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.
