Final answer:
Buying a house is considered a financial investment because it provides both financial returns through potential capital gains and nonfinancial returns by offering a place to live. Investment in tangible assets like housing carries moderate risk and return, with low liquidity due to the effort required to sell the property.
Step-by-step explanation:
Buying a house to live in can be considered a type of financial investment. Unlike bank accounts, stocks, and bonds which only offer financial returns, a house provides both a financial return and a nonfinancial return. The financial return could come in the form of capital gains when the house is sold for more than the purchase price. However, the nonfinancial return comes from the consumption of housing services, meaning you have a place to live. This aspect of investment in tangible assets like housing offers moderate risk and rate of return, with the added benefit of serving as a place of residence. The liquidity of such an investment is low, as selling a house can be a time-consuming and energy-intensive process.