Is Your Fascination for Home Ownership Hurting Your Progress?

The ‘makan’ part of the proverbial ‘roti, kapda, makan’ has got so deeply ingrained in the Indian psyche that owning your house is regarded as one of the biggest milestones of your life. Having seen the plight of many of our friends in their 30s who spend all their savings as well as future earnings (20 year home loan), a slightly unconventional thought passed our mind. Is it really necessary to buy a house when you are in your 30s?

The arguments usually presented in favor of owning a house are pretty simple – firstly, it gives you a feeling of safety that you always have a place to go to. Secondly, property prices will keep on rising perpetually, so it’s better to buy it sooner than later. The arguments on the flip side are – the need to pay monthly EMIs will tie you down to your jobs. It will completely take away your risk taking ability exactly at the time when you should be taking risks.

GreenEdge Wealth Services’ View

While you are paying your EMIs, you will have little left to invest in stocks, bonds or start-ups. You will also reject any entrepreneurial opportunities that will come by your way. By the time your home loan is re-paid, you will be in your 40s and your risk taking ability would be significantly lower. You will get the safety of a house but you lose the chance for making big in life!

After deeply reflecting upon the pros and cons of buying a house, we have come to conclude that it may not be a bad idea to postpone your home buying decision to ones 40s. Meanwhile we need to make some effort to try and deploy our capital in a more productive manner in the next 10 years. Our folks have seen a 15 year bull market in property and hence may urge you to invest in property. But there are enough signs that suggest that the bull market is over and property markets in large cities will witness a five year correction.

If there is still a need to buy a house, don’t buy beyond your means. Leave some money on the table for experimentation with stocks, start-ups, etc. A word of caution here – in case you decide to invest your hard earned money in stocks, do it yourself if you think you have the requisite expertise else find yourself good investment advisors.