Buying or Renting a Home ?

This is an age-old question as to what you should do if you have enough Money to Buy your own Home?

Should you buy it or should you keep Renting a House, so today I am here to talk about what I think is the best way to look at it?
Now usually here in India, we love buying properties if we have the necessary capital or even sometimes we take out House Loans to Buy a House. But I feel like Buying a House with a Loan is really detrimental to your Investments as a whole. Let me make a hypothetical scenario where you take a loan of 1000 USD to buy a house which you are paying an interest of 12% annually, this means that you need to pay approximately 95 USD per month for 12 months to repay the Loan and get full ownership of your house. In this case, you are losing a Capital of 120 USD a year which you could have just invested in any Index Fund and gotten some decent Positive Returns in the long run. In the meanwhile, you can indeed live off of the 90 USD you were paying as Principal for the house.

But then again some people may say that Property has its own Value and it increases over time, and I won't argue with that but it is also a fact that Property value doesn't grow as fast as it used to.

LAND GOES UP IN VALUE MORE THAN PROPERTY

Buying a House has a huge financial as well as Psychological pressure and since I talked about the Finance above, it's time to talk about the psychological pressure. When you buy a certain house in a certain location whether you like it or not you become tied to that Location subconsciously. So whatever opportunities come the way that would require you to leave your house could become something you repeatedly pass on. So yeah that definitely adds on a Pressure that you cant feel.

FINANCIAL PRESSURES

Now I am going to systematically showcase to you my own example of why I feel like Renting a House is Better than Buying a House. I live in an apartment whose Market Value is currently around 2200000 INR and I pay a rent of 5000 INR per month to stay which means that I can stay at this house for rent for around 30 years before I spent an entire 2200000 INR provided the rent goes up by around 10% every year.
On the flip side, if I invest the same 2200000 INR in an INDEX FUND for 30 years I can get over 6.5 Crores after 30 years even if I factor in Inflation at 7% I would still be at a net profit of approximately 5 Crores with which I can buy 10 of those similar houses.

I hope that was easy to understand in my case Renting a House and Investing a LUmpsum into Index Fund is way more beneficial for me in the long run than just downright buying a House now. But there are exceptions to this case as well which I will discuss in tomorrow's post so please tune in for that as well.

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