Many people talk about their homes as their biggest investment. Unfortunately, the truth is that a home mortgage actually represents a purchase, rather than an investment. Although, of course, a home mortgage is an investment for the lender. The lender earns money from it. But the buyer doesn’t.

Think of it this way. A true real estate investment will provide you with money each month. You will have a regular cash flow. This means that you have something coming in from your property.

A home mortgage does not do this. If you buy, hoping to sell the home for more than you paid, but living in it instead, it is still a purchase. Why? Think of the interest charges, home insurance, utility bills and upkeep. You have to subtract all of that from the money you get from selling your home. When you look at it that way, your money is outgoing.

That doesn’t mean that you shouldn’t purchase a home. The tax benefits can offset some of the expense, and a home mortgage, in which you recoup some of what you paid in, is preferable to renting in the long term.

Just don’t fool yourself into thinking that your home mortgage represents a bona fide investment.