Tanmay should realistically assess whether it is possible for him to continue with the home loan, given the uncertainty associated with his job. Getting out of real estate investing can be a good idea to relieve stress on your income. However, if he can meet his EMI obligations for a few more months before selling, he should. This will allow it to benefit from lower long-term capital gains taxes on assets held for at least three years.
He can take out a loan from his father, liquidate the mutual fund investments and take out a loan from the PPF account to generate the necessary funds. Any premium he generates on the sale of his apartment can be used to make investments suited to his current income profile. Tanmay made the mistake of committing to a large, long-term, inflexible investment before his income and savings stabilized.
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At this point in his career where there may still be uncertainty about income, Tanmay should only consider investments that can be made from realistic estimates of income and savings. Short-term income surges should be invested as they occur, not committed up front. Investments should be flexible to allow him to take a break from investing or even stop if there is a lack of income or savings. He should be able to do so without incurring penalties, cancellation or affecting the value of investments already made. In addition, if there is a need for funds to support its income, then it must be possible to easily liquidate the investment.
Going forward, he should assess whether the investments he is considering meet these essential characteristics until his income reaches a level of assurance that allows him to plan for long-term fixed obligations, such as a real estate investment. .
(The content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava, and Labdhi Mehta.)
