In country like India, we can’t depend on country to provide for basic necessities. Hence, everyone wants security in their life especially with respect to Food, Clothes and House (Roti, Kapta and Makaan). Securing food and clothes are easy to achieve regular income streams and securing them will require limited investment (10s of lakhs invested will give 10s of 1000’s to secure these).

House today in India very expensive and it require 1 Cr+ investment for house that will help you save 20k per month on rent. This effectively means 2.4% return which is very low. Some people will argue that rent is increasing every year hence 2.4% is not a right metric hence we need to account for long-term increase in rent.

Lets look at an example, Ishan is paying 33K monthly rent inclusive of security deposit of 6k and other potential tax saving from HRA.

Total Rent 33,000
Society Charges 6,000
Property Tax (@10% on net) 2,000
HRA Benefit (@20%) 6,600
Net 18,400
Increment 5%
Return Income 9%
Investment Required 60,00,000
House Cost 1,20,00,000
Saving 50%


With above assumptions, if we look at buying a house financially in today’s market it doesn’t make sense to buy a house.

I have used very conservative return assumptions with a prudent investment portfolio this can definitely can be improved. Also, if you think rent increase will be more than 7% in long term and return can’t be more than 9% buying a house will turn prudent.