1. Here’s how small savings can help you buy a house worth Rs 50 lakh

Here’s how small savings can help you buy a house worth Rs 50 lakh

It is everyone's dream to buy one's own house. However, if buying your own house entails paying a large sum as home loan EMIs for a long time, then that house will not give you comfort even though you have purchased it for the comfort of your family.

By: | Published: March 1, 2017 9:55 AM
Have you ever thought about how much you need to save per month for buying a Rs 50-lakh house after 15 years? Buying a house is not a small thing.

It is everyone’s dream to buy one’s own house. However, if buying your own house entails paying a large sum as home loan EMIs for a long time, then that house will not give you comfort even though you have purchased it for the comfort of your family.

Have you ever thought about how much you need to save per month for buying a Rs 50-lakh house after 15 years? Buying a house is not a small thing. It requires lots of money and years of dedicated savings to achieve that particular financial goal. Ideally, a salaried employee buys his own house between the age of 35 years and 45 years. This means that after getting into a job, one expects to buy his/her dream house after the next 10 years to 20 years of time.

Therefore, during that period of time, you need a house either by compulsion or by choice. Those who do not plan early to buy a house, are left with no choice but to buy a cheap house because they will end up paying huge monthly EMIs by buying an expensive one. And those who plan early get many choices to buy their own dream house. This way you can buy a house which is fully equipped with the latest technology and is well furnished.

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Here we are taking a look at how much you need to save monthly to build a corpus of Rs 50 lakh in the next 10 to 20 years:

How much you need to save monthly for 10 years?

To built a corpus of approximately Rs 50 lakh in the next 10 years, you need to save approximately Rs 17000 or less a month in different kinds of money growth instruments which will help your invested amount to appreciate in a given period of time. Assuming an average return on your overall portfolio to be 16%, the actual amount of investment made in that particular time period is approximately Rs 20 lakh.

How much you need to save monthly for 15 years?

To built a corpus of approximately Rs 50 lakh in the next 15 years, you need to save approximately Rs 7000 or less a month in different kinds of money growth instruments which will help your invested amount to appreciate in a given period of time. Assuming an average return on your overall portfolio to be 16%, the actual amount of investment made in that particular time period is approximately of Rs 12 lakh.

How much you need to save monthly for 20 years?

To built a corpus of approximately Rs 50 lakh in the next 20 years, you need to save approximately Rs 3000 or less a month in different kinds of money growth instruments, which will help your invested amount to appreciate in a given period of time. Assuming an average return on your overall portfolio to be 16%, the actual amount of investment made in that particular time period is approximately of Rs 7 lakh.

Therefore, the early you save, the lesser you need to invest to built the desired corpus for your financial goal of house purchase.

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Where to save the money?

Saving your money in banking products will not fetch you that much of interest. To generate the desired corpus, you need to invest in a different instrument – equity mutual funds, which will give you a much higher return. While investing in equity MF’s, you need to diversify your investment amount into various categories like large cap funds, mid-cap funds, diversified funds, etc. This will help you maintain your average return and also help you to minimize the risk occurring from market volatility.

Shouldn’t we take a home loan?

Starting your investment journey early prevents you from falling into the trap of taking a big loan, whereby you may be able to buy a house but for the rest of the years you will end up paying large EMI’s. Although taking a home loan is a good option which gives you tax benefits, but then the loan should be taken for saving tax and meeting additional cost which may unwillingly increase when you filter your choice of purchasing your dream house.
If you are going to buy a house for the first time, then don’t forget to take an additional benefit of Rs 50000 under section 80EE of the I-T Act apart from claiming a deduction of principle and interest amount under section 80C and section 24 of the I-T Act, respectively.

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