new financial products…
so much pressure from so many people to ‘feature’ new financial products! It means subramoney has arrived…or is it a case of desperation that products are not selling?
I refused to feature products which are generally unnecessary for the readers (may sound pompous, but I am the judge here)..
what happens when somebody has a very complicated and expensive product? Arguably my readers are more intelligent than me, but I decide that I will not carry articles of products that I do not understand the product.
I understand only term (no I do not understand term with return of premium)…insurance.
I understand only Index fund…..and the other fund managers whom I know! Too scary for me to look at fund managers with a small corpus….I will not.
Milind N
Many Thx Subra.Your each word is Important for Lay people like us ,who prevent financial mistakes ,often irreversible my following heard mentality…like buying a flat by leaveraging 60 to 70 percent of net take home.Any subra student will Stay on rent and will invest aggresivly in diversified MF or Good scrips…We remember…”As long as My Dividents are more than my Rent ,i would stay on rent ,though i can afford to purchase a flat…subra these lines are in blood of your reader…i have not refered it to quote it,i simply can recollect it…its that Impressive .Many thx .Hence Probably People want that you should recommend products as our readers are increasing every day .By the way subra…Missing article on real estate…its quite some time we read about your wisdom on the topic.Many thx
subra
Milind…sadly Personal Finance is a dull, boring subject. I cannot make it exciting like a TV channel tries to do. You know the no. of digs I take at them…
all that I had to say about real estate is already there somewhere in the blog…when I see new developments I will write. However in PF the greatest favor you can do is to stay away from financial porn. Too much of it around even from respectable people…
thanks lots of nice words…
anon
Thanks again, subrabhai.
Milind N
Greatful for guidance Yesterday ,Today ,Tomorrow….Porns are many in PF…We have Subra…Not Bothered about Porns
Suresh
Sulabha purushaa raajan……
Congrats- you have managed to find the “durlabha” shrota”
prabe
Subra,
I have a request why don’t you write on creating a Dividend based portfolio?
subra
the market is a nightmare for value investors now. There is nothing to buy – it is just too high from a Value based investor. I am no buyer of any div yield scrip now..I may put my hand in the market..but not a market in which u can build a FULL portfolio. In many cases I have got value from growth, but surely not an yield market at all.
Jeet
yes… “As long as My Dividents are more than my Rent ,i would stay on rent”
…stay on rent and be prepared to pay 1lac+ per month rent when u retire say after 30yrs (assuming current rent 15k)… ofcourse u would argu that u would not stay on rent when u retire, u would either go back to your parent’s house in a remote village which would be 50yrs old at least by then (ofcourse u r assuming here that u can afford to change the life ishtyle just like that) or u would buy a house from ur equity investment when u retire ( ofcourse u r assuming buying house is as simple as buying potatos and the transaction is always fraud-fee)…. stay on rent and be prepared for some headache in old ages … ofcouse lets keep other things aside like retiring on a yr like 2001, 2008-09 etc, then nice landlord etc …
subra
Innumeracy helps of course.
Milind N
Subra Lets Use Technique told to Sehwag by legendary Sunil Gavaskar…No Need to touch every ball ,which is going wide.Let People win Argument !!
subra
Did you know Milind that a few years ago..one Mr. DS came to the nets..and the selectors were shocked at that man’s effectiveness at batting. However he had no footwork and no technique..and surely may not have been able to speak English.
Obviously he was not selected. His name? Devendra Sehwag..do u need a penny to guess whose father? L O L
so the techniques of the bygone era (get a good degree, stick to one job, buy a house, Gilt is safe, US can never default…) needs to be re-learnt. Well, a few people keep rents low, should I be complaining?
Milind N
May God Bless DS Sehwag —He Gave us Viru and House owners ..They are giving us Nice Flats…Former is Treat to watch and Later is Treat to stay at fraction of cost.GN
Ashok
@Jeet,
I am not writing for Subra but I have the same opinion as his about staying in rented accomodation.
>>u would either go back to your parent’s … 50 yrs old.
If my parent’s had a house, I would Rebuild and RENOVATE it with all modern facities. Doesn’t cost more than a few lakhs of rupees.
>>u can afford to change the life ishtyle just like that…
What lifestyle changes? Retirement itself is a big lifestyle change. After retirement, what you look forward to relaxing healthy walks, TV, broadband, nearness to temples (probably), closeness to vegetable/grocery shops/bank, and company. Not nearness to local railway stations or multiplexes. Most of the towns have these facilities.
