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Business News/ Money / Personal Finance/  FY23 to end soon: How to plan your savings from next fiscal to buy first home
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FY23 to end soon: How to plan your savings from next fiscal to buy first home

Teena Gandhi, Vice President, Earnnest.me said, owning a home not only provides a safety net but also holds sentimental value. Buying the first home can be overwhelming as it requires a considerable amount of corpus, so one has to plan meticulously.

Currently, home loan rates have gone up due to RBI's monetary policy tightening and rate hike cycle for the current fiscal, an effort to bring stubbornly high inflation under control. (HT_PRINT)Premium
Currently, home loan rates have gone up due to RBI's monetary policy tightening and rate hike cycle for the current fiscal, an effort to bring stubbornly high inflation under control. (HT_PRINT)

The next big thing for earning women would be the end of the financial year FY23 which is just a couple of weeks away. The month of March is generally busy for employees, employers, and taxpayers. However, with the new fiscal year just around the corner, it is important to prepare your savings mechanisms especially if you're looking to buy your first home in five years.

The closing of a financial year usually comes with a host of factors, for instance, you close your accounts book for that respective year, calculate your earnings and also file for income tax returns (ITRs).

Teena Gandhi, Vice President, Earnnest.me said, "Owning a home not only provides a safety net but also holds