Rise of the woman home owner (and the only financial roadmap she will need)
Does home-buying feature in your short, medium, or long
term financial goals? This Women’s Day (8th March),
experts give you a phase-wise investment plan
Did you know that women own less than 20 percent of the world’s land? In stark contrast
to this data, most women in India’s leading metros are active home-seekers and buyers
compared to their male counterparts. Apart from tax incentives, women buyers have also
proved to be prudent investors and creditworthy re-payers of home loans in the last four five
years. Hence, it is no surprise that everyone in the real estate industry, from
developers and banks to asset managers and even state and central governments are
seeking to make property ownership attractive for women.
Home-buying has long been considered a safe investment avenue not only from a
returns-on-investment perspective but also due to the sense of security and dignity that
comes with owning your own home. Hence, if you are among that growing tribe of
aspiring women homebuyers, here’s some practical advice from asset managers.
I am ready to buy a home within the next one-two years; what should I consider?
“Assuming you already have some amount ready for down payment, there are various
instruments that ensure easy liquidity and low-to-medium returns. With the introduction
of RERA, payment schemes have been eased off (read: by deferring the down payment),
thus enabling home-buyers to save cash outflow upfront. Select a balanced mid-cap
mutual fund to ensure tax free returns. Also, investment products where premium is
below Rs 2.5 lakh are tax free as per Union Budget 2021. Investing in gold ETF ensures
decent returns as gold prices have dropped significantly. All these products can be easily
liquidated for the down payment and other costs associated with a home purchase,” shares CA
Mridula Goenka, director, Nisus Finance.
Apart from insuring your dream home against accidents and calamities, Goenka further
advises on taking a home loan insurance too. “Properties purchased by availing home
loans should be insured with term insurance policy or loan protection insurance cover.
This will pay your credit balances and loans even when you are injured or in the event of
death. It provides financial protection to your family at affordable rates and covers the
risk of default in repayment of home loans. Under such a scenario, a lump sum amount is
paid to set off against the loan outstanding. Consider taking an EMI insurance plan from
the home loan providing financial institution; additionally, some payout for illness
treatment can also be obtained,” she says.
I want to buy a home within the next three-five years; how should I plan my
Goenka elaborates, “An investment portfolio needs to have an ideal mix of financial
products keeping in mind the risk-to-return ratio, liquidity, lock-in period, and taxation.
Invest in low-to-medium risk products with good inflation adjusted returns. Hence, I
would ensure that my portfolio has a good balance of debt and equity instruments. My
equity portfolio, which has given a 23.15 percent return over a one-year period, includes
shares of blue-chip companies like banking, technology, FMCG, pharma, and healthcare.
Additionally, growth stocks with good potential like cement, REITs, and select IPOs would
also be included. Investing in gold is advisable too as it has shown returns of 12.54 percent over the past year. Other investments would include corporate bonds,
diversified mutual funds, and index funds.”
For those who want to skip the equity route, wealth manager Mrin Agarwal says, “Look
up a goal planning calculator to figure out how much you should invest each month. Start
a SIP in a short duration debt fund. Have a term cover for the home loan and a separate
cover to take care of the family.”
I am at least five-seven years away from home-ownership; where do I begin?
Ashok Shah, partner, N A Shah Associates, a leading tax advisory firm, says, “Invest in
growth schemes of equity-oriented mutual funds or debt funds. This way, you will get the
benefit of indexation in debt funds. Further, you can claim exemption from long-term
capital gains for reinvestment of proceeds in residential house under Section 54F if you
satisfy prescribed conditions. For long-term corpus building, consider investing in
National Pension Scheme and/or Public Provident Fund, which offer tax-free returns.
Other products to consider for long-term wealth building are gold bonds issued by RBI
and equity linked savings schemes.”