@rski What about appreciation in value of house, considering it as a solid investment that does not fluctuate much, I have seen real estate compound at 20-25% for 10 years, provides roof on your head , and this is where most people stick to their investments and allow compounding to play its role.
You are speaking of an aberrant period in India where property became a sink for unaccounted income .
Just like for a brief 12 year period interest rates in the Uk touched 15 percent . The 300 year average is less than 1/3 of that .
@rski The point is that real estate offers very attractive risk reward dynamics. I read this advice from a book by Peter Lynch where he advocates that people should buy a house first. People are better at buying house compared to stock due diligence, houses don't have ticker tapes , you won't have to see your house prices crash unless the economy collapses in which case stocks would be hit even further. While you compare cash flows of rent vs FD you completely ignore the terminal value of house.
@cardinalsf So by your calculation assuming a ticket size of 50 lakh , and 20 % compounding annually the house would be worth 3.09 crores in 10 years .
That’s what my compounding calculator shows. That’s awesome .
I wonder why my parents apartment in a nice suburb of Pune from a very reputed builder bought in 2000 for 21 lakh has only grown to 1.1crore over 21 years. A measly 8.18 % compounded annually .
And why the annual rent for it does not exceed 200k after society fees.
