townhouse for $63k in 1997, last appraised at 109 and at the peak of the market went for 380. Our house now we bought for $320k, last appraised at the same value (surprise!) and at the peak of the market went for over 500k. I think over the time of the loan we'll end up paying a bit over $600k in principal, interest, property taxes, etc. We're selling the townhouse when the market goes back up again, and haven't decided if we'll sell the house or make it a long term residence.

There's definitely pros and cons to renting vs owning. I would love to buy a house (not for investment purposes though), but, that's just not happening until I find my sugar mama or leave the Bay Area. Yup, I don't have to worry about any of that stuff. Carpets? Nope. Roof? Nope. Paint? Nope. Termites? Nope. Property taxes? Nope. It is nice to own your own place though, which I would love to do one day. I can't paint over this god awful light blue paint that's in my condo I'm in now and I can't figure out where the cat box smell is coming from (no I don't have a cat). So that sucks.

600K on a 320K loan sounds about right though. I think buying a house is kind of like the stock market, you just have to be able to strike when the buying is good or have lots of extra money to just get in.

[FBPro]

Without a doubt our home has increased in value over our purchase price 50%+.

[Philliesfan980]

My wife and I bought a house last summer, and our friends rent the same exact type of house in our neighborhood. Our mortgage is about $2200, and I think they rent for about $1500. The landlord has landscapers that mow the lawn and keep the plants looking real nice, my ass has to mow my lawn and whack weeds, pick up leaves, etc. When their contract expired and they renewed the landlord repainted the interior of the house, redid the carpets, etc. I have to pay for all that myself. They have a new roof, and mine has about 3 years left before I have to have it replaced ($$$$). In the long run, you'll pay way, way, way, WAY more owning than renting. There are of course downsides to renting ... not being able to do what you want to the house, having equity to lessen the hit of all those payments, roommates (ugh), etc.

Now, if you know what you're doing and buy in down markets and sell in up markets, you've got a nice investment. I bought a townhouse for $63k in 1997, last appraised at 109 and at the peak of the market went for 380. Our house now we bought for $320k, last appraised at the same value (surprise!) and at the peak of the market went for over 500k. I think over the time of the loan we'll end up paying a bit over $600k in principal, interest, property taxes, etc. We're selling the townhouse when the market goes back up again, and haven't decided if we'll sell the house or make it a long term residence.

What about in 30 years (or less) when you've paid the Mortgage? Then you're just paying for taxes and maintenance. Chances are, in 10 years, the rent that your friends are paying will have escalated above your current mortgage + escalated taxes.

I wouldn't be too discouraged about the extra $700 you're paying now. It will be worth it in just a few years probably.

[Rizon]

What about in 30 years (or less) when you've paid the Mortgage? Then you're just paying for taxes and maintenance. Chances are, in 10 years, the rent that your friends are paying will have escalated above your current mortgage + escalated taxes.

I wouldn't be too discouraged about the extra $700 you're paying now. It will be worth it in just a few years probably.

True, true. It got buried in some of the posts above, but I agreed that it's an investment above 30 years. The 320k was a great price for the house, 10k under comps, plus it's a great area (a block away from a major freeway, walking distance of every store imaginable, an enclosed development, other stuff). I'm not even remotely worried about the extra $$ since the area has historically held its normal value really well.

The poor people that had it before us paid 500k and ended up under water within a couple of years. I felt really bad for them.

[Rizon]

Dola,

Forgot to add my parent's example of holding a house for 30 years. They bought theirs for 60k-ish in the 70s. At the peak of the market they were going for over 500k. Valued in the 300s now. So yeah, if you can hold a house that long that's a pretty good investment.

[Sun Tzu]

I bought a beautiful house in an upscale neighborhood in sunny California for $250k this January. My PITI payment is $1650.

Hell, fucking, yes my home is an investment.

[SportsDino]

It is simple really, take the dollars paid in and the dollars you gain out.

