In its November issue, Outlook Money discusses: Renting or buying a house?
In its November issue, Outlook Money discusses: Renting or buying a house, is a deeply personal choice, but our numbers tip the scales in favour of renting.
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NewsTranscript
00:00 Hello and welcome to Outlook Money. I am Shanakshi Chakravarti and this is the space where we
00:05 discuss all things money. And with me I have the editor of the magazine Nidhi Sinha. Hi
00:11 Nidhi, how are you?
00:12 Hi, how are you, Shanakshi? All well and I hope we have a lively chat today.
00:17 Yes, we are in fact looking forward to the November issue. So if you've not got your
00:21 copies, go to the stands and grab it. And if you can't go to the stands, you can hit
00:26 up online and take a look at the November issue of Outlook Money. Nidhi, we are discussing
00:32 all things money but specifically in this month's issue, we are looking at interesting
00:38 cover line this time, rent versus buy. Now this is a question, this is a topic of discussion
00:43 in every household in India, perhaps globally, whether you rent or you buy. Now could you
00:49 elaborate more on this, please?
00:50 Yes, of course, Shanakshi, you're right. That's what happens in most households. This discussion
00:56 is, you know, especially people who are living on rent, they are always wondering whether
00:59 this is the right time to buy. You know, they'll be looking at prices, where they're going,
01:04 etc. And especially after a few years, you've been working. But the decision to rent and
01:11 or buy is not a very simple one. So there is, of course, this ongoing angst that, you
01:18 know, renting is like money going down the drain. And that's because, you know, when
01:22 you buy a house, there is that feeling that in the process, you are kind of building an
01:26 asset for yourself for the long term. So when we were doing this cover, we not only dealt
01:31 with the question of money, whether it is really money going down the drain, renting,
01:37 or whether it's about, you know, how much you can save in the process while you are
01:43 living on rent. So one question is that, we have dealt with the money question. And the
01:49 other question that we have dealt with is a particular life circumstances, which, you
01:54 know, makes so much of a difference in this decision. So these are the two things that
01:59 we have really gone ahead and found out about.
02:03 All right. Okay. In fact, for the benefit of our audience and our viewers, why don't
02:07 we in fact show them what the issue looks like? If you can bring that up, we can show
02:11 our audiences.
02:13 So this is our next cover rent versus buy. And we have done massive, very detailed calculations
02:18 to show you the money part on which works for you. So of course, for that, we have had
02:23 to take certain assumptions in place, such as, you know, you pay the same amount of interest
02:28 rate on your home loan for the long term, and also the rate, the growth rate at which
02:33 your investment grows. So what we have basically done is we have taken the assumption that
02:38 you want to buy the same house in which you are living on rent. So essentially, usually
02:43 what happens is that rent is much lower than the EMI you are going to pay. So what we did
02:47 for our calculation was that we assume that you are paying the rent, but you're also investing
02:52 the difference between this rent and the EMI, the assumed EMI that you would have paid if
02:56 you had taken a home loan and invested it in a growth interest, growth oriented investment.
03:02 So our results were quite surprising for us also, because renting is coming out on top
03:10 of buying. You are actually, in the long term of 20 years, what we saw is that you are able
03:18 to save much more than the future value of your house. Now future value of your house,
03:22 what I mean by that is the appreciation in the house asset after 20 years. So it's not
03:29 like present value, it's the future value with which we have compared. But there are
03:33 other life circumstances like I was talking about, that we have dealt with is, you know,
03:38 it's a lot of individual decisions, whether you want to stay in a particular locality,
03:43 whether you like to stay near your workplace, your affordability factor. So there are several
03:48 other things, your sense of security, you know, being a, so for a lot of say, single
03:52 women, single men, some minorities, a lot of such people, you know, they get a sense
03:58 of security when they own a house. So all of that, if all that comes into play, then
04:03 money is only a small part of it. And there are other things that you really need to consider.
04:08 All right. So, Nidhi, that's interesting. You've made some very interesting points.
04:12 And one will actually have to read this month's issue to find out what works out better for
04:16 who, whether it's rent or it's buying. But also, I mean, what else can one look forward
04:21 to in this issue? Why don't you give us a sneak peek?
04:23 Yeah. So apart from this very important story on rent versus buy, especially now that interest
04:29 rates are rising, etc. We have a very important story on the index, the equity investment,
04:34 which is such a big part of most people's portfolios these days. So what we found out
04:39 from our numbers, we again ran numbers in that story. And we saw that, you know, for
04:44 an average retail investor in the present volatile times, sticking to the index, hugging
04:49 the index, so to say, you know, it can really help you in the long term. Because, for example,
04:56 we took Nifty and we've seen, we've taken it from inception and we've seen that it keeps
05:02 churning its portfolio to include companies that may perform better for you. And on an
05:12 average, it has given better returns from compared to a lot of other funds. And of course,
05:17 there are funds that will have an alpha over index, but this is something for very basic
05:22 retail investors. So that is like a shortcut for you. So that story is, of course, there
05:27 and then we have Children's Day in November. So that's, there we have something very interesting
05:32 for parents and children. We have come up with a quiz. So this quiz has 10 questions,
05:38 where you can sit with your kid, figure out how much you have been able to inculcate good
05:44 money habits in him or her, and how much has he been, he or she been able to kind of grasp
05:51 from whatever learnings you are trying to impart to your child. So that's something
05:56 that you should really look forward to and take that quiz.
05:59 Thank you so much, Nidhi. You in fact, did really elaborate on the November issue. So
06:03 there's lots to look forward to. And thank you for taking out the time to run us through
06:07 the November issue. Thank you very much.
06:09 Thanks a lot, Sonakshi. And to our readers, please grab a copy this time.
06:13 All right. So with that, it's a wrap from us. But we will be coming back to you on the
06:19 Outlook social media page. We are on the Outlook business, on Outlook money. So you need to
06:24 really keep up, like, share and subscribe and be in touch with this page for all the
06:29 latest.
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