Where were you?" he asked
“Oh, mummy ji had called," she replied. “The signal here was weak, so I stepped outside to talk to her."
“An early morning call from her is never good news. What did she say?"
“Well, she was saying that we should buy a flat. This living on rent was a waste."
“Ah, the usual."
“Not really," she replied.
“Why?"
“Because this time she offered what she thought was financial logic."
“When emotion stops working," he said. “So, what was this logic?"
“It seems the rent that we pay every month is going waste, given that we are not using that money to create an asset out of it. On the other hand, if we pay an EMI towards a home loan, we will end up owning a flat and create an asset."
“I had never thought about the issue in this way," he said. “Guess for once she makes sense."
“She doesn’t."
“Doesn’t?"
The math
“Take this flat that we live in. We pay a rent of ₹20,000 per month or ₹2.4 lakh a year. The market price of the flat is around a crore. If we were to buy it, we would also have to pay a stamp duty of 6%, which means a price of around ₹1.06 crore."
“Ah, maths early in the morning," he said.
“So, we pay ₹2.4 lakh to live in a flat that would cost at least ₹1.06 crore. This means the rental yield is 2.3% ( ₹2.4 lakh divided by ₹1.06 crore expressed as a percentage)."
“Where are you going with this?"
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Quick Edit: The market's green role
The world needs to bend its rising curve of carbon emissions, a goal that's proving elusive. Adding to the challenge, US climate policy is likely to flip back into neglect mode next year.
Growth shouldn't suffer for want of a market fix
Packaged food companies should drive a food-processing revolution and run a campaign for substitution of fresh-veggie demand. It'll crush price volatility and open up space for rate cuts
We should reform import tariffs to boost Make in India!
Tariff reforms to resolve duty inversions can arrest the 'cost competitiveness leak' of Indian manufacturing
Trying to quantify everything may worsen human decisions
'Quantification fixation' is real—and we should learn to resist it
Hope has sprung anew amid the thick haze hovering over COP-29
The climate summit has seen rules being ratified for a carbon market, progress on finance and high corporate participation
Trump's return is set to send the world scouting for fresh options
His confrontational stand on issues will ruffle feathers and make nations review their alignments
Why national pride has not helped clean up Delhi's air
A sense of shame was expected to get it done. That hasn't worked. Do we lack the will and talent?
SEBI CAN DO MORE TO DISSUADE RETAIL F&O SPECULATION
A recent Securities and Exchange Board of India (Sebi) report highlighted the significant losses individual traders have incurred in the equity futures and options (F&O) segment between FY22 and FY24.
Is filing ITR in old regime still valid?
I am with the Indian Army. Until last year, we received Form 16 under the old tax regime, including allowances such as HRA, travel and uniform.
Avoid common mistakes in NRO, NRE accounts: A guide for NRIs
Tips on using NRE and NRO accounts to effectively manage funds, repatriate money and remain tax-compliant
