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25L cash, what to do !!!

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25L cash, what to do !!!

Last updated: July 30 2011
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  • #11

    #11

    Re : 25L cash, what to do !!!

    Wait..

    Invest in Mutual Fund and have peace of mind.

    Family will keep on pressurizing for many more things in life.. Ultimately it’s your life you take decision. 25L in todays world is not a great amount looking at the inflation.

    If you are happy living 1BHK rented so be it and enjoy your life. Duniya gayi tel lene.

    If it gives more pleasure looking at your saving yielding good returns, so be it. Don’t take that money out and sad for rest of your life.. simple.

    Comment

    • #12

      #12

      Re : 25L cash, what to do !!!

      If you don't own an apartment buy one, buy atleast a 2 bed apartment in a good locality. Everyone knows you wont get it in 25L however it is best to buy within your budget unless you have a god-father who would bail you out if you ran into money issues with the loans in the future

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      • #13

        #13

        Re : 25L cash, what to do !!!

        Originally posted by rajtjrll View Post
        Guys have been member of this forum from 5-6 months now.....
        have been searching 2 bhk in pune since then...

        By and Large the news and forum and all says the prices will reduce, I have seen prices at the level where they were in mar-apr....no rise no drop...

        personally i didn't found any project worth the money they are asking...in Kharadi (45L)/hadapsar(40L)/wagoli(30-35L) areas...

        currently staying at a very gud 1 bhk flat for 7K i more then happy with this deal....reason to purchase flat is strong pressure from relatives to invest 'something' in RE....

        This is preface.....now Question....

        I have 25L in cash, of my own.....would like to keep 5L with me as liquid assets and can invest 20L at one go.......still need somewhere around 15L of loan to invest in RE.....

        What you guys have to suggest, should I invest in RE at this stage or keep that 20L in FDs and earn 2L a year....

        what will you (ofcourse many seniors here) do if in the situation like of mine.....
        RE is a big ticket purchase. Your savings should be much more than 25L, maybe 50L before you buy. For own use, buy when family is complete, when job and city are settled - buy close to work and relatives and buy one bed room more than what your needs seem to justify. So a 3BHK is basic minimum to buy. No point buying a 2BHK which will seem small after a few years. 2BHK is not for guys with 25L in savings - you should aim bigger.

        It is difficult to do more than 3-4 RE deals in your life. It is time consuming, has lot of costs and registration and is difficult to sell. So better to go for few but big deals in RE.

        In the meantime, distribute your 25L into 7L in stocks/MF, 7L in FD, 7L in RE and rest 4L in e-gold and others.

        For 7L in RE, best you can get is - I agree - a small shop. Give it on rent. You should get a yield of 7000 pm which should cover your current rent.

        If you dont consider it worth the effort to buy such a small ticket RE, distribute 10L in FD, 12L in stocks and rest 3L in gold etc. and wait for more savings to accumulate.

        You can get a strong RE proxy in stocks also - hotel stocks, cement stocks, Paints, Ceramics, housing finance tend to move with RE to some extent. Otherwise, if inflation busting is your intent, go with Pharma, FMCG and utilities like Power Grid/Petronet LNG which will stay linked well to inflation.

        But at the end of the day, if you buy a 2BHK worth 45L with 20L cash down and rest on leverage, you wont go much wrong - you can rebuild your corpus in a few years. Just make sure that it is a self usable flat - should be big enough

        There are numerous ways to get fixed return similar to FD without paying tax.

        If you had 50L, I would have said - buy a plot worth 30L - it delinks the land cost from the construction cost - so that you just sell the plot and buy the flat, when needed. But with 25L, plot is too risky and not advisable

        PS. If you are still a bachelor - buy the 3BHK. Otherwise girl wont marry you!!! (just like weaver bird!!!!)
        Last edited June 10 2011, 10:39 PM.
        Venky (Please read watch a or before posting)

        Comment

        • #14

          #14

          Re : 25L cash, what to do !!!

          Venky, rightly said about 50 lakh scenario..
          I sugest him to wait till he accumulate the wealth to 50L target and then take the position as you suggested...

          Comment

          • #15

            #15

            Re : 25L cash, what to do !!!

            Raj,
            If u can afford it now go for it. If u want to wait to build 50L portfolio(2-3yrs) from current 25L, market scenario will be different. Just compare what has happened from 2008 to now. If same happens the God bless us. I dont expect same results but similar results.
            Please note bubble will never burst, it will only slightly deflate(like it happens every 3 yrs cycle) which will not benefit people like us. I dont know what will happen if black money comes back to India, i believe 30% would have been generated thru RE if not more, but i feel it will only stabilise prices or instigate further price rise.
            P.S.-I had asked on Pune forum few months back, a question-
            What will u do if price of RE falls by 25-30% and rents go up by 10-15% in 2011? Response was not surprising, every response suggested people still preferred to be on rent.

            But dont get into emotional pressure from your family.
            Btw-Have u shortlisted the options- if yes then share with your forum, if not then do that first everything comes back later.
            MM

            Comment

            • #16

              #16

              Re : 25L cash, what to do !!!

              Ok, so let me paraphrase your situation here:
              1. You have 25L in cash, out of which you can spend 20L for real estate.
              2. You are currently staying in a rented 1 BHK flat at 7k per month and are happy with it.
              3. Looking to "invest" in real estate mostly due to advice from relatives and family.

