Why Taking a Loan for Assets Like Property is Smarter than for Liabilities | Maximize Your Returns!

Summary

In this insightful video, the speaker discusses their recent acquisition of a home loan worth 2.5 crore, addressing common misconceptions about loans. They emphasize the distinction between asset-based loans, like home loans, which typically have lower interest rates (8-9%) and appreciate in value, and liability-based loans, such as car loans or credit cards, which incur high interest without yielding returns. The speaker encourages viewers to seize opportunities for property purchases without fear, highlighting the potential for rental income and property appreciation. This perspective aims to shift the mindset around borrowing and investment.

Takeaways

• 🏠 The speaker recently took a home loan of 2.5 crores from a bank.
• 🤔 Friends express concern that taking such a large loan might be a mistake.
• 📊 There are two types of loans: loans for asset purchases (like home loans) and loans for liabilities (like car loans and credit cards).
• 💸 Home loans typically have an interest rate of 8-9%, while real estate can grow at 15-20% annually.
• 🏘️ Rental income from properties can add an additional 2-3% yearly return.
• 🚗 Loans for liabilities, such as car loans and credit cards, have much higher interest rates and do not provide returns.
• 💰 It's important to not be afraid to take loans for asset purchases, as they can be financially beneficial.
• ❗ One should think twice about taking loans for liabilities since they don’t generate income.
• 📝 If you find a property that is slightly out of your budget, consider taking a loan to seize the opportunity.
• 🌟 The speaker encourages others to not miss out on opportunities due to fear of taking loans for asset purchases.

Q & A

What type of loan did the speaker take last week?

The speaker took a home loan amounting to 2.5 crore.

What are the two types of loans mentioned in the transcript?

The two types of loans are those for purchasing assets, like home loans, and those for purchasing liabilities, like car loans and credit card loans.

Why does the speaker suggest that taking a home loan is not a mistake?

The speaker believes that if a loan is used for purchasing assets that appreciate in value, like real estate, it is a good investment despite the loan's interest rate.

What is the typical interest rate for a home loan mentioned in the script?

The typical interest rate for a home loan mentioned is between 8 to 9 percent.

How does the appreciation of real estate compare to the interest rate of a home loan?

Real estate is expected to grow at a rate of 15 to 20 percent annually, which significantly outpaces the 8 to 9 percent interest rate of the loan.

What additional income does the speaker mention that can come from real estate?

The speaker mentions that one can earn rental income of about 2 to 3 percent each year from real estate.

What is the financial consequence of taking a car loan or credit card loan according to the speaker?

Car loans and credit card loans have high interest rates and do not provide any return on investment, leading to out-of-pocket expenses for interest payments.

What does the speaker advise if someone finds a property they like but it is slightly out of their budget?

The speaker advises not to miss the opportunity and to consider taking a loan to purchase the property.

What should one avoid when taking a loan for purchasing liabilities?

One should avoid taking loans for liabilities as these do not yield returns and can result in financial loss over time.

How does the speaker view the relationship between loans and asset purchases?

The speaker views loans as beneficial when used to acquire appreciating assets, while cautioning against using them for liabilities.