SHOULD YOU TAKE A LOAN TO BUY A HOUSE (PART2)
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- Опубліковано 27 вер 2024
- #nri #nrimoneyclinic #financialplanning
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Congratulations for well deserved 50k..
Thank you so much 😀
@@NRIMoneyClinic sir for 20 years, it's a very long period investment..and you are taking very low conservative rate of return only 8% . If we play very safe options in equity MFs, we can consider 13 % CAGR .. then whole calculation will be change.. what's your thinking ..
If you get anthing more than 8% , that is additional profits for you .. please subscribe and keep sharing the videos
@@NRIMoneyClinic 6 .L
What about the EMI saved when making full payment for the home? The EMI saved could be invested in the same 8% investment vehicle and that amount at the end of the would-be-loan-tenure needs to also be subtracted (or added) to the final result.
Otherwise the benefit of paying full amount for the home up front is not fully calculated right? Am I missing something?
I think this is true
You are right. He did a wrong calculation.
We have Scenario 3 rd , Downpayment full 50lakhs and Rs 36000 SIP @8% (instead of EMI) after 25 yrs Rs 34465197/- plus house 🏡! this also is giving best 🥰
I've seen 99% of my friends aged between 25-32 yrs all purchased flat with cash only. But I don't have any idea how at this younger age they were able to save that huge chunk of money where their investment time cruve were really low.
While taking home loan, we Couldn't get 100% loan amount and some down payment too. Say 70-80%as loan amount. For 50laks property we have to make 15- 10lakhs as down payment. This will Change the invested amount and return on investment calculations. Plz explain on that part too sir.
Hi, when we are taking an example of 10+ years, please include the inflation factor as the maturity amount seems too high before adjusting for inflation.
We've taken little different pathway. We're investing in mutual funds for last 5 years with decipline and having 15% annual returns (using PPF, 2 nos of Large & Mid Cap and 1 nos of ELSS). We plan to purchase home at a low cost location, when retiring after productive age (more than 20 years from now). It helps to as current average age of India is 30 years. After 20 years, property is not going to be hot, as majority will be retiring or spending money to renovate existing property. Unsure whether many have calculated about such scenarios. It's more profitable than home loan scenario and people will have adequate cash flows too. Dream, Calculate, Analyse and Act with brainy stuff.
I think this video is missing an important point.
In the case that you don't take a home loan, you don't have an EMI. In the 25 years case that emi amount of 36000 becomes available to you in your monthly budget to invest.
Lets assume you invest the 36000 monthly for 25 years at 8% interest, this will result in a corpus of 3.4 CR, comparable to the one we get if we invest 50L for 25 years.
So it looks like both options are going to give you the same return at end of 25 years.
No emi has added advantage of less tension.
Perfect
In the 3.4 cr for SIP route , the invested value is 1.08 cr and interest is 2.37 cr . In case of 50L for 25 years Lumpsum route , the invested amount is 50L while return is 3.17 cr with a total corpus of 3.6 cr . Much better than the SIP route. Plus you always have the flexibility to use the same lumpsum amount during the 25 yrs when you need an emergency big sum which is not possible if you already purchased the house with that money and only option left would be selling the house .
Sir, the way you talk is superb.Defenitely you will get more subscribers
VERY NICE INFORMATION......YOU DESERVE MORE THAN 50K ...CONGRATULATIONS
You solved the question which I was looking for, great video with great explanation
Thumba simple and point to point explaination. Dhanyavadhagalu sir.👍
What was the value of a house &rate of interest 10 years before?.
What was the real returns in a mutual fund?.
The same calcution for 20&25 years ago.
Buying a house before 2001,only were valuable,as the cost house were very cheap,then.
