As you move into the thirties, you need to liquidate your part of your stock investments and think about investing in property. Remember the first property you invest in need not be your dream home. In India interest rates are extremely high. So is appreciation of property. If you go by the conventional route of investment, you pay the high interest rate lifelong.
To avoid that try investing in what you need and not what you want. How do you do that? Remember you have just entered the 30-38 age group where most Indians start planning a family and a home. Ask yourself a few questions to clear your investment goals for the next few years.
* How many people will live in your dream home for the next ten years?
* Do you need a 3 bedroom or a 4-bedroom home when you are 30 or even at 40?
* Are you reconciled to pay a high mortgage for a lifelong to acquire a dream home?
* Are you sure that you or your spouse will stay in this dream home or even the same city throughout your life?
* Is this city you work in currently your dream city for a life time?
* How far should your residence be from your place of work?
* Should you be working for 8 hours a day and commuting for 3 to 4 hours a day life long?
* Have you calculated your and your spouse’s real wages by including your commuting time?
* What is the best location to stay considering different work places of the couple?
* Can you afford to buy a suitable home in a comfortable commutable location for both you and your spouse?
Now these questions can be confusing. But the answers they throw up helps you to create your goals for home buying.
You could be tempted to revise the size of your dream home. You may want to reduce your EMI when you buy your dream home. You may consider that this city is good for you immediately, but not for lifelong. You may realise that between you and your spouse you are burning up a sixth of your life commuting and need a relook at your work life balance. You may think that though you know the best location for your home, you simply cannot afford it.
So, what do you do? The solution is simple. Buy a home but not with the express motive of living in it for lifelong. Buy a home as an investment. Buy it where you can profit from it if you do not live in it. It should be an affordable home catering to your current needs and not to your future needs. Buy at a price and location where you are comfortable with the mortgage payments. Rent it out if it is not close to your workplace. If you are smart buy allotments and sell at a profit. Allotments could be of a residential or a commercial property. Use the capital gains to reduce your mortgage payments when you book your dream home.
The idea of switching investments for capital appreciation is just to reduce the mortgage time from 30 years to 15 years or 10 years or the mortgage amount significantly. If you can do that your stress level reduces as you are never uncomfortable with mortgages. The thumb rule for smart investment is to ensure that you are able to afford at least 50% as down payment.
It is not difficult to do that. You have only to realize that living in the land of infrastructure shortage, you have a great chance of making a smart deal. An asset in India has both rental value and capital appreciation. Forget about the sentimental value of ‘my dream home’ and get down to real business to make yourself richer and your life simpler.