Nanayam Vikatan – 18 December 2022 – Is it profitable to build a house with savings and rent it out? | doubts for investment question and answer

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Preethi, Madurai.

They say economic recession will come. Stock markets will fall if it comes; Also the NAV of mutual funds will fall. Then you will get more units while investing in those funds. Can I invest then or keep SIP till then?

Dr. Muthukrishnan, Certified Financial Planner.

“No one can predict the trend of the stock market perfectly. The objective of SIP is to enable one to invest in all stages of the stock market. So, never stop SIP.

There is no chance of economic recession in India. India’s Gross Domestic Product (GDP) is growing at 6% to 7% per annum. There will be slight fluctuations from time to time. But, on average, this growth will continue in the long run.

If the stock market goes down, invest more money in the schemes you are investing in now. It will provide more units. Thus, when the market rises later, more profits are likely to be made.”

Co. Bharati Muni, Madurai.

The value of LIC share which I bought at Rs 904 is now trading at Rs 625. Should we sell the losing stocks at this stage or wait for some time?

B. Gurumurthy Iyer, Founder, https://mybillion.in/

“At present, LIC may be averaging the company’s shares. In the next couple of years, you can expect good returns from investing in LIC stocks. Always invest for the long term in any company stock. If you wait at least 3 to 5 years you can see significant returns on stock market investment.”

K. Bhuvana, Kiranur.

Home loan for how many months after failure to pay the interest, the house will be sealed? Explain the activities of a bank and housing society.

V. Thiagarajan, Auditor, www.bizlane.in

“If you fail to pay more than three monthly installments, the loan will be treated as bad debt. At that time, they will send a notice asking them to pay the outstanding monthly installments within 60 days. Within these 60 days, you must pay in full more than three monthly installments that are currently outstanding or at least the amount of less than three monthly installments that are outstanding, without leaving any more monthly installments in arrears. If they fail to pay, the next step is to foreclose on the house. The process can be completed within 20 days to 50 days.”

Niveda, Madurai – 2

I am the head of the family. We are planning to build a house on our own land with the money saved through savings. Is this a good decision in today’s situation?

Lalitha Jayapalan, Financial Advisor, http://moneyvedam.com

“You plan to build a house and rent it out to generate income. Instead, if you put that money in a bank fixed deposit, you are likely to earn 7-7.5% per annum. If you have a rental income of 3-4% per annum, you can build a house and rent it out.

For example, if the value of the house is Rs.40 lakhs, 3% of it i.e. about 1.20 lakhs per annum rental income can be built and rented out. Also, the rental income is not profitable when you factor in property maintenance book fees and the period of no rent between one moving house and the next renting.”

Annamalai Raman, via Facebook.

How does a Real Estate Investment Trust (REIT) work? What are its pros and cons?

N. Jayakumar, Chartered Financial Analyst (CFA)

“A Real Estate Investment Trust (REIT) invests in income-producing (ie, rental) real estate properties and distributes the profits to investors on a proportional ownership basis. That is, it works like a mutual fund.

According to our laws, 90% of the income should be given to the investors. It provides an opportunity to invest in multiple assets through a single investment. You can start investing from a minimum of Rs 10,000. There is more facility to sell and cash when required. Assets are managed by qualified professionals etc. which is an advantage.

As the ‘RAID’ program is new to India, there are limited investment opportunities. Although ‘raid’ shares are listed and traded on the stock market, it may be difficult to sell and cash out immediately when needed, as there are fewer investors. The advantage is that the income received by the investor has to be taxed depending on the tax bracket.”

Kalaish Selvi, Villupuram.

I am the head of the family. I have Rs.10 lakhs. This money is needed only ten years from now. How can I invest this money..?

Srikanth Meenakshi, Co-Founder, Primeinvestor.in

“When your investment horizon is 10 years, you can afford to invest a little more risk. If you do that, you have the potential to earn 2-4% more per year than investing without risk.

In terms of mutual funds, you can invest equally in Axis Nifty 100 Index Fund, Barak Parikh Flexicap Fund, Kotak Emerging Equity Fund and HDFC Corporate Bond Fund. Do not invest 10 lakh rupees at once, but invest in 10 months at the rate of 1 lakh rupees per month.”

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