One of our clients was genuinely concerned about the soaring prices of residential apartments, particularly in a Tier 2 city like Mangalore.
Consider a large builder whose hoardings seem to be everywhere across the city, with a Bollywood Badshah as its brand ambassador. Project launches appear relentless.
Our take on the matter was simple.
Residential real estate is not always an investment. At the premium end, it can often be as much about status and lifestyle as it is about the underlying financial returns.
Owning an expensive apartment can be a matter of pride. It can signal success, impress peers and, sometimes, massage the owner's ego. The builder, through aspirational branding and marketing, helps sell that dream.
Now, consider financial assets such as stocks, mutual funds and fixed deposits.
Even if you hold financial assets worth ₹10 crore or more — as some of our clients do — nobody necessarily knows about it. There are no grand entrances, fancy hoardings or celebrity endorsements attached to your portfolio. And you cannot exactly flaunt your portfolio statement on social media!
Financial wealth is often invisible. And that is precisely its beauty.
From an investment perspective, financial assets should be evaluated on their potential to deliver :
- Appropriate risk-adjusted returns
- Liquidity
- Diversification
- Suitability for your financial goals.
An exotic home, a high-end car, expensive paintings or handcrafted jewellery may offer enjoyment, utility, emotional satisfaction or prestige. There is nothing wrong with that. But much of their value may lie in consumption rather than investment.
The problem begins when we confuse the two.
Our advice: Don't mix investment decisions with consumption desires.
Buy a home because it meets your family's needs and fits your financial plan. Buy luxury because you can comfortably afford it. But don't justify every expensive purchase as an investment merely to feel better about the price you pay.
After all, your lifestyle is what the world sees. Your wealth is what you truly own.
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Happy Financial Planning!
Naveen Julian Rego – CFP®
MD & Principal Officer
Naveen Rego Capital
SEBI Registered Investment Adviser
Reg No: INA000019211
BSE Enlistment No: 2178
Disclaimers:
- Investment in the securities market is subject to market risks. Read all related documents before investing.
- Registration granted by SEBI, enlistment as IA with Exchange, and certification from National Institute of Securities Market (NISM) in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
- Financial products recommended by us that are under the jurisdiction of other regulators are beyond the scope of SEBI’s grievance redressal mechanism.