Thank you so much sir for your knowledge 🙏🏻🙏🏻🙏🏻
Basic flow in the logic !!! If you have cash and invest , you cannot simply look at maturity value. Where would EMI come from ? What you need to do if you invest cash and take home loan is invest in 8% MF portfolio and have SWP equivalent to EMI amount and then compare how much is left in that portfolio
You have a point . But there is one problem in your argument. Mutual funds at times may not perform for long periods of time (1994 to 2003 , 2014 to 2019 ) . During such times you will risk depleting your capital .. not a very good idea .. please subscribe and keep sharing the videos
@@NRIMoneyClinic yes. MF may not perform for a long period of time. But the video ignores the EMI repayments completely by a person who takes home loan and invests 50L. Perhaps a better way would be doing an example of someone who invested in 2005 in. a conservative portfolio if say 20% NIFTY and 80% Income Fund. Repays in EMI until 2020. If he ends with a positive number, that’s his real gain vs paying with cash in 2005. Don’t get me wrong. I love your videos and they are very thoughtful especially for NRIs (like me, based in Bahrain).
Sir but the main part is.... Why anyone will look for loan if he or she has available amount of 50 lakhs.. Which can be invested anywhere.... Loan is considered bcz there is no available money..
Your talks are great!
What a fabulous presentation 👏 👌 👍 .right on dot......
Nice explanation...!! Thank you🙏
Sir you are making a wrong assumption here as the loan tenure goes lower the interest rate goes higher in every bank. As they don't have flat rates for any tenure.
Interesting
Thank you
But you haven’t taken Rent Paid for that period into consideration
Are the calculations still valid in 2024? Home loans are at 9%-10%
Dear Sir,
In your second calculation… amount shown in presentation and amount you call out is different…. Not a big difference but it is better for the public video to fix it.
Thanks for pointing out . It was a slip of the tongue . It is in two places. Follow the figures shown on the screen
Very informative sir
What if I cannot sell the house even for Rs. 1 Crore???
But what about rent for 25 years sir.
Sir,please make video on reverse mortgage
Thank you for this useful video. Do NRIs have the same tax benefits for their India income under Section 80C & Section 24b as resident Indians have ?
Thanks Sir 👍
Sir really impressed with your logics and yes if proper invested then Returns can fetch from 9 to10% easily .history says that.
Sir I have one doubt if you can please help me with ur opinion. I have already booked an house under construction and in CLP plan. Also I have got sanction for loan for Rs 50 lac. Query is that I am suppose to get Rs 45 lacs for sale of property and which I can get capital gains benefit of 20%, but I was thinking of paying the capital gains to income tax that is 20% and balance money invest in Good portfolio stocks. And continue the loan. What will be ur advise .. will this 20% pay me off in long run?
Hi, I am thinking of buying house of 50L
I have 25L for downpayment, for the rest 25L I'll take a loan
Does it make sense to take loan for a house as an investment ?
Sir please consider the cost of same 50 lakh home that will be after 25 years, it'll be in crores definitely not 50 lakh. Property rates can definitely go haywire in span of 25 years
You are right . That issue to be kept in mind . Not required to be used in calculations
Great 👍
Thank you 👍
Sir I am 21 years old and I want to invest for long term where should I invest , I am investing in ppf and nps and I want to retire at age of 45 ?
Which are safe investment s?
Too good Sir
Thank you so much
Hello Sir Home loan tax benefit not considered
2 most important aspects that are neglected by Indians when it comes money management..
1. Opportunity cost
2. Leverage
Good content uncle 👍
Thank you sanjith
Sound quality is poor
You are right . I am in a lockdown with poor internet connection.. we will be back to same old quality once situation normalises
Sir one doubt .. it is evident if I have 50L .. I paid fully and my house is debt free. I still will have 36K per/month to invest which I would have paid in EMI . This will earn you approx 3 CR + 50L interest you saved.
Yes this is exactly true
Hi sir,
I have a doubt instead of taking a loan of 50 lakhs and invest the 50 lakhs which we have for 8 percent return and pay emi of 30k for 25 years. I feel its better to take 50 lakhs home without loan and invest the emi amount of 30k to generate 8 percent return for 25 years. Where we will be debt free from beginning
Interesting observation.. Let me calculate and discuss it in future parts . Thanks for highlighting
When you are investing 50lakh as a whole ,from where you will invest 30k for next 25 years?
Is it not a double investment?.
@@businessconsultant5742 yes. Even this home as part of investment by loan and lumpsum investment in mutual fund as second one double investment too.
If no loan taken, the saved EMI amount of 30k if invested for 25 yrs each month for 8% in sip, the total corpus minus tax crosses 3cr. On the other hand, taking loan has tax benefit each month. I think net-net both approaches almost provide similar results. Anyway, am waiting for sir's analysis in his next video.
