Investing in a House, Car & EMI will make you poor! — Profound Hooman!

Kishore Vishwa
12 min readMar 5, 2019


| 2845 words | 20 minutes | Long reads | Infotainment |

We people are so common in (to) nature. We Earn, Spend and at some point we start to Save! There are several types of savings. How many of us are into conscious saving? How to properly utilize the money we earned hardcore and use it for our retirement?
for that to be answered, let’s go through the 3 categories of people who are about to invest and learn together about “the mistakes of investment and how to turn that into a profitable one!”

The Computer was heating me up, while I pushed my chair back to get up, *notification* from the phone beeped. It was “Mathi”. He has sent me a photo of a 2BHK apartment with a quote, starting from 45 lakhs only!

“Why is this one for?”, replied him with a doubt.

While the double-tick turns blue, I had the call. “Dude, yesterday night we planned on investing our money, right? What’s your idea about getting a house in Chennai?” he questioned me.

Yesterday’s thoughts rolled…

While we are looking for chat items, we came across a roadside wala selling mushroom chilies. We both know that the growth of mushrooms can’t be contaminated with chemicals unlike vegetables. yet he advised me to get that chilies in a high-class hotel saying, “we will get this one in a hygienic way”

So, instead of spending 20/plate, we spent 40/plate for the same food in a different place.

When I asked him “what’s the purpose of spending twice the amount on the same dish but, for the place?” he replied, “stop being a miser. We are getting enough money. So, spending on small items won’t make us poor”

Though the words are good, it sounded BAD! “Do you think our way of thinking will make us rich?” I questioned him. Being in silence for some time, I continued, “Maybe we should start saving our money in a healthy way”.

He didn’t give me any answers later. The first answer I’m getting is in this morning about the house which was an advertisement.

“I didn’t remember anything like I said on investing dude, we spoke about the way to save our money in a good way” I stopped.

“cut the call and come to game room. While coming, get a coffee for me too!” he hung the call.

It raised a doubt in me like, he’s calling me to have a discussion or to bring him a coffee?

Hi everyone! I’m “Gunaseelan”, I hope everyone knew me. Just remember the guy you have come across at different situations.
Whenever you are going on group, you’ll be having a conservative reserved guy, that’s me!
The person who always try to play the safe game, that’s me!
We people don’t take risks, not like you guys who always wanted life to be a thrilling ride. We do ride but, with a 10-meter distance from the previous vehicle. We don’t rush, by the same time we don’t crash too.

I’m an IT employee who is receiving a package of 6.5 L/annum. Like all of you, I too come to a stage of saving my income instead of spending it lavishly which I been doing it for 3 rdconsecutive year. The problem now is, I’m having the money every month with an empty mind of not knowing what to do with that. Everyone including my parents are advising me to get myself a house or a car in Chennai. Since, I’m not a risk taker, I’m here to find a way to properly utilize the money. So, let’s go to mathi who’s waiting for me in the game room. I hope he’s waiting more for the coffee that I’m getting him.

When I ended up in game room, mathi was sitting in the carom facing “Anthuvan”. Both of them asked me to join the game in a different tone.

I teamed-up with Anthuvan and mathi with another guy

It was the middle game. Mathi will have the striker after me. We were 3 points ahead of Mathi’s team.

“I’m not getting your game clearly man!”, mathi speaks out after receiving the striker from me. Obviously, those are the first words he spoke after completing the last drop of the coffee. I now had my doubt cleared that, this bugger longed for the coffee than the topic we are about to discuss.

The reason for his words is, I’m not pocketing any coins. Instead, I’m keen on dismissing all the coins which is tried by mathi’s team.

“He’s not good at offending so, he chose to be a defender it seems”, Anthuvan told mathi.

“Like the game I’m not getting his words too! yesterday night he was telling something and today he is telling something completely different”, said mathi

“what happened guys? Any problem?”, words put out by Anthuvan’s eagerness on knowing what happened.

After the brief talk about yesterday’s night, Anthuvan kind of guessed where we are going on our life! “investing and saving are good options but, the way you choose matters guys. So, what’s your idea?” Anthuvan questioned us!

“My idea is to get a house in Chennai or to go for a car first. My house in my native is a bit old fashioned and the car we have is 7 years old. So, I’m going to get myself a luxurious house and a car for my taste”, the enthusiastic voice of mathi silenced the entire game-room. Because, we been told that getting our own house is the best way to show our growth to the society. But we are not told how we should go for that destined fruit!

