re: Investing in Real Estate vs Stock Market / Mutual Funds There cannot be a generic formula in deciding something like this.
The scenarios and investments depend on many factors like current situation, income, committment, existing investments, risk appetite, future plan and many other factors.
So, there is nothing that one size fits all.
Many have made millions in real estate and share markets and similiarly many have gone bankrupt too.
My 2 cents here -
- Current share market is highly overpriced, so wait for correction or another opportunity.
The extremely high valuations does not make any sense to invest. For very long term you can buy blue chip companies.
- Do not put everything in shares, balance it out with real estate, gold and fixed deposits.
- Real estate is good hedge against inflation, and prices are only going to increase. Even a depreciating expense like Cars costs have increased drastically, who imagined getting returns from a car.
I will give you an example where I went to buy a plot, now after 2 years it is still unsold but prices have shot up by a whopping 50%, so now I cannot buy it anymore.
- Inflation is not rightly shared by government, the current number is too high (above 12%) and it was shooting with fuel prices rising every day, see the price of dal, gas, petrol, cooking oil which all have more than doubled in last 2 years. Same is the case of freight, cement, services, steel.
- Current interest rates have been kept artificially low imaging interest rate on loan is 7% but inflation over 12%.
If you are in reverse scenario and putting 1 crore in FD, you will get 5 lacs as interest (nett 4 lacs after taxes), but value of this 1.05 crore will not be even 95 lacs, effectively giving negative returns after inflation adjustment.
Now you can take a call for yourself.
Ideal would be to keep 30% real estate 30% shares 30% nps ppf fds and 10% gold.
Try bringing the EMI close to one third of your savings and you can take the plunge.
If the EMI is lessened by making more down payment than it would be a good idea.
Last edited by xway : 26th January 2022 at 18:10.
Reason: inflation data added
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