It’s difficult to decide
Usually when I have this dilemma I toss a coin
Heads for selling equity, tails for holding
If I get heads and think let me try one more time then I know I should not sell
If I get head and I am relieved I got heads then it’s a decision I go with
Same thing for tails
thanks everyone for sharing the views. thats very useful. i think i should have made it clear that, its not for investment but for consumption. its easy to say buy it no matter what, if if its for consumption. but implementing it is very tough. because i treat is as an expense (instead of asset). so your netwoth is down by x. anyways so far i havent found a house which i liked from all aspects. (somehow i am happy that i didnt find one, because otherwise i will have to decide about selling off equity/FD).
@prasanna, thanks for that post. you are right. that pretty much sums it up
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Though I have not been the proud owner of a Self-Occupied house yet, but I feel slightly matured, to share my point of view, from my own experience, to hear so much from so many peers & veterans, sharing their own dilemma on this fodder of widely thought over phenomenon, of Social Stigma to own a house & in turn inculcate feeling of pride within one’s own self.
Let me put the things in to perspective & I would be honest in sharing my Opinion.
I would try to keep it simple,easy to understand & in a Pointer format to express my 2 cents.
- Age, Active Income & Responsibilities for an individual, for me is the key ingredient, to ponder over, before making any commitment, may be it for Equities or Real Estate (Owning a House).
- Equities sound to be having a Partial Ownership of a Quality Business, being run by Ethical & Promoters having unquestionable integrity (assuming 1 is clear with his stock picking criterion’s, objectivity & rational behind it & then investing in it heavily & then holding those identified scrips with patience & without emotional attachment of Fear & Greed)
- At the same time, when we go for purchasing a self owned house, we consider ourselves to be the owner (notionally) of the house, from the day, we make a down-payment, though the reality is there as well, we are partial owners only, until the tenure of the loan gets done & till the last EMI scheduled is paid off in totality.
- Small seeds sown at the infancy, turn out to be big trees, with years of patience & conviction & watering those trees continuously, throughout ones active (earning) life, generates relaxed & tension free life, to sit under that big tree, once we are no more in a position to depend on our active income (post retirement or due to health issues or any unforeseen circumstances).
- Once you plan to cut this growing tree in between for satisfying another Goal of yours, you will not be in a position to have a pleasant breeze under this tree, once you celebrate your Nth B’day say for example (65th).
Later you will repent even though you had sown the seeds so early, but at the time of reaping the fruits, you have already cut the trunks of the tree, for using the wood to manufacture your furniture or for using it as a fuel to prepare /cook your food for your short term milestone. (Analogy & Metaphoric Similarity)
Last but not the least, before I conclude, IMHO, I would be advocating to keep your Equity Portfolio untouched, for just achieving your another goal & in this case Purchasing a Own House.
I have got numerous examples, from veterans, who have purchased house, just from the Equities.
I know personally somebody, who has got the entire Funding for owning a house through Internal Accruals (just by selling shares of Page Industries, once he got a sense that he has minted enough from Page, being a early entrant & holding huge chunk,& that growth has become expensive & may not continue in the future at a similar pace).
He has got immense reasoning & justification for the call he took for Page, not just to sell a % of his PF, for the sake of owning a house.
Also while shortlisting a Quality Business, we take the pain to look Debt/Equity Ratio, so why we do not consider the same, when it comes to managing our own Personal Finances. By Taking debt, are you not leveraging yourself, when same amount you can put in your conviction bets, thoroughly researched already, to earn more for you & at the same time generate Passive Income in the form of Regular Dividend, for you & keeping you Debt Free.
What I mean to convey is never ever jeopardize, your Goals & thought process, when your are high on your Emotional Quotient or Peer/Social Pressure, becoz decisions taking under those circumstances, can never be rational & practical.
Final Word: Would you sell a Kitchen of your house, to buy say Eicher Motors or say Bajaj Finance or say CAPF shares to be Purchased, as you see value in them, once Market collapses. Answer would be strictly no or cannot be? Right?
Then why you give option to yourself, to think, other way round?
Hope this helps to remove your dilemma.
Also feel free to read my Opinion in the similar context at the link below:
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