Jack3d
Jack3d
Unicorn

Home loans categorisation

Folks with home loans. Do you categorise monthly EMIs under your investments or consider it separate?

13mo ago
Toph56
Toph56
Stealth13mo

Expense cause the house bought to live in doesn’t count as investment for me. It’s a peace of mind purchase. Id rather think of it as expense than feel good about it being an investment.

TallTales69
TallTales69
Unemployed13mo

This is the absolute right way to think about it.

I've seen some folks post here with: 2.6 Cr net-worth = 1.8 Cr house + 80 L investments.

The reality is the net-worth is 80 L. Helps with mental clarity on the way forward.

Toph56
Toph56
Stealth13mo

And I don’t believe in buying a house to rent as a means of investment. 😅

TallTales69
TallTales69
Unemployed13mo

Liability. EMI = Liability.

The house you live in is not a part of your net-worth. It's a liability.

If it's a house that you don't live in, asset.

Jack3d
Jack3d
Unicorn13mo

I meant paying an EMI for a new house that is being built. I don’t live there. What to do in this case?

Train
Train
Dunzo13mo

It's only an asset or investment if u earn rental income from it, or if ure planning to sell it at a much higher price in the near future

majboormajdoor
majboormajdoor
Stealth13mo

EMI payments are Investing Cashflows for me. I categorize it that way for a reason.

I monitor expenses from a Std of living perspective. So EMIs are independent of that. Plus, my NW=assets - loans. Any money flow which increases my NW is an investing cash flow, so EMI is investment.

However, in other contexts, like Emergency fund equal to 6X monthly expenses, I consider my EMIs as fixed costs and include them as provision.

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