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The Ideal Investment Plan for the 30-Year-Old Who Wants to Buy a Home

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August 03, 2021

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Almost everybody dreams of being able to buy a home on their own. They work hard and save up as much as they can to put a down payment on a place of their own. Over time, the price of real estate has skyrocketed, making it extremely difficult for individuals to save up enough. But with a sound financial and investment plan, even 30-year-olds can grow their wealth to purchase the home of their dreams.

Why Start Planning In Your 30s

Purchasing a home is probably the most vital decision you ever make. It will probably also be the most expensive. The down payment amount itself could run into lakhs, with most properties in larger cities valued at a few crores.

In all honesty, you should start investing for a home right from the time you receive your first salary. But, most people start earning in their 20s and might be more impulsive with their money. In your 30s, your career has advanced a little. You’re more mature, and you seriously start to think about the future. You have several options open to you. By creating a sound investment plan, you can grow your wealth and buy your dream home.

Ideal Investment Plan

Not everybody knows how to make investmentswhen they’re in their early 30s. There are many different types of investmentavenues available. Sometimes, people get confused and find it difficult to make the right decision. Here’s a look at how you can build an investment portfolio that works for you.

1. Start Immediately

Remember, it’s never too early to begin investing. Start with whatever you have. You can use tools like recurring deposits and systematic investment plans to invest small amounts each month. Decide how much you want to put aside every month. Treat your investment as an expense and put it in a separate account every month. That way, you do not feel tempted to dip into it.

2. Balance Your Portfolio

You should never put all your eggs in one basket. Instead of putting all your money in a single fund, spread it across various avenues. You can put a portion into equities and the rest in safer options like debt funds or liquid funds. Pick three or four plans with different maturity periods. Once the short-term plans mature, you can reinvest the money for higher returns.

3. Use Compounding to Your Advantage

While looking for investment opportunities, pay special attention to the ones that offer compound interest. With these plans, the interest amount gets added to your principal at regular intervals. You then start earning interest on the new amount that includes the interest. With plans that offer compound rates, your investment value increases over time.

4. Stick to Your Plan

You cannot stop investing once you start earning returns. The only way to make your money work for you is by being consistent with your investments.

Why Should I Buy a House in My 30s?

Once you start investing, you will soon have enough to start paying for a home. Some people wonder whether 30 is the right age to make such a crucial financial decision. Let’s take a look at why purchasing a home in your 30s is a good idea:

1. Easier Loan Process

When you’re younger and have a steady income, it becomes easier for you to get a loan. The idea is that you have more than enough earning years ahead of you to repay the loan.

2. Tax Benefits

To encourage young people to invest in their future, the government allows you to claim tax benefits on your home loan repayments. You can claim deductions worth INR 1,50,000 on principal amount repayments. There’s scope to claim additional deductions worth INR 50,000 for the interest amount that you pay.

3. Scope for Appreciation

Real estate investments have the highest potential to appreciate in the future. So if you ever decide to sell your home later, you can enjoy high returns on your initial investment.

Becoming a Home Owner

Once you have your investment plan in order, you need to prepare yourself to own a home. There are a few things you must do before you begin this new journey.

  • Zero In on a Location

    Start by thinking about where you’d like to purchase your home. Pick a city and even a specific neighbourhood if you like. Think about what size you would want.

  • Clear Pending Debt

    Before you apply for a home loan, clear as much debt as possible. A small default on your credit card bill or a missed EMI could impact your loan application.

  • Build Your Credit Score

    With a good credit score, you can enjoy lower interest rates on your loan. Make sure you pay all your bills and EMIs on time to boost your credit rating.

  • Get Your Paperwork in Order

    Before you can apply for a loan, you need to get all your ITR statements, residence and age proof and other documents ready. Try and do all your paperwork in advance for a quick and easy application process.

  • Think About the Larger Picture

    Many people make the mistake of only budgeting for the cost of the house. While creating your investment plan, make sure you think about the added expenses that come with owning a home. While signing the lease, you will have to pay something known as registration and stamp duty. Once you have possession, you need to consider the cost of changing the interiors. Finally, you must remember that you will have to pay property tax every year.
    When it comes to buying a home, time is of the essence. Create a sound financial plan that involves different types of investment opportunities to maximise your returns. Remember to stick to your investments and continue to grow your wealth for a stable financial future.

 

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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