              What would be the max home loan you can afford today with your current income, assuming a downpayment of 20%?
              That should be your budget for real estate.

              I would suggest that you calculate the EMI for the home loan mentioned above, and then subtract your current rent from it. Immediately start saving the difference. This saving should not make a major impact on your current / required lifestyle.

              Keep adding this saving to the 20L you already have, while you search for the flat you want to purchase. This way your downpayment keeps increasing while you search for your dream home.

              Take your time, do not worry if the search goes slow. You have time and money in hand, which the builders do not. It would be ideal if you can keep a search time frame of 1-2 years, while keeping up the monthly savings.

              Comment

              • #17

                #17

                Re : 25L cash, what to do !!!

                Hi,

                Quite intersting..You have 25 lacs in cash and you don't know where and how to invest ? Amazing dost.

                I am 100% sure this is not your money that you earn your own because if you do so then you won't ask any question about what to do with 25 lacs.

                If this is your money then I don't think you have to go with any investment because only the person who has the patience to save this much of cash should never take any 1% risky path

                So go for 100% FD my suggestion.
                Choice is yours !!!
                BR,
                P

                Comment

                • #18

                  #18

                  Re : 25L cash, what to do !!!

                  <QUOTE However if you want to buy 2 BHK then you will have to wait for 6 months. QUOTE>

                  why to wait for 6 months to buy a flat in Pune

                  Get a franchise business and invest in it, thats the best way !!

                  Comment

                  • #19

                    #19

                    Re : 25L cash, what to do !!!

                    Originally posted by Venkytalks View Post
                    RE is a big ticket purchase. Your savings should be much more than 25L, maybe 50L before you buy. For own use, buy when family is complete, when job and city are settled - buy close to work and relatives and buy one bed room more than what your needs seem to justify. So a 3BHK is basic minimum to buy. No point buying a 2BHK which will seem small after a few years. 2BHK is not for guys with 25L in savings - you should aim bigger.

                    It is difficult to do more than 3-4 RE deals in your life. It is time consuming, has lot of costs and registration and is difficult to sell. So better to go for few but big deals in RE.

                    In the meantime, distribute your 25L into 7L in stocks/MF, 7L in FD, 7L in RE and rest 4L in e-gold and others.

                    For 7L in RE, best you can get is - I agree - a small shop. Give it on rent. You should get a yield of 7000 pm which should cover your current rent.

                    If you dont consider it worth the effort to buy such a small ticket RE, distribute 10L in FD, 12L in stocks and rest 3L in gold etc. and wait for more savings to accumulate.

                    You can get a strong RE proxy in stocks also - hotel stocks, cement stocks, Paints, Ceramics, housing finance tend to move with RE to some extent. Otherwise, if inflation busting is your intent, go with Pharma, FMCG and utilities like Power Grid/Petronet LNG which will stay linked well to inflation.

                    But at the end of the day, if you buy a 2BHK worth 45L with 20L cash down and rest on leverage, you wont go much wrong - you can rebuild your corpus in a few years. Just make sure that it is a self usable flat - should be big enough

                    There are numerous ways to get fixed return similar to FD without paying tax.

                    If you had 50L, I would have said - buy a plot worth 30L - it delinks the land cost from the construction cost - so that you just sell the plot and buy the flat, when needed. But with 25L, plot is too risky and not advisable

                    PS. If you are still a bachelor - buy the 3BHK. Otherwise girl wont marry you!!! (just like weaver bird!!!!)

                    thank you sir for your advice...

                    as i mentioned, i have searched projects in east pune, and hardly find anything of value....once decided to go for konark exotica in wagholi for whopping 38L-1100sqft flat...but my wife gave red signal...... and at this point of time i am thankful to her....

                    Comment

                    • #20

                      #20

                      Re : 25L cash, what to do !!!

                      Originally posted by Munish Malhautra View Post
                      Raj,
                      If u can afford it now go for it. If u want to wait to build 50L portfolio(2-3yrs) from current 25L, market scenario will be different. Just compare what has happened from 2008 to now. If same happens the God bless us. I dont expect same results but similar results.
                      Please note bubble will never burst, it will only slightly deflate(like it happens every 3 yrs cycle) which will not benefit people like us. I dont know what will happen if black money comes back to India, i believe 30% would have been generated thru RE if not more, but i feel it will only stabilise prices or instigate further price rise.
                      P.S.-I had asked on Pune forum few months back, a question-
                      What will u do if price of RE falls by 25-30% and rents go up by 10-15% in 2011? Response was not surprising, every response suggested people still preferred to be on rent.

                      But dont get into emotional pressure from your family.
                      Btw-Have u shortlisted the options- if yes then share with your forum, if not then do that first everything comes back later.

                      Thanks for reply, I understand your words that prices are not going to crash that easily....but i have one thing to relate....not sure does it make any sense or not....
                      when i joined my current company in 2007 we had some 150 engrs, now in 2011 we are roughly 500....indeed the growth is three times in just 4 years.......but i dont see that thing getting repeated in next 4 years and 2015 to see 1500 engrs....that isnt gonna happen....

                      moreover company is taking more contract engrs then permanent employees keeping overall salary payouts just the same YOY....

                      I have searched a lot projects in feb to apr....all valued more then i would be happy to pay....or i thought......as of now i have no shortlist of projects....though the area is of east pune......

                      Comment

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