Let me introduce Mathi (Mathiyilan) to you. Like me, you came across mathi too. Quite often!
The Cool guy in the gang, who acts like innocent at front and do all the crazy things behind, that’s him. The one, who lavishly spends, updating with all the latest tech in the market, often! who speaks fashion and freaky stuff and when it comes to sharing opinion, he goes with the crowd without offending anyone. In simple words, the most desirable one, that’s him.

After hearing his words on getting a house, the thirst for my house lured inside. Considering the options of buying it with all those risks, I dropped the plan.

“Going for the house is a good option, what’s your plan for it?”, Anthuvan questioned mathi.

“I’m planning for a house, worth of 45 to 50 lakhs. With an initial value of around 10 lakhs from my hand and the rest will be on Bank-loan! If its going to consume longer than usual, then the first preference will be a car of worth 15 to 20 lakhs with the best deal possible to evade the tax amount I’m paying” mathi’s tone got even more higher this time. He sounded like he already pursued it.

Anthuvan’s face now turned to me. “What’s your idea of saving guna?”

The money I’m having or will be having is surplus only till the day I’m deciding to work. After that, it’s hard for me to spend it in a regular basis for years. So, planning to save it in policies and schemes which will return twice the amount I have given and if in case I stopped in between, the amount I saved won’t be diminished”, while I complete, I can sense the fear of engagement for years in mathi’s eyes.

“So, both of you guys turned your heads from spending unconsciously to consciously. But you guys still didn’t get the concept of investing and saving in a proper way”, Anthuvan excited us both.

“What does that mean?”, mathi’s curiosity over him increased. Because, we both know what kind of genius is Anthuvan.

“The best way to give suggestion is to let you guys talk with kalai for some time!”, Anthuvan brought the hero to my thoughts.

Now, let’s see kalai’s background for a minute.
Kalai (Aekalaivan) is our room-mate and it’s the only similarity among us. He differs from us in every possible way we know. Unlike us, you might not have seen him. Maybe you might have heard about him with elder people describing about someone who started their life with nothing and reached higher heights. His passion made him to work on computers and logistics even before he reached 15. That could be the reason for him being a business man running 3 business successfully by the age of 25.

It was 7:45 in the evening. Kalai returned from his office after an exhausting badminton match.

“Machan! We are facing a problem”, even before I complete this phrase the reply I got is, “Let’s solve it Machan!” from kalai. I’m really impressed with his interest on solving a problem.

After his freshen-up procedures, he sat in front of us. “so, what’s up?” kalai ignited the topic.

“we are planning to invest our money instead of spending lavishly…” while mathi continues kalai interrupted him with his cowardly reply “So, you guys finally saw it”. That’s the time I realized, how long this bugger is looking at our flaws but, remained silent on it! Maybe he let’s us to enjoy those small pleasures of our life! Who knows? At least he’s ready to stand with us when we are facing a problem.

“we are looking for opportunities to invest our money. What’s your thought on getting a house as an investment?”, I spoke, trying to pull up mathi’s topic first in the conversation.

“you want to invest or get a house? Clear it out!”, kalai paused.

“investing in a house dude!”, mathi replied, looking confused.

“investments are for assets, getting a house is a liability! Both are different extremes! Where do you want to end up?”, kalai paused again with a stunning question.

Instead of considering the risks of getting a house, I now wanted to know what he’s trying to say. After looking at each other, we both told him “we didn’t get your point!”

“Assets will set us free, liability holds us back! Assets will give out money and liability will consume money from you! If you are planning to get a house with all the money you have, you cannot retire on your own. Your retirement will be linked with someone else in the family like your children or guardian”, kalai tried to educate us something.

“So, houses are not assets?”, mathi sounds confused

“house will be an asset only if you turn it into one, applying its own formula!”, kalai exclaimed.

“Before turning those into an asset, please tell me why house is not an asset and why we can’t rely on that?”, my eagerness rushed me to get the answer for that question in my mind.

