Before I bought my house in 2010, I was grappling with this thought whether to buy or rent ? . I was living in a rented house and was paying Rs 8000/- as rent. My parents insisted on buying a house and the EMI was Rs 14,000/- per month. I argued that the rent amount was much lesser and insisted that we live in a rented house as the EMI is much higher than the rent. As with any middle class family, my parents had their way and we eventually bought the house.

November 2002 - I boarded the train from Mumbai to Pune to take up my first job. Net income was Rs 15,000/- We were working in one of the top IT service companies and quite excited. I used to meticulously write my expenses on daily basis. Very soon, I had made some good friends. I was eating out regularly. There was one late night movie every week, parties during the week. I stopped writing my expenses. Every Friday there was a Sumo ready to take us back to Mumbai and every dreadful Monday, there was one to take us back to office. By the time I left my first job and moved to the second one, I had Rs 4000/- in my bank account (2 years of saving).

One of the risks that recently have been talk of the town are geographical risks . Despite the world which is so interconnected now and any event has repercussions across the world, there are still inherent geographical risks which are local .

Mutual funds can be categorized into two types of funds :

Active Funds

In active funds , we have an experienced fund manager and a management team to make decisions on the amount collected from investors. For example,

1. Mirae Asset Large Cap Fund - Fund Manager - Gaurav Misra & Harshad Borawake
2. Parag Parikh Long Term Equity Fund - Fund Manager - Rajeev Thakkar & Raj Mehta

Passive Funds

In passive funds, they follow a market index and do not have a fund manager who actively manages the portfolio. For example,

1. SBI ETF Nifty 50 - Largest ETF in India with an overall AUM of 75,000 crores and this fund tracks the Nifty 50 . Expense ratio is 0.07%

When we buy a house loan from bank,

1. Bank provides us money
2. We need to return the money after fixed number of years
3. Bank charges a fixed interest rate for the money that it has lent

However, we also lend money to banks. In case of a fixed deposit, we lend money to the bank.