If it is first house,where u stay,rent amount?
This is a wrong calculation. The money that you are paying as EMI would also have generated huge returns if no loan is taken and it would have generated much greater returns than in the case of a loan. Please do not misguide people and push them into liabilities.
Sir, You have perfectly answered the question which has been popping up in my mind for a very long time now :) Thanks a lot!!
Sir hw can u assure 8% int available continuously for 25 yrs. Wrong estimated income sir.
You have a point . If interest rates rise, investment returns will also rise and vice versa is also true . You can work back any number of years and check this . Infact your investment returns can be far higher than 8% . A well constructed mutual fund portfolio could yield anywhere between 9 to 12% as a ling term average. Please subscribe and keep sharing the videos
Sir one query , I have 1 cr in cash and I am willing to take a loan of 1 cr with 8.5% ROI for 20 yrs . While calculating , if I keep the same amount in FD at 7% , I am getting the final return after 20 years more than what I would be paying to bank . Am I correct in my calculation or missing something as the loan I am taking is for 8.5% while I am investing in 7% .
Thank you for this very informative video sir. Pls answer Sir if we are in UAE better to take loan form uae or from india to build a house in India.
well explained but I am a person who does not take risk it will invest only in bank FD, post office, or PF. what about a person like me, I feel buying by cash will be beneficial.
Open up your mind . Risk comes from not knowing what I am doing and not having time . In this case time is not an issue . Other problem can be solved by engaging a professional financial planner. Please subscribe and keep sharing the videos
even if you invest in FD with 7% return you would still be beneficial
I can't thank you enough sir. What a quality content.
🙏 doing a great service
Could you please explain, Is it possible to get exemption on LTCG mutual fund for NRI AS PER 115f ?
sir thank you so much perfect video and content I was searching this type of video and this is 100% match very informative..
Sir what if the interest rate in market goes down ? Please consider this also
Sir; such a beautiful advice with so simple language. May u attain many more accolades for the good work and spreading financial literacy.
Hi, you should be calculated if the entire amount paid by savings, then monthly EMI has been invested and return that will make sense to understand the best way
Good point
Sir what has been the inflation rate in India in 2020?
Thank you so much 🙏
Compound interest will work for our investment,so even for same interest rate will be beneficial
Yes . You are right . Please subscribe and keep sharing the videos
1. The 7% interest saved is a guaranteed returns if the house is bought with full cash. The 8% mutual fund returns is not guaranteed and depends on a lot of factors like inflation, interest rate, tax rate etc. They won’t stay same for the 25 years.
2. Debt has a lot of emotional burden on a lot of people. Managing money in a disciplined manner is near to impossible. That means, people won’t invest in a disciplined way for 25 years because of unexpected financial situations.
Above all, renting works out better financially if someone needs a home loan to buy a home. Consider the taxes, interest vs the rent amount.
It is neither a misleading video nor any form of advice .
If it does not apply to you, you may kindly neglect it .
Definitely did not like the word MISLEADING
Sir, I like all the content and information you share. It is very helpful for many people like me. Sorry, I just corrected my comment. I just wanted to present my perspective about getting home loan vs buying with cash. Hope it makes sense!
You are definitely entitled to your views
Sir what if interest rate cycle upsides by 1.50% to 2%...
You have a point here . But please note , your investment return will also move up in similar proportion..
This is most misleading video I have seen by so called professional advisor.
1. Why did you not consider the amount saved on emi when paid the upfront for house. You have to invest that saved emi amount with 8% return monthly.
2. You have assumed 10% tax on mutual fund return but actual tax on debt mutual fund is 20%. Since house is secure investment you have to compare with debt mutual fund, not equity mutual fund.
2. Debt mutual funds taxation is 20 % after indexation which approximately works out to 10% . Investing only in debt funds is neither suitable nor advisable .
1. I did not understand your view point . Let me revisit the video and understand what you intend to communicate and then reply to you
100%.
Well explained sir. Highly educative. Thanks a lot. Am messaging on whatsapp today and i would like to discuss on mutual fund investment.