Actually we do not do investment in equity but try to make quick bucks out of it but for real estate we are actually an investment minded. Its just that we need to change the mindset and nothing more.
I got a question which sounded very interesting and practical. A user asked me, “Whether he should go for an investment in real estate or should go for an equity based investment profile?” Though his question was to choose one of the two it looked like he he had lot of preference towards Real Estate and also mentioned the following reasons.
- Being a service personnel he can get some good amount of Loan.
- Tax benefits on the interest of Loan as well as 80C.
- High chances of him loosing some good amount of money in equity compared to real estate.
I also looked at his reasons which he called it as benefits and I was not sure if he would follow if I suggest him some equity investment but then thinking about his benefits I have some answers to them.
Unless you are taking the Loan as Home Loan you are not eligible for the first 2 benefits. Home loan is the loan taken for the home where you plan to live in near future and you cannot have Home Loan for multiple properties. So if you qualify as home loan then you should have a home loan and go for Real estate investment but when it comes to third point I think you seem to loose more money in Real Estate than in Equities but its just that you do not feel the loss in real estate.
When you buy something in Equities you always is stuck to the price ticker, looking at the price of your stock or mutual fund on a regular basis but when it comes to Real Estate you do not tend to find the price of your property on a regular basis. If you can follow the same strategy for stocks then you can feel more comfortable and relaxed. The main reason we could not do this is because we have the price very easily regularly floating in front of us and also we are not quite sure about our investment and try to turn the investments as much as we can depending on the news flows.
So actually we do not do investment in equity but try to make quick bucks out of it but for real estate we are actually an investment minded. Its just that we need to change the mindset and nothing more.
Assalamoalleykum Shabbir;
Nice post Congrats for this
W/Salaam and thanks for the feedback
Hi Shabbir,
Based on your answer for namrata’s question, which says dont invest if not too much of loan is required. I have been investing in SIPs since last couple of years. I have some additional cash flow coming in due to my current home loan is getting closer to end. I plan to invest in additional property (20 LAK budget) in Thane, Navi Mumbai or Pune for investment. What my problem is I can not buy property now since I dont have enough cash in hand to make it for 20% amt of loan.
Question:
1. Should I keep aside the extra money in some debt fund or mip schemes for short-term 1-1.5 years view and make decent savings to hold suffficient cash? (i want to play safe with extra money hence not putting in equity mfs)
2. Or should I sell the existing MF’s units (appx 2 LAK market value) and buy property to avoid aditional price rise, which will happen after 1/1.5 years.
What sounds as good option out of the above..from your perspecive? Any other better ideas?
Ashish, if you are planning to go all out with investment into Real Estate I will suggest no. I will suggest you should make Real Estate a business. You can buy the house but make sure you are also ready to sell it off. I see many people are not able to do it because they think it is a life long asset. I agree on the asset part but if you have cash you can look for more assets. Also don’t be afraid to give the house on rent and get the cash rolling and use that to get the EMI done ASAP.
real estates…properties in mumbai??
Real Estate is always a good and safe investment provided you don’t need to take too much of Loan
Hey shabbir,
First of all i would like to say that ur site is very informative and is really beneficial for investment purpose.
I would like to ask u that is it the right time to invest in real estate. Or could thr be a correction in real estate market soon?
Namrata, Did you meant Real Estate Stocks or in Real Estates
Really nice and good information for me. Thanks for sharing.
Yes we should go for a Real Estate Investment but not always