This is a constant discussion that I have been doing with people around me, People admire real estate and they are still the firm believer that real estate give better returns than any other asset class.
Here am breaking the myth with few examples and facts although the message was forwarded to me on a WhatsApp group and it really make sense:
Film actor Rajesh Khanna bought a bungalow in iconic Carter Road in Mumbai for Rs.3.5 lakhs in 1970. His heirs sold it recently for Rs.85 crores. The property has multiplied by 2428 times or an annualized return of 19.38% over 44 years. Continue reading
Before you proceed, there are some questions one should ask taking up any task in life.
If somebody asks me: “Should I buy a house?”
And my answer is always the same: “I have no idea.”
It is not for lack of familiarity with price-to-rent ratios or the benefits of the mortgage interest deduction. No matter how carefully and clearheadedly you approach the exercise, is more a starting point than a conclusion about your optimal living situation. It will give you a good look at the financial dimensions of your decision. But housing is about quite a bit more.
These are the 5 questions that one should answer before taking a call:
- How much is permanence worth to you?
One of the nonfinancial benefits of buying a home is that you know you can live in it indefinitely. You don’t have to worry that the landlord will raise your rent 20 percent, or demolish the building to turn it into something else. You can renovate the kitchen or paint the shutters according to your preference and yours alone. (O.K., maybe a historic preservation board or homeowners association may have some say, but you are pretty much on your own).
So what is that worth to you? It is purely a question of your preferences and priorities in life. Continue reading
Today, deviating from our routine post, we are trying to bring to you all an amazing quiz on finance. Let`s be fair to ourselves and give a challenge to our learning till date. So, here comes the show:
- This is a stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.
- This phrase is Latin for “according to value”. It is a tax based on the assessed value of real estate or personal property.
- An interest rate swaps whose notional value adjusts according to rising interest rates by indexing the floating portion to a Constant Maturity Swap (CMS). Continue reading
Warren buffet: A good business that can be purchased for less than the discounted value of its future earnings.
George Soros: An investment that can be purchased (or sold) prior to a reflexive shift in market psychology/fundamentals that will change its perceived value substantially.
Benjamin Graham: A company that can be purchased for substantially less than its intrinsic value.
Some other examples are: Continue reading