Dear All,
Most of us gets confuse on where to invest, how much we should invest ,etc.
The major confusion arises when we plan to invest in a property as an investment. The house which we buy to stay can not be consider as an investment. It is jus part of your need. People says commodity,equity, blah blah.. gives similar returns as compare to property.
So, I did some simple calculations on one of the property in Pune with actual values. Sharing the same with you :)
The cost of the property was 26,50,000 in Aug 2009.
Lets consider that 15% was own contribution and 85 % funding by housing loan
Own contribution around 4L and 22,50,000 was the house loan amount.
In the year of Sept 2013 the figure looks like
Selling cost of house 43,00,000 (Amount individual will be getting in hand after selling the property)
House Loan balace as of today 19,00,000
House Rent for 2 years 2,00,000
Total Profit/Net worth of my current investment = (Selling cost + Rent ) - House Loan Balance
= (43,00,000 + 2,00,000) - 19,00,000
= 26,00,000
Lets do the similar exercise for safe investments like Fixed deposit and Recurring Deposit
4L FD for 4 years with 9% interest = 572562 (Matuarity Amount)
Monthly Recurring Deposit of 22500 with 9% interest = 1329968 (Matuarity Amount )
*** 22,500 is my monthly EMI towards hosue loan, Same amount I have used for Recurring deposit calculations.
Total Networth = FD + RD
= 572562 + 1329968
= 1902530
The diffrence in both the investment option is aroud 7L :) . Which is very huge.
If you observe calculations clearly, the approximat returns are 12% on 26L by investing just 4L one time and remaining by house loan.
I would suggest to invest in house provided
1. You dont want to break it in short term as you may need to pay tax if you sell it.
2. This investment does not provide you an option of partial investment withdraw. ie either you need to break all or none.
Advantages
1. Tax benefit
2. Good returns
Any thoughts/suggestions are welcome?????
Thanks,
Sarang Chalikwar
sarangchalikwar@gmail.com
"Follow the simple rule that the return from the investments should be more than the interest on the loans"
Most of us gets confuse on where to invest, how much we should invest ,etc.
The major confusion arises when we plan to invest in a property as an investment. The house which we buy to stay can not be consider as an investment. It is jus part of your need. People says commodity,equity, blah blah.. gives similar returns as compare to property.
So, I did some simple calculations on one of the property in Pune with actual values. Sharing the same with you :)
The cost of the property was 26,50,000 in Aug 2009.
Lets consider that 15% was own contribution and 85 % funding by housing loan
Own contribution around 4L and 22,50,000 was the house loan amount.
In the year of Sept 2013 the figure looks like
Selling cost of house 43,00,000 (Amount individual will be getting in hand after selling the property)
House Loan balace as of today 19,00,000
House Rent for 2 years 2,00,000
Total Profit/Net worth of my current investment = (Selling cost + Rent ) - House Loan Balance
= (43,00,000 + 2,00,000) - 19,00,000
= 26,00,000
Lets do the similar exercise for safe investments like Fixed deposit and Recurring Deposit
4L FD for 4 years with 9% interest = 572562 (Matuarity Amount)
Monthly Recurring Deposit of 22500 with 9% interest = 1329968 (Matuarity Amount )
*** 22,500 is my monthly EMI towards hosue loan, Same amount I have used for Recurring deposit calculations.
Total Networth = FD + RD
= 572562 + 1329968
= 1902530
The diffrence in both the investment option is aroud 7L :) . Which is very huge.
If you observe calculations clearly, the approximat returns are 12% on 26L by investing just 4L one time and remaining by house loan.
I would suggest to invest in house provided
1. You dont want to break it in short term as you may need to pay tax if you sell it.
2. This investment does not provide you an option of partial investment withdraw. ie either you need to break all or none.
Advantages
1. Tax benefit
2. Good returns
Any thoughts/suggestions are welcome?????
Thanks,
Sarang Chalikwar
sarangchalikwar@gmail.com
"Follow the simple rule that the return from the investments should be more than the interest on the loans"
The assumption here is the house cost will inflate from 26,50,000 to 43,00,000?
ReplyDeleteThe data is real..
Deleteyes very true....this is good if its your first house and better if its second coz you can add the rent amount plus deposit in FD may be !!
ReplyDeleteThis comment has been removed by the author.
ReplyDelete