I know it is very difficult to accept new ideas especially when we have grown up listening to some old established beliefs. One of them is - Buying properties. The most common reason people give for buying properties is (i) Look how much my MIG flat has appreciated. I bought it for 25,00,000 and now its worth 85,00,000 after 15 years. Suppose Mr. A bought a flat for Rs. 25,00,000 in the year 2007 when the property market was in boom. However, on paper the value of the flat is only Rs. 10,00,000. He paid Rs. 14,00,000 in cash to the seller and Rs. 1,00,000 to the broker. Assuming that Mr. A is a salaried individual and all his earnings are in white. So, the Rs. 14,00,000 in cash was arranged by converting white money to black. Also, remember if Mr. A took a home loan - he also paid interest on the loan he took. Mr. A is very happy that in the year 2022, the market value of the flat is 85,00,000. Mr. A wants to send his child ab...
When we talk of investment, what we mean is putting away our hard earned money today - for that distant future, when we actually need that money - May be for higher education abroad for our children, wedding of our children or for our retirement. Now, let us think of an investment idea with the following characteristics: (1) This investment idea requires a huge initial payment and its not the only payment you have to manage. You need recurring payments for next few years. (2) It is an illiquid investment - means if you need to dispose it off , you may need weeks or months and lot of energy for both buying and selling this investment. (3 ) Not only does this investment require lot of initial money but buying and selling it also incurs a heavy transaction fee. Mostly 5% to 7% of the cost of your investment . (4) As if the points mentioned were already not enough, the investment requires lot of COMPLICATED paper work for both buying and sellin...