“OK! Assume that you have got a house now. It will most probably in debt for over 20 years. Paying for it continuously adjusting all the troubles of work is psychologically a terrible idea. If you are not working for some time, do you have any idea how you are going to pay that debt every month?
if a crisis occurs and you have to sell whatever you had on EMI, calculate the value diminished after selling that, you’ll be shocked to see how much you have lost.” (while kalai explaining these, there’s a terrible look at mathi’s face because whatever he has were on EMI and applying the value concept kalai explained to it, mathi already have negative values to whatever he has)

“And the worst of investments while growing is investing in a car! Consider buying a car of worth 15lakhs. The moment you take out from the seller, it will losses about 10% of its original value. Considering to sell after a year of usage, you might be moving it around 50–60% of its value. Taking all the maintenance in charge, you wouldn’t be making even 50% of the value of your down-payment. I personally advise you to read a book ‘RICH DAD POOR DAD’ which explains a lot about investment” kalai completed his speech about what kind of bad idea is that to have a loan without any planning.

“Then, what is the procedure to change the house into an asset?”, I wanted to know in what way he’s thinking to get his house and as an asset.

“Well, for that you have to apply one mathematical formula!”, kalai said it with teasing smile.

“Finally, mathematics finds a way to involve in our life it seems”, mathi’s naughty joke made a smiley curve in all our faces.

“It’s always been there. Those who knows how to use it, climbs their way higher. Those are afraid of maths, desires the life of one’s using it.”, Kalai sarcastically teased us both.

“So, what’s the formula then?”, mathi kick started it now

“it’s called 15% formula

this may feel insane to few (may be not! hope it doesn’t). if you felt insane, just refer with the people who had their homes without borrowing (self-made money through business or assets)

the name 15% formula stands for -> 15% of your asset value, 15 years of savings, 15-year-old business
All the three need not be considered at the same-time but, if you do then, trust me, it could be an asset of life with a minimum value spent without compromising your wish to have a beautiful house.

let me break the formula step by step,

15% of your asset value -> consider your total asset value as 100%. in that, house shouldn’t exceed 15% when it comes to investing in it. if the value is more! then, you haven’t planned about various things like retirement, settlement, cherishing…

You may have doubt like why 15% of total value?

Constructing a house for our standard in the society without compromising the comfort will cost that percent of value.
In that case, the reason you should not exceed 15% is based on handling cashflow in your life. if the house is your only asset then, that’s how you trained your mind on investing. it may lead you to serious troubles later. trust me! (if you have doubt, refer people having house as their only asset). this calculative investment could turn you into a good business person! who knows?

15 years of savings -> this idea of savings should not be considered in terms of solid amount but with percentage of the routine. Be practical! the price of the things won’t sustain for even a period of 2 years, except boomer which is still available for 1 Rupee. this can be related with the idea of LOAN. coz the period of repayment is somewhat equal to that saving period. only relation is the time period (not encouraging anyone to opt for a loan). If you still looking for a loan, find the path of paying on its own even if you stop working in the middle. else, don’t go for that.

15-year-old business -> consider any business, the actual growth of the business can be calculated only after 9–10 years. After the hard struggles and fight, the attachment towards a business or any relation gets into your soul (like sealing). After that period of 10 years, (once it becomes your career for life) your standard of growth in the market can be easily analyzed. So, based on standards you can bring that asset (house) with a saving period of 2 to 3 years for that 15% house value.

some business may bring you more money with little investments and in short period. Even for those businesses the time it will consume is closer to 10 years for you to generate that 85% of your asset value which contributes to the 15% for your home to the status of your business in the society.

for a financially sound mind, house will be the second last thing it will invest if, considered luxury and comfort together (to our status in the society). and car will be the last thing (again in terms of luxury consideration)

for those who are not into sound financial accounting of your cash flow, may be the house is one of your major investment you have within few years of earning and it will be constituting more than 50% your asset value. Be wise and take calculative risks. Don’t rush hard!

The same 15% formula deals with buying a car. Except for that 15%, go with 1% of your total asset value.

if you plan it accordingly and start to invest in the right way, your control over your money begins to multiply which helps in proper planning and faster retirement. anything other than that will postpone your financial knowledge resulting in prolonged work period.”, kalai completed his concept of investing in a house. I didn’t get many things clearly from his idea. Maybe I’m going to discuss with him about this concept later. But for now, the idea of saving is altered in my mind.

“even if you are saving in terms of cash, be wise! Because, the amount of money you are going to save will be the same but, the value of it will be declining over years. So, find things which don’t have diminishing value like gold for a safe saving”, kalai added to his point of investing.

Myself and mathi looked at each other, words unspoken yet, we knew what has to be conversed. We must increase our intelligence on investing. When kalai said “All the best young investors, be wise and invest nice!”. We both have only one thing to say him,

Originally published at on March 5, 2019.