Buy a house early on or invest first? CA breaks down the best way to build assets

Whether you decide to buy a house early in your career or invest in SIPs and mutual funds, financial planning is of utmost importance right off the bat. Owning a house – a dream of every salaried person in India – comes at a great cost. But what if there is a better alternative to owning a house early on?

Nitin Kaushik, chartered accountant, broke down the best way to build assets. He said you don’t have to buy a home to feel successful, building assets would do that for you. While early ownership of a house feels good, early wealth feels powerful. 

He then broke down the implications of each. 

When you buy a house early, the EMI will kick in, perhaps Rs 40,000 per month for 20 years, limiting your opportunities to freely invest, exploring career flexibility, and perhaps also concerns about job switches and layoffs. “You own the house, but it owns your cash flow,” he said. 

Now, instead, if you invest the same Rs 40,000, you could earn 10-12 per cent over time on SIPs, MFs or PPFs. You would retain your liquidity, your money would grow thanks to compounding, your job could be mobile and you could move between cities and even countries. And most importantly, as the CA said, “In 10–15 years, you might just buy a house in full – no loan.”

“Let your portfolio build the house. Not your salary slip,” said the CA.

A similar example was given earlier by chartered accountant Meenal Goel, who compared investing in property versus mutual funds over a decade. Goel invested Rs 50 lakh in Nifty-based mutual funds rather than buying a flat, a common choice among middle-class Indians.

Her analysis showed her mutual fund investment grew to Rs 1.44 crore, yielding an annualised return of 11.06 per cent. In contrast, her uncle’s investment in a Rs 50 lakh flat brought in the same year, appreciated to Rs 89.5 lakh, reflecting a 6 per cent compound annual growth rate (CAGR).

Goel emphasised, “A house you live in is not an investment it’s a lifestyle choice,” suggesting that for many salaried professionals aiming for high returns, property may not be the optimal investment without factoring in associated costs.