The only way to become reach is to have a contrarion approach. Herd mentality will always lead to mediocrity. Only 5% of the world's population is rich and that's only because they do things differently.
First thing, NEVER ever opt for a homeloan if you are a MIDDLECLASS guy in India. Even, if you go for homeloan, see to that loan portion is less than ten percent of asset value. If loan portion exceeds ten percent, PLEASE remember that you are not buying an ASSET but you are buying an INCREDIBLE LIABILITY. IMPORTANT: Please spread this message to every one as I observe that most educated middle-class guys unscruplessly borrowing FOR HOME BUYING and ruining their financial progress.
Re: How NOT to become poor in India for middle class guys
by Neeraj Agarwal on Jun 08, 2012 09:10 PM
I am not agree with the views, Yes loan become problem when u r not at all in position to repay the EMI, but in county like India when Real estate is giving you decent return, Taking home loan and putting your lequidity into some concrete assets, is much better th putting your money to buy cars and investing in stock market. We should be very clear that, when we buy a property, we buy assets, this is neither expense nor appreciable commodity. We Indian buy home, and enjoy at later date, when all loan repaid, yes compromise with little luxury, which not advisable for financial planner.
Re: Re: How NOT to become poor in India for middle class guys
by Muthu Karuppan on Jun 10, 2012 11:17 AM
Repaying Loan is always a problem for more than 50% people. REAL ESTATE MARKET IS A BULLSHIT
Re: How NOT to become poor in India for middle class guys
by Test User on Jun 08, 2012 09:28 PM
Not true. Taking a loan is called using leverage. So you can buy a house with money you have not yet earned. If you cannot repay a loan, walk out of it (don't repay), but if you can repay you have a created an asset out of literally no money. Considering high inflation in India, real estate generally compensates for inflation and the rent gained is a bonus. The more expensive the house (based on location, features, interiors), the higher the rent ratio because of the demand-supply problem of quality housing in India.
Re: Re: How NOT to become poor in India for middle class guys
by Muthu Karuppan on Jun 09, 2012 12:48 AM
To neeraj and test user. Both your concepts look good in theory. But in practice, borrowers pay two and half times more than the amount borrowed. This means your claim of beating inflation becomes untenable. Not only that, finding buyers willing to pay high price in future is also very difficult. Considering practical realities, value appreciation is only at paper level. I know many middle class people in my friends and relative circle struggling to fulfill their family needs like education etc because of this EMI. Understand that EMI is a FINANCIAL CANCER. Better spread awareness among educated people and Loans should be opted only on basis of Payment visibility.
Re: Re: Re: How NOT to become poor in India for middle class guys
by san on Jun 11, 2012 06:48 AM
Muthu, finally I find someone with a good understanding of finances.
99% of the people really dont understand the dynamics of a home loan and real estate.
Lets take a simple example of buying an apartment worth 50 lakhs.
You are taking a 15 year loan of 40 lakhs at 10% interest. You would end up paying around 1.5 crores for it.
Do you really think that a person can sell an apartment which is 15 years old at that price after 15 years.
Even if you end up selling the house at 1.5 crores , the point is you havent made any profit. Look at the stress you need to go through for 15 years for repaying the loan. I am assuming the middle class person works for a private concern and if any issue crops up from the job perspective, the family will be doomed and you will lose everything.
Leveraging is too risky for middle class people. You are better of paying rent for 15 years than taking up a huge loan on your head.
The problem with housing is if you one only one house, its very difficult to sell it as you are not comfortable renting some other place when you have one of your own. So your so called asset is just simply lying in and only saves the rent for you.
So do you think saying 20-25 rs on rent is justfying your investment of 1.5 crores.
Doesnt make business sense. Instead of opting for 40L loan, start your own biz for 10-15 lakhs and you will have a better chance of creating more income and beating inflation.
what more i can say, whatever i do is because to "compete" or "show off" or "better than others" etc. all unwanted, life is simple dont make it comlicated being greedy and preaching greedy
Seek refuge in 10 Janpath and work there as some Chapprassi,Cleaner,Cook,Maali and Voila u will be soon rewarded with a Big post and can loot the country to the hilt.If u don't believe me just ask PrathibhaTai.
Re: Re: Re: BEST AY TO BECOME RICH IN INDIA!!!!!
by Test User on Jun 08, 2012 09:30 PM
all indians are looting the country, why blame politicians. If anybody is not looting, it is because of lack of opportunity, not by choice.
Re: Re: Re: Re: BEST AY TO BECOME RICH IN INDIA!!!!!
by sky on Jun 08, 2012 09:48 PM
I partially agree.. We Indians are coward but we won't accept it..
Share market is like Casino, where except the owner all are looser. Only rich families will get benefit. In India rich families are hardly i.e. estimating 4 persons in one family,only 15000000 families can game out of total 3000000000 families.
Do not put your hard-earned money in speculative share market transactions, especially for short term gains. You will be trapped. There are very very few Jhunjunwallas and Warren Buffets who have made money in the stock markets. Look at the skyscraper stock exchange buildings, the posh offices and residences of stock brokers, investment consultants and advisors that are built with your money!! Every transaction you make earns money for the Government, Stock Exchanges, brokers, bankers, consultants, advisors and agents, and you may or may not benefit from it. It is your money they are profiting from. THINK.
