Planning to buy real estate at young age? It’s better to invest here

Young generation these days has disposable income. But is it enough to create prosperity? This has been a much talked about debate in most financial-inclined households. When Vikram Limaye was asked about his views on investment, the CEO of NSE was too happy to enlighten the young investors.

So the question was easy, how should one start his first investment given the pace of the life, is it wise to hurriedly invest money just for the sake of it?

“You shouldn’t invest in something, if you don’t understand it well. However it’s recommended to start investing from a young age. This is because your ability to take risk is a lot higher when you are younger. And also your working life is decades more. Therefore your ability to take risk helps you from that stand point. Once you start early, you should learn about markets well and then when you understand what you are doing, you can start taking risk. Also when taking risk, you should take risk more from a long term perspective rather than a stand point, said Vikram Limaye.

Younger generation is seeing a lot of change recently. No more does a status symbol mean buying a sedan in early 30s, all thanks to Uber and Ola. And with the disposable income growing real estate game has also changed over the last decade. So what should the young generation look at as a good prospective investment – a home or SIP. To which Limaye suggests, “If you ask me, I would say neither. First thing is to time your investment. Starting out early, if you want to buy a home, I don’t think, you can finance it. So you would require to take a loan. I think, first you should start investing, build some equity and then think of buying a home. When you have at least some capital, the leverage of investing in a home would be lot less, compared to buying a home with meagre capital. “

If buying a home boils down to investment first, then the question arises where does a youngster invest? “You see, the asset management industry has come a long way in last four years. Even five years ago, the size of the industry was much smaller than what it is today. And the other trend in the asset management trend, to which I am reasonably optimistic about is SIP,” he added.

And the reason for that is obviously the structure. Earlier in the time, people invested in markets getting advice from a friend or hearing rumours. Naturally the results weren’t great. Many lost money. Some took a break from the market for many years thinking the market to be a disappointment and the majority never returned.

“People should understand what an SIP is. Even when there is volatility in the market, people don’t stop investing. You have to invest through cycles, ups and downs. And over a long term, equity asset class has proven to provide higher return compared to substantially other asset classes. For the common man, it’s always better to go through SIPs,” Limaye added.