Riya Kapoor is a banker and is in her late 40s. She feels she is currently stuck with her property investments. Tempted by easy loans, she had purchased three flats—one for self-occupation, another as an early investment, and the third one on the outskirts of the city. The vacant third apartment is earning no rental income. Should she consider selling this flat now?
Riya Kapoor should realise that overexposure to any one asset class, especially real estate, can hurt long-term financial health. While property may seem like a solid investment, it involves large capital outlays and carries risks, such as delays, cost overruns and limited liquidity. Paying large EMIs also limits her ability to build a diversified portfolio.
However, she has age on her side. If she gives herself 10 years to rebuild her wealth, she can recover the loss from selling the flat. Unlocking the capital stuck in the property and investing it in other financial assets, like equities, can offer better long-term growth. Being EMI-free will also allow her to start SIPs and boost her savings.
Selling at a loss is painful, especially amid conflicting views on the market recovery. However, she must remain focused on the fact that the flat is not generating any return and it would be difficult to sell or monetise it in parts, if the need arises. For greater financial flexibility, liquidity, ease of access, and ability to borrow against investments, she should consider exiting now.
Given the legal complexities and paperwork involved, especially since she already owns two properties, real estate may not be the best choice for her at this stage. Selling now and reallocating the funds to growth-oriented investments could offer her better returns and greater control over her financial future.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
Riya Kapoor should realise that overexposure to any one asset class, especially real estate, can hurt long-term financial health. While property may seem like a solid investment, it involves large capital outlays and carries risks, such as delays, cost overruns and limited liquidity. Paying large EMIs also limits her ability to build a diversified portfolio.
However, she has age on her side. If she gives herself 10 years to rebuild her wealth, she can recover the loss from selling the flat. Unlocking the capital stuck in the property and investing it in other financial assets, like equities, can offer better long-term growth. Being EMI-free will also allow her to start SIPs and boost her savings.
Selling at a loss is painful, especially amid conflicting views on the market recovery. However, she must remain focused on the fact that the flat is not generating any return and it would be difficult to sell or monetise it in parts, if the need arises. For greater financial flexibility, liquidity, ease of access, and ability to borrow against investments, she should consider exiting now.
Given the legal complexities and paperwork involved, especially since she already owns two properties, real estate may not be the best choice for her at this stage. Selling now and reallocating the funds to growth-oriented investments could offer her better returns and greater control over her financial future.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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