Often we are depressed about our earnings, whether it is in form of salary or business proceeds. We are never satisfied by what we are earning and the desire to earn more never ends. The only reason for this is our unorganized investing strategies which are often derived by our social circle. The major mistake we make is by spending our hard earned money on dead assets, which shrink the liquidity in our hands, thus making us think that we are not earning sufficient.
You must be surprised that you have heard about tangible/ intangible assets, current/ non-current assets and operating/ non-operating assets; then what are these dead assets and how they shrink your purchasing power? Today we will talk about major three dead assets which we never think before investing, moreover, we make achieving these dead assets as our goals.
1. HOUSE: Yes, number one on my list is investing in house is a dead investment. A lot of people will not agree with my view on this, as they will think where we live if we don’t own a house. Its true, house is a basic necessity along with “roti and kapda”, but have you ever thought that the money you put to purchase a house is never earning anything for you. Your money is dead the day you invest it in buying a house. I live in Delhi, here the return on investment in residential property is only around 2%-3% p.a. of invested amount in terms of rental income. Even in case you buy a house to live, the burden of EMI (Monthly Bank Loan Installment) will shrink your pocket. Ahh, never invest thinking that there will be capital appreciation in property value, because in 10 years even bank’s fixed deposit multiplies the amount many fold (Say 1.75 times), I don’t think property value in every area will double in 10 years. Do you think so?
So now question is how to go for a house. I will suggest instead of investing in residential property buy a commercial property of equal value. The return on your investment in terms of rental income will be doubled, some of which can be used to pay your house rental and you can reinvest the rest. Sound crazy right? But it is practical and my personal experience.
2. CAR: The second on my list is investing in car. It’s a dead investment believe me. Often we don’t buy a car that best suites our need and purpose, instead we always want to buy a car which we think others will like. We will feel superior to others’ driving that big SUV, but somewhere in our mind we will be worried about that heavy EMI which we need to pay for it or the things which we forego to maintain that big car. The value of that car will eventually deplete in few years then you will think of owning a new car in exchange of old one. The result will be that you can never be satisfied by your earnings and always be in worry for increasing expenses.
For this the solution is very simple, either buy a car which best fulfills your need and solve your daily chores or go for a used car initially (which are available in very good conditions these days). Always remember the vehicle is for our convenience and we are not for convenience of the vehicle. You never want to put your hard earned money for maintenance of a non living thing (car) at the stake of living humans in your family.
3. Jewelry: Now you must be amazed that I am going nuts. How in the darkest dream jewelry can be a dead asset? I will put it straight, have your mother/ sister/ wife or someone (ahem) ever sold the necklace or ring or any piece of jewelry you bought for her. The answer to this is obviously no. Let me ask you one more question, how often do they wear all the jewelry they have in their bank locker or whatever place it is? The answer to this will be “very rare”, “occasionally” and so on. And now tell me what will happen if you’re ever allowed to sell this jewelry and invest it somewhere else? The jeweler will pay you nearly half of the price you bought it because of glass stones and metal stitches in that beautiful piece of jewelry. I would like to make a clear demarcation here that we are only discussing about jewelry and not the bullion's. Bullion are always best option over investing in jewelry. Bullion never deplete in value instead you will get full value any day you go to market to sell them. So how come you classify jewelry as a good investment option. Think over it.
So this is pretty much it. My views, my space and I Love to put them straight. This article is a string to my earlier blog “Save Your Hard Earned Money”. Do let me know your views and feel free to contact me. Keep reading for more of my thoughts that are purely my personal experience and knowledge based.