Just my point of view:
If there are any full time traders here, a sincere advice for you. Do not bother to maintain this score. Do not take loans. No credit card loans. No personal loans. Buy your car with savings. Even house with savings. That is not impossible. Buy the house within your means. Live within your means.
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This is my two cents. If this opinion helped you, that is well and good. If you did not like this post, please ignore it and move on, and I will still wish you good luck.
Year: 2009
City: Chennai
Most flats were quoting Rs. 40 Lakhs upwards.
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Again, where there is a will, there is a way.
If you have any more questions, please let me know.
PS: Of course some acquaintances and relatives look down upon me because I drive a Nano.
I don't give a damn about what they think.
They do not know my Income or net worth. My goal is not to prove anything to such people.
I enjoy my freedom including financial freedom and freedom from corporate slavery.
Thanks for detailed reply.
I appreciate your dedication, your hard work, your attitude towards life and everything, you posted.
well, I do not want to discuss or comment on your post. But cant restrain myself to post, you talked about 2009, with an income of 19.5L per year, somewhat equivalent to 50L now.
But, where did you reply to my main query
"Will you please explain with an example, how to buy a 2 BHK flat (in a metro city) worth 45 lakhs by one's own savings."
okay let me add some more details
how a person (family includes 4 adults and a child say 4 years of age, inc 2 senior citizen, ) earning say even 10L (gross income) now, (joined this job say some 3 years ago, started with 7L (gross) per year) will be able to buy a flat worth 45L, from his own savings, without a loan
Now let us look at all the posts without changing the original perspective.
In my first post relating to this subject, I addressed full time traders. My point was that full time traders should not take any loans. You asked a question on buying a house in a metro city without a loan. I gave my own example. Most people on the forum felt that my income enabled this. If my posts did not drive the point home, then, I think, I have not communicated properly.
I have a friend an young physiotherapist. He graduated out of college just 3 years ago and makes 5 lakhs a year in Hyderabad. He is in the early stage of his career. He is renting his home in Hyderabad but is building a house on a small plot of land belonging to his father in Srikakulam ( a smaller but nice coastal town in Andhra Pradesh). After his home construction there is complete, he will obviously relocate to that town which is his home town. He is staying in Hyd. just to fund his future practice in Srikakulam. He is a good example to look at. He is not taking home loans. He is building that house piece by piece with his monthly savings.
Bhai, please understand, if you are a full time trader, who is forcing you to buy a house in a Metro for 45 lakhs? Please decongest the metros if you can. India is not just metros. It is a much bigger country. In my second post, I made it clear that if I did not have access to a free home in Hyderabad, I would have moved to the rural side. I was not raised in a city. And I can go back to my small town life in which I grew up.
I worked in New York with a CPA whose net worth was USD 700 Million. Before, I relocated to India, he spoke to me in detail. He told me that he buys only used cars and he said that car makers try to up sell loaded versions of cars by tempting us etc. Indirectly he was hinting that my choice of buying a Toyota Corolla upper end version and brand new in the USA was a wrong decision. Eventually, I had to sell it at lower price after my usage.
Now also addressing your point. If you think as a trader that you cannot afford a 45 lakh house and you take a loan for it, you would end up paying 90 lakhs over 25 years. Now can you afford committing 90 lakhs for a 45 lakh house? By doing this you really believe that you are going to be rich or have a good life? Be realistic. A 45 lakh house in a metro city is most often a flat and it loses its value after 25 years. Say one could resell it at 20 lakh rupees (not future rupees, but at present value) the interest paid is more than the that. Surely this does not reflect a trader's mind set. Buying high and selling low is like hitting a self goal for a trader. That is why I said a trader should not take loans.
Interest rates on home loans in India are always above 10%. Once you take a loan they have all the excuses in the world to increase the rate and not to decrease it.
Personal loan is 14.5% if you have the best credit. It can go up to 19%.
Credit card loans vary between 24% to 39%.
In all the above cases, I have not included processing charges. These are charged upfront and ideally you should reduce that from the loan you received. If you do that you will be horrified when you recalculate the real interest rate.
Above all this, in India you have GST charges on some of those charges. A stock trader will not get any GST credit on this.
How many traders do make the above % returns on their trading business?
I have not invented any of these economic theories. If you read Warren Buffett's letters he explains a lot about frugal living and living within means. Even for investments, he prefers companies that have zero debt.
Another good source of information for this subject is a book called "The Millionaire Next Door"
There are two more big risks for traders.
1. A vegetable vendor goes home with some profit every day even if it is small. A stock trader does not have that advantage.
2. Most stock traders are using leverage. This is a high risk. I stopped using leverage when, I saw it's impact on my day to day profits.
How can you add loans to the above two risks?
Finance business is the most difficult business in the world. It is not easy to survive in trading with loan liabilities on your head.