The most famous line in George Orwell's book "Animal Farm" is when the pigs declare, "All animals are equal, but some animals are more equal than others."
While this line represents a cynical view of government, a description of your personal net worth statement may read, "All assets (and debts) are equal, but some are really more equal than others." Let's consider how to view the things on your balance sheet, without much regard to how they got there.
In this environment, many people are excited about how much their house has appreciated and may be feeling asset rich. But a house is less equal than other assets such as savings or investment accounts that may appear on your balance sheet.
A house is a use asset. You need a place to live, so unless you sell your home and rent (like some people are doing), your house is an asset that makes you feel good but doesn't much move the needle on paying for your kids' education or retiring. Sure, you can borrow against your house to pay for some things, but it isn't an efficient ATM.
And lest you think you are going to sell your highly appreciated home and buy something a lot less expensive, be aware that it hardly ever happens. Maybe in a work-from-anywhere environment you can move to someplace much cheaper. But sticking around and buying down won't typically put a lot of money in your pocket.
There is also a hierarchy of investment assets on your balance sheet.
A Health Savings Account ranks No. 1, because it is the only investment that is tax-deductible when you invest and tax-free when you withdraw from it for allowed expenses.
While a Roth IRA on your balance sheet is your next best bet because it comes out tax-free, the math for investing in a Roth versus a deductible retirement plan shines only if you are in a higher tax bracket when you retire (or if you want your kids to inherit a great asset). If you are in a lower tax bracket when you retire, you would have been more advantaged with the tax deduction from a traditional retirement plan.
