Taking A Personal Loan To Buy A Home

wealthymattersNow the general idea is that a body takes a home loan to purchase a house and a personal loan to defray marriage related expenses ,to take that vacation in Europe etc…..

Home loans are always secured loans. So the rate of interest generally tends to be much lower than almost any category of loan. And then of course for being such a good child ,the government gives you tax breaks too ! But there are cases where a personal loan is your best way forward to become a home-owner. Consider the following cases:

1.A place like Vasai-Virar might be one of the fastest growing regions in the MMR when it comes to lower priced homes that could also potentially make great capital investments. But start making enquiries and you will start finding out that a whole lot of properties are “Collector Passing” and that apart from the odd co-operative bank or the occasional patpedhi, no home loans to purchase such properties is possible from most lenders. Moreover, the interest rates of loans from these sources makes personal loans from major banks look attractive. Read more of this post

#XRBIA Chembur Central – Making Lavish Living Affordable

wealthymattersMumbai is a city where real estate is so expensive that a lot of people, even those who are far from poor, make do with tiny homes in old dilapidated buildings and others resign themselves to living in far off suburbs in the MMR where homes are cheaper and then suffering the inevitable long commutes into the city.

Now the problem of living so long in an environment where we train ourselves to expect less by way of lifestyle, as an inevitable compromise to get on with the business of making money in Mumbai, is that we often forget to open our minds enough to ask if this much of compromise with the quality of life of ourselves and our children is really inevitable. For those of us living a cramped life in really old houses, are there no other locations where the houses are newer and the social infrastructure comparable to those in older neighbourhoods of the city ?And for those of us commuting for hours everyday, are  there no better located homes, such that long commutes are cut short and we literally find time to actually live life in the Maximum City? Read more of this post

Investing In MNC Stocks


Though MNCs shock shareholders occasionally as when they decide to delist or pay hefty royalties, they have always rewarded investors handsomely. In fact, MNCs have been wealth creators for investors across time cycles. Even in turbulent times such as the last three years ended March 14, the CNX MNC index has returned 7.93% compounded annual growth rate (CAGR) against 5.55% CAGR returns generated by CNX Nifty. That is why MNC shares are good for long term investments.

There are some corporate governance issues in this space. But the management quality is good and investors  can consider MNC shares for investment with a three-year time frame.

The CNX MNC index consists of eight different sectors that fall in both — defensive and cyclical segments. Defensive include FMCG, IT and pharma whereas cyclical include metals, industrials, chemicals, consumer discretionary. Defensive MNC stocks do well on the bourses in tough economic times when the overall economic growth is anaemic. Cyclical stocks  suffer  during low-economic growth. So investors can invest in MNC cyclical stocks during downturns to harvest a gain when recovery takes place.  Read more of this post

ICOR Figures And Corollary

wealthymattersIncremental Capital Output Ratio (ICOR) is the additional capital required to increase one unit of output. This ratio is used to measure the efficiency of an industrial unit or country as an economic unit. The lesser the ICOR, more efficient the organization.

India’s ICOR has more than doubled in the last year,meaning we are now half as efficient as before in the use of our capital.

In 2011-12,we needed to invest 5.4 Rupees to make 1 rupee,i.e we were getting an average 18.5% returns on our money invested in businesses.In 2012-2013,the returns fell to 8.7%.

So what sort of returns do you make on money invested in  business?Is it above or below the national average? If you feel business is slower or that its increasingly difficult to turn out a decent profit.you are not alone…….

If this is the sort of returns promoters on an average can make on money,guess what investors , especially retail investors are likely to receive….. Read more of this post

Some Real Estate Facts To Mull Over

wealthymatters.com(1)Long term returns from residential real estate

Robert Shiller, by tracking the US home prices data from 1890 concluded that in the longer run, property prices grew at an annualised return of around 3%, just keeping pace with inflation.Housing price rises could not outstrip inflation in the long term because, except for land restricted sites, house prices would tend toward building costs plus normal economic profit.

I have no such data for India.But here is what I can attest to:an ancestral house acquired 120 years ago for 6000 Rupees is now valued at 1.2 crores-an annualized return of about 6%.I think this is close to the long term inflation rate in India.


(2)Is home ownership all that it is touted to be?

In a poorer country like Bangladesh, 90% of the houses are owner occupied. Whereas in a richer country like Switzerland, only 33% of the houses are owner occupied.

Europeans are more comfortable with renting compared to Anglo Saxons and we Indians need to decide whose model we choose to follow.Read what Niall Ferguson has to say about property ownership. Read more of this post

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