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The Best Money Advice, One shall follow…

Despite sane and sound advice from family and friends, I chose to forgo getting my own home leading to be the biggest financial mistake in my life.  I was overconfident in my ability to make a killing in stock markets that I lost good chances of home ownership.  Someday in the future, my preteen son will attempt to figure out the world as an adult.  Hence, I write down my greatest financial blunder owing to complacency and overconfidence which I hope he would avoid as a young adult.

A harsh truth of life is that the rent you pay never comes back.  It is money gone away like water in a sink.  This reality makes it sensible to own a home.  We are often lured by either reckless consumption or mutual funds promising great returns forgetting that owning a house does a few vital things financially.  It acts as an asset growing your capital over time while riding you of recurring rents enabling you to live better.  It also shields you if job loss or no wage hikes happen for a protracted period.  Life is not always sunshine and rainbows, and these things do happen often.  Besides, by missing out on owning a home earlier in life, one has to endure the double whammy of both rising rents and the expenses of raising kids and supporting a family later in life.

A bank lets you own your home with very less down payment and allows you to stay in it even before paying up fully.  A bonus is that the loan you pay back also offsets your taxes.  Thus in one single move, you saved both rent as well as taxes.  No other loan comes with such good terms in this world.  The home loan paid today, unlike rent, comes back as an appreciating asset over time helping you increase your capital in life and secures old age.

Thus for a young adult, the best scenario is to try and get that first home as soon as you start earning when expenses are lowest, and the rate of savings can be higher each month.  With marriage and kids coming along, expenses shoot up each passing day makes it tougher to save.  House prices also rise often, and the dream home of today gets expensive and unaffordable tomorrow.  It is hence practical to start and finish your loan burden sooner in life so you are better placed to handle rising expenses each year.

A home can also provide you with a source of income in case you move elsewhere looking for a job.  The rent you get from your existing home will offset any rent you pay in a different place as you move all over the world looking for better opportunities.  If you and your spouse are prudent to save and afford a second home, the rent earned is an extra income and helps you lead better lives.

As a final word, a home is a part of the basic triad of food, shelter, and clothing that we all seek in this world and it makes great financial sense to get it as earlier as possible in life.

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