I strongly believe many will not agree what I have written below, my only request is to see in a different perspective, probably some of you might appreciate!
Subsidy - A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy. This is the definition from Wikipedia.
Today, many middle class Indians are doing the same job to the other middle class or lower middle class, without knowing that they are doing subsidy. Unbelievable, but, it’s true!
Today, one individual can't stay more than one house at any point of time, many Indian still believe that real estate is the only asset class and keep investing in that, believing that it is a good form of investment. Obviously the second, third, fourth house of them will have to rent it out.
City like Chennai, middle class Indian have two choices either he can buy a property worth 75 Lakhs and paying 75K EMI for the next 20 years so that it will be their asset after 20 years time. The second choice will be going for a rented house, where in they need to pay 15K per month and can save 60K. Moreover, in the rented house he can choose bigger, better house in case future demands. How ignorant to lock their money at the beginning of their career where the salary is lesser and forgoing the biggest opportunity for creating wealth in Mutual fund through power of compounding!
The way I look at the house owner (those who have more than one) is the good-hearted man and he is subsidizing his wealth for the fellow human being by renting it out. The beauty is, today many house owners are in a philanthropic mood to create as much subsidy as they can! They are deserved for some tax benefits!!!
The biggest irony is paying 75k for 240 months after that the house is hardly anything never bothers many of their mind, but paying 15K month on month everyone feel that it is the waste of money!
I called this as forced belief. It is not from our original set of belief, it is forced by relatives, friends and society over a period and we tend to believe after that!
Moreover, housing loan is the kind of addiction and many Indian addicted to it, till they retire and always trying to compromise their life for 50% of their income or lesser than that.
We all came to this world only as a rental basis; nobody is going to be here permanently, when our life itself is on rental basis, and how ignorant many of us are buying more and more property by scarifying their entire youthful life! It’s not for the wealthy people, whose life will not affect when they bought property and I am addressing only for the salaried middle class to upper middle class!
B. Padmanaban, Financial Planner, www.fortuneplanners.com