So this is my advice: Stay on in rent till you are 50-55, save aggresively, choose a tier-3 town to live your retired life in, build a big house there and live a good retired life.
If you BUY a 2-bhk flat when you are 30, you will live in it for the rest of your life. Imagine living in a cramped 2-BHK and depending on your children to shuttle you around to the nearest temple/bank/shop because most of our cities don’t have proper footpaths or crossing the road is too dangerous.
Karthik
@ Jeet,
I own a flat (Well actually Axis bank owes it .. i cant even buy the banks share as it is over valued) but i agree with Subra’s views completely.
1 lakh + rent in future due to inflation will be same as todays 10 K. So my earning would also be substantially higher. By the way why Shd I ever own a house? Why cant people live in rented house even after retirement?. If they cant afford a flat in Bangalore they can move to Mysore. Idiots like me have already bought the flat .. there are so many lying around in Bangalore.. so the guy who lives on rent is the king.
Ashok, You need to add good hospitals/doctor to the list. They are evry important when we get old.
Jeet
a few points..
1. “1 lakh + rent in future due to inflation will be same as todays 10 K. So my earning would also be substantially higher.”
true with assumptions
i) Rent escalation rate < inflation
ii) u r still earning (primary earning that is), but I
was talking after retirement time. It's probably
true that a fresh grad hire would make 2lac per
month due to inflation but the retired person's
primary earning would be zero (if it is so today).
2. Stay on in rent till you are 50-55,….build a big house there and live a good retired life.
assumptions:
i) u r still healthy and ready to take the pain of such a big task after retirement. May be u r considering buying a readymade big house.
ii) u have no problem in frequent change of address while u r on rent. Ofcourse there would be some lucky people who would not need to do this. But this is becoming a common practice for landlords.
iii) What if u get into a wrong or evil transaction while making this task after retirement. You have lesser chance of putting things in place…
Having said all these, I must admit that there are some advantages of staying on rent. Specially if you are in a prof. where you have the possibility of moving to different places. But I do not support the motherwood statement like renting is always better than buying. I think it would depend on many factors like the country u live in, the city u leave in, ur profession, personal choice.
Sometimes we borrow concepts from western world without considering the underlying difference in regulation and infrastructure.
Ask someone who has stayed on rent both in US and India for a few yrs to find out the difference in their exp..
Driving from SFO to LA may give u different exp than driving from Hydb to Chennai, even if u r driving the same car.
subra
committing to a house actually means committing to a city. I know one guy earning about 40k a month buying a 3bhk in B city…then changing jobs to C city. Saved by the fact that mom has a flat in C city…HE CANNOT AFFORD EMI IN B and RENT in C city.
financially he has done more stupid things too…but he reads the blog so will not comment more.
Jeet
In that case, he can put his flat in B city on rent and use that rental income to pay his own rent on C city.
But again, as I said before, renting/buying would depend on many factors. If someone is in a profession where he would be changing cities frequently, buying may not the best option for him. I am not against renting but can’t accept the concept of ‘renting is always better than buying’.
Another point, those who think that the current rent of a 3bhk is very less in comparison to its EMI, they are just seeing it as it is today. After a few years the rent of the same 3bhk would be higher than the EMI due to inflation adjustment on rent. But ofcourse, the calculation would involve many parameters.
subra
flat in city B EMI: Rs. 35,000
Rent received in city B: Rs. 10,000 pm – stayed vacant 6 months, brokerage one month rent. LOL
Rent in city C: Rs. 18,000.
luck…Mom has a big flat in city C worth quite a bit.
innumeracy is an issue.
Ashok
Subra,
>>committing to a house actually means committing to a city.
Committing to a house is actually committing to a locality. I have personally seen examples in Bangalore where people have changed from a “own” (bank-owned) house to a rented house closer to workplace/schools, thanks to the killer traffic in Bangalore. Two hour city commutes are becoming the norm now and people also consider office location into their career plans.
A family I know very well recently shifted to a rented house close to their daughters IIT coaching class, even though they have two own flats, because she could not afford the time-waste commuting to both school and coaching class. Of course, this would be only for a couple of years but 2 years of big financial loss for them 🙁 .