“ Wise men learn by other men’s mistakes, fools by their own. ”
The presumption of buying a house leads to a lot of hassles & pains. It can be removed only by understanding the whole home buying process. In India, thanks to our government, buying a home not only gives us need fulfillment & self-satisfaction but also saves our money by large in terms of tax paid to the government.
Now, that’s the catch – most of the young earners feel the pinch of paying a large chunk of their hard earned money in tax. So, they intend to buy insurance policies, mediclaim’s, ELSS mutual funds, PPF & then more & more policies & finally they end up in a trap.
I remember the first thing most of us did with our first annual income was buy a LIC policy & we were happy boasting about it. Today, I realize it was foolishness. We all entered the trap which has been laid by the companies since generations. TRAP, yes it’s a trap which no one realises. Initially we buy a lot of policies to save tax & then in the long run we borrow money to pay the premiums of these policies. Lastly, the youth doesn’t have money to enjoy their life even after earning a handsome salary.
So is there a better way of investing?
I would suggest the best way for youth to invest & enjoy their life is: first thing buy a home by taking a home loan & safeguard your need of shelter. So, you have a home to live may whatever happen in future. Secondly, secure your loan with a policy that will take care of your loan even after you. Now, this is your biggest step & will shut up half your critics, seniors, advisors etc.
LOAN? Did this sound like a nightmarish word to you?
If yes then think again, do you have the capital to buy a house? Or, are you from the school of thought that believes in investing in equity & fund houses, growing up your booty & buying home in cash? Hellooo!! Good morning!! Dude you need to wake up & get real. Remember you are not the lucky one who got a free seat in IIT or IIMs. You have slogged it hard, so at least now get realistic & plan for your easy life ahead.
If the answer is No, then you need to read this ahead-
Now, why am I suggesting a home loan? As per most of you all, it’s supposed to be pain in the neck & shall burn your pockets. But do you really know what a home loan does? Home loan covers almost all the work of your tax saving instruments. It is the one time injection that shall save the cost of your lifetime pills.
Here’s what my friends Aki & Nikki did as soon as they started earning. They did not get trapped by the policy agents. The first thing they did was they bought a flat at Moshi in Pune. This is how it helped them in their tax planning:
- In the first year itself, they took the benefit of the Stamp duty paid under section 80c of Income Tax.
- They also got their entire principal & interest amount exempted under Section 24 & 80C.
- As it was their first house they got an additional interest benefit of Rs.50000 under section 80EE.
- They got the first home buyer benefit under Pradhan Mantri Awas Yojana (PMAY) of upto 2.67 lakhs. This saved their interest cost.
- Aki purchased this property in joint name & kept Nikki (his wife) as the first property holder, which gave them an additional benefit of 0.05% in home loan interest & also benefit in property tax. (In case you are not married you can still buy a house by foregoing this negligible benefit.
Last time, I was dining with them, they told me how proud their parents were as they had fulfilled their dream. Aki told me now he is not worried on the tax front for the next 15 years, thanks to the home loan. He further intends to invest in mediclaim to safeguard their medical needs & a term insurance plan to secure the near & dear ones after him. The rest money is for them to enjoy their life.
Like Aki & Nikki, one should think differently & plan ones investment. “A stich in time saves nine”. So buying one house initially shall save you from buying nine policies in future. So, it’s better to research, foresee your earnings & tax liabilities & then invest judiciously.
The sheer fact is even today in India, “Love thy neighbour” concept is still prevalent only for owners & not for tenants. During your rainy days your home can generate money but your policies cannot build a home for you. Policies will never mature when you really need them!
Do remember to check the RERA registration before investing.
The festive season is round the corner, so enjoy your home shopping. Happy investing.
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