Say you got a good buy during the foreclosure bake sale in March 2009, cash money 100%, you hold to today. Compare it to an index fund at the same time. You buy the index fund, you are nearing a 100% return TODAY. The house, well if you can find a buyer (HAHAHAHAHAHA) you are still waiting probably for the asset valuation to climb to maybe a 10-20% profit, I don't do housing so even that may be high.

Granted, that is perfect market timing, but it is to illustrate the first thing a lot of people get wrong... ignoring opportunity cost. The money you are sticking into a 'house investment' instead of buying other investments does matter.

The second thing I see everyone screwing up, once you introduce a mortgage you have DEBT, you may have CASH, but you really have a negative NET value in EVERY scenario except where the appraisal value of the house goes up faster than the rate of your debt.

Instead of paying your mortgage, you could be saving it and getting interest, so the positive interest you could have earned gets added onto the negative interest you are paying. The whole concept of equity is often used for people to convince themselves they are afloat in the deal when it really just represents how much of the cash they have flooded out is now back under their name. You didn't EARN any money in the whole arrangement, you just paid a bank to take out some interest and some small portion of that money is back in your name (in the form of a portion of equity on an illiquid asset).

If you have a 200,000 dollar house and you get a mortage all told costs 250,000 and you are paid off in X years and the house value remains flat, your INVESTMENT did not make you 200,000, it lost you 50,000.

The chief value from the house as so many of you have mentioned comes from the fact that rent is an expense, you have nothing left over at the end of the day if you pay a rent expense. Do not confuse this with investing please. This is actually much simpler to value and it is independent of your sell price on the house, you should calculate it with respect to your debt funding with an extra bonus if you bought the house with cash.

There also is the cashflow analysis approach, almost always this is livable in the long term and hell in the short term (in a realistic market). Unfortunately people tend to think a shit-ton of credit is wealth because they are swimming in cash up front, they don't realize that depending on the terms and timelines every dollar they get is going to cost them 50-100% more. Inflation helps mitigate this (inflation is fun in many microeconomic scenarios), unfortunately when you have 50-100 million people with the same bad idea the macroeconomic impact is the sick bubbles we are getting more familiar with these days.

In short, if you can even begin to unravel all of the factors above than maybe you are an investor. I don't want to turn people off escaping the rent trap, there are savings to be found, but unrealistic approaches to that effort will lead you to much higher expenses and a lot less equity. For the love of god, whatever you do don't buy high at the top of the next bubble. For every person out there who managed to win 20 grand here and there there are probably 2-3 who lost 20 grand.

Work for yourself, don't be a slave to your house. And the easiest way for that to happen is to live in it, not overbuy thinking you will turn a buck. Particularly if you don't know the basics of how to turn debt into real capital. Anything which results in more cash outflows than inflows might call itself an investment but it is a bad one, unless you want to get into some highly advanced NPV discussions which is invalid the moment someone takes that house cash and plops on a garage, or landscaping, or buys a car with it.

[SportsDino]

Dola,

Forgot to add my parent's example of holding a house for 30 years. They bought theirs for 60k-ish in the 70s. At the peak of the market they were going for over 500k. Valued in the 300s now. So yeah, if you can hold a house that long that's a pretty good investment.

My grandmother got her house for a few thousand in the 60s, maybe 100-200k these days (actually it is better when it is appraised for less, lower taxes, which is what you want if you are not a flipper except for when you are going to sell :) ).

She bought it without a mortgage at all, bonus. Assuming a cheap rent rate of $300 since 1990 that is $75,000 in pure profit right there (and that is a low estimate). That is where you want to be, not roller coasting through four houses in your life up on some and underwater on others and paying a mortgage every single year of the process and still finishing off payments into your 50's/60's.

-----

People need to take into account the costs if you have to sell. Any fees you may have for getting out of the contract, fees to sell the house, timing of the sale and how long you can float it to get a buyer. The danger is not just selling below your mortgage price, but all the transactions costs involved that eat away at your profits and are harder to recall than the big ticket 'I sold it for X thousand'. Cash flow is illusory, it may look nice that you have a bunch of cash in your pocket around the sale, but if you are an investor you shouldn't be living paycheck to paycheck anyway and cash should only represent money that isn't earning any interest.