I know it’s a sin to be against Roth’s with Ed Slott. However, if you do not need your assets to be liquid and primarily going to pass down the asset to your heirs I believe investing in your primary residence is the better option. AFTER ALL YOU GET TO ENJOY LIVING IN YOUR PRIMARY HOUSE RATHER THAN LOOKING AT A STATEMENT SHEET OF YOUR PORTFOLIO. You also can invest substantially more right from the beginning and have more years of compounding tax free growth. As far as getting “NEVER TAXED” as the Roth is, your heirs get a stepped up basis when you die which eliminates the capital gains taxed (not talking about multi-millionaires with estate tax “problems”). In the event that you sell it before you die, a married couple can pay no capital gains on a $500,000 net capital gain. In addition if there was an unexpected emergency, you could liquidate some of the asset by opening up a HELOC or a primary mortgage while your still working. If retired with unexpected expenses you could get a reverse mortgage. As far as investment class and diversification goes, lets face it if the stock market goes up or down, real estate goes the same direction. If the bond market goes down due to rising interest rates the housing market goes down for the same reason. If bonds go up due to decrease interest rates the housing market goes up. Thus residential real estate has corresponding diversification as a stock/bond portfolio. You could keep a small amount in a Roth invested in foreign stocks/bonds as well as short term interest bearing investments. Go ahead let me have it with your comments!

Another Ed
(After all two Eds are better than one ! )