Part 4: Strategy or How the heck do I get to Financial Freedom?

4.8 Planning to buy a House? Do it without derailing other plans

Should you buy a house or live in a rented place forever? If you want your own house, how do you go about planning for it so that it does not take over your Financial Freedom Plan?

In India having your own house is still pretty important and it is huge commitment unless your parents or in-laws are funding it. Even then you better plan this well. The important questions to answer is should you consider owning a house at all or live by the saying -Fools build a house that wise people live in. If you should then when is a sensible time to do so?

Buying a residential property, is not a good investment in India as the returns through rentals in all likelihood is lower than FD and the long-term appreciation in value is modest. Everyone tends to get anchored to the buy price and feels elated when they see the current market price. But they forget the time elapsed since they bought it and don’t compute the CAGR on it to get a real assessment of their investment. So, you have to derive significant emotional and self-fulfillment benefits to justify buying a house. Which is fine by me. If you do buy, makes sure its in a place, neighborhood you will love to live in. This protects you from having to pay very high rentals in the future, in case your preferred location become really very expensive.

Understanding the impact of buying a residential house. Your cash...........Read More

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