Assumption: House cost 20,00000 which can be rented at 5000 per month rent Rent increasing 5% per annum house appreciating 5% pa EMI 20000/- My point is that rent and home prices will increase same rate,as it can not happen that one is steady or slow and other is increasing very high, Saving denotes what amount will be saved if living in rented house instead of buying and paying EMI Saving =EMI-Rent Of these saving 1 lacs will be invested lon term in equity/mutual fund that can fetch 15% return (though it can be higher but i m taking a conservative view) for eg. in first year i will save 1,87,716 of which i will invest 1 lac and rest 87,716 i will spend on my lifestyle i have negated tax benifit because HRA component is not taxed which accounts for 1,20,000 (10K pm) in my salary component.
RE:rent or buy
by ashish on Aug 21, 2008 12:00 PM Permalink
18 137521 247716 ; 110195 100000 19 144397 247716 ; 103319 100000 20 151617 247716 ; 96099 100000 TOTAL 1983957 4954320 &nb sp; 2970363 2000000 Assuming 1,00,00 invested each year with 15% return compounded annually the total value at the end of 20 year 1,19,44,677 (around 1 crore 20 lacs) 9 lacs that I didn't invested and spent. Assuming property appreciated 5% each year house value after 20 years will be 53,06,595 (Around 53 lacs)
