How and where to invest money maybe the most important financial question. If you find the right answer it would mean a peaceful, and enjoyable life.
Earlier you could simply park your money in FD and get 8 to 10% interest. But now India has reached a stage where rates on bank fd will keep going lower. If you see in foreign developed countries rate of interest is close to zero on bank fd.
What if I told you there is an investment in which the interest increases every year. In this investment there is no risk of government reducing interest rates, or the stock market crashing. If you have 20 to 30 lakhs capital with you this could be the best asset.
A 1 Bhk flat in Mira road which is in Mumbai, India was available for Rs 15,25,000 taxes included. This was in 2008 and the price of this flat in 2020 is 50,00,000.
If given on rent you will get Rs 15000 every month which comes to Rs 1,80,000 every year. This rent will increase every year.
So no matter if you sell it or give it out on rent you are assured of very good return on your investment beating returns from insurance, bank fixed deposits or even gold.
The only thing that comes close is investing into equity shares. But the stock market is very volatile, with upto 30% drop in value quite normal. Those who cannot tolerate such swings should not invest in equity.
Also equity mutual funds cannot give you interest like the rent of 15K every month. The dividend from equity shares is 1% or 2% with only a few select companies giving above 2%.
The trick with real estate investing is to buy cheap in developing area and wait for rents to rise. And then you have a chicken that will lay golden eggs.
I wish I had at least 10 million rupees back then and now I would have a real estate empire and early retirement from work. I would have been in a beach on Goa writing this article.
Where to invest money in Indian market.
In every major city of India there is good potential if you are willing to look at the outskirts of the main city. Home loan emi rates are low and may go down further.
India in the next 25 years is going to be one of the biggest economy of the world. With the government spending heavily on smart cities and urban development, real estate can give you the best return and passive income.