Salaries have gone up so much and so has expenses, so if these younger lot dont switch jobs they wont be able to live a decent life. Older lot has already built their mansions when the life was much simple and easier. These days its becoming tough day by day to keep with with the Joanes. An example many of my friends are putting teir kids in IB school just to live up to theier high circles and my good they charge s bomb, my entire school’s fees (min you it was the most expensive school in the tier 2 city in its time) is equivalent to one year of IB school’s fees.

I bought a house on loan due to parental pressure. Paid the EMI for about 8 years… slowly realized its not the wise thing to do…(of course after reading subramoney and few such blogs!!) withdrew my EPF amount, closed the loan, sold the house, moved to rented house… slowly deploying the capital into equities. Feeling great and looking forward to a prosperous future. Will buy a house again only if I can pay in full cash and only if my financial situation justifies the expense. Yes, I will treat buying a house like any other expense like buying a TV, Fridge, AC or a car.

Hi Balaji,

When you sold the house – was it profitable?
I am also in similar boat and thinking to sell off the house – come on rent and live peacefully.
Where do you keep the capital before deploying in equity?

balaji,

i have a different question
didnt everybody in your family scream with sentiment like tamil cinema saying selling house is equal to ruining family name

how you managed and convinced all to leave own house and stay in rented house ?

yes.. of course.. hell broke loose 🙂
It was a long process to convince my parents and wife.. took about 2 years before they gave up!! there was not a single soul that would support my decision. Friends, relatives everyone would try to advice me against the decision.. Some thought that I had gone mad and some that I will go bankrupt soon. After a point I just didn’t talk about it to anyone, in fact had to lie that am just selling this one and buying another house close to my work place.

However, I was determined.. didn’t like all my capital being locked down in the name of a house. Was convinced equity is the way to wealth (Thanks to people like Subra). It also helped as I was always the kind of person who gives a damn for what other would think. Like how Buffet would say, am fine to look foolish as long as have done nothing foolish!!

I finally sold the house this march, moved the amount into Quantum liquid fund. And then gradually moving it to a set of Equity MFs and Quantum Bond Fund. I would have loved had this happened about couple of years earlier, would have deployed the whole amount into equity in one go! At least the market is giving me some opportunity now.

Balaji,

In first 8 years of EMI payment, hardly principal could have come down as most of the EMI goes towards interest. If the house cost is 50 Lacs, after repayment of loan, one could have got another 50 lacs if returns matching with inflation. Do you feel this upfront capital is important for equity investment?. Do you have an experience in equity investment before?. How confident are you that you would generate positive real return?. Why could you not save any extra amount to invest in equity in all 8 years?. I would have preferred to see my performance with equities with small savings before taking this big decision of selling the house to get into equities.

@Krish.. wow.. how preconceived notions could cloud ones eyes!

we hardly know each other and you make convenient assumptions.. I can answer all your questions but it will not match what you had already assumed!! let me save you the disappointment and myself the effort.