Money Talks # 67???? - Double return from my investment

People find happy to sell their property at the double the price from their investments.

One of my clients was happy to sell their flat at 1 Crore in 2023. They bought it around 40 Lakhs. They were happy and thinking to reinvest in property hoping same return.

They wanted a discussion. Because they saw decent return from their Mutual Fund portfolio in last few years. They got about 25 % return annual return so far.

So, now they are confused, flat or equities ?– they got double return from flat and mutual fund - equity is running in 25 % return. Which one is the best ?

I said, from mutual fund – Don’t expect this kind of return in future. On an average, 10 % return per annum in 5 years is good expectation.

That was demotivation. I said, expect 10 % per annum in long run but if you get more or less – its yours only. That’s fine by them. But in flat they got 100 % return, that’s why still a dilemma for them to choose the reinvestment.

I asked, when did you buy flat ?

They bought flat in 2012 for 75 % loan. In 8 years they closed loan and sold at 1 Crore in 2023 ( All prices in approx. )

We must understand, for 30 L loan, in 8 years – they must have paid 12 L as interest. So, 30L become 42 L + 10 L down payment. This means 52 Lakhs is the total cost. If you really calculate annual return for a flat bought in 2012 for 52 Lakhs ( not adding any maintenance and furnishing cost ) and sold in 2023 at 1 Crore – Annual return is only 6.13 % per annum

We miss real percentage of annual return to conclude our investment decision.

Let’s not conclude our investment plans based on numbers, be clear and understand in real annual basis – how much are we going to get ? is it making sense for you ?

Investing is number game muddled with little emotions ??

Happy investing.