Page 30 - Masala Lite Issue 164 August 2024

30 CASH COURSE WITH ATUL

Do Not Own a Home and Nothing Else
TO RENT OR Avoid a situation where home ownership
prevents you from being able to save any
money otherwise. It is common that
TO BUY: MAKE families direct the lion’s share of their
income to mortgage payments. If this
happens for an extended period, it will
YOUR OWN To prevent this, if you take a mortgage
impair the family’s ability to save money
for investment assets.
INFORMED to buy a home, keep some buffer
between how much you can pay and
how much you actually pay. Banks are
DECISIONS incentivised to lend to you as much
as your income can service, so you
need to be mindful of this. Owning a
home and preventing the build-up of other forms
of savings is not a recipe for prosperity.
A Brief Summary: Bangkok is a Renter’s Market
• Conventional wisdom preaches home ownership as an important financial The Bangkok property market is one that is more favourable to renters than buyers.
milestone to reach. Do not fall for the advertising and make your own decision. Many of the examples of wealth creation from buying a home come from property
markets where there has been more meaningful price appreciation.
• There is merit in renting and/or owning. Everyone’s circumstances are
different, and you should figure out what’s best for you. An experiment you can conduct to evaluate this is: look at Bangkok condo listings
and compare the rental and purchase prices of units in the same building. Would
• Avoiding a situation where the lion’s share of your income is servicing you buy a unit at the average listed price and then rent it out to someone else for
mortgage payments will be better for the health of your household balance the average rental price? In many cases, your return will be lower than 4 percent.
sheet.
For More Info, Go to Netflix
• Go to Netflix for a discussion of this topic with personal finance expert
Ramit Sethi on his show How to Get Rich (2023) Personal finance expert Ramit Sethi discusses this question and other related topics
on his Netflix show called How to Get Rich (2023). He is a renter and shares why
not being a homeowner is a much more sensible option for him. The show is based
Ditch the Bias to Own, and Figure Out What is Best for You on his book which is also useful for personal finance topics, albeit very U.S.-centric.
Instead of accepting the conventional bias to be a homeowner, figure out if that
is really what is best for you. Often, people are biased towards wanting to be a
homeowner. This is the celebrated route, and the one that has been championed by Atul Sethi is the founder and CEO of Farnam Tree, a
the ‘American Dream.’ licensed boutique investment firm based in Bangkok.
Sure, there are many excellent reasons to own a home. But because social advertising Atul has over twelve years’ experience working in
has told you to do so is not one of them. Everyone’s circumstances are different, and investment banking and as a research analyst, prior
nobody knows your situation better than you. Consider the merits on both sides to starting Farnam Tree.
before assuming one route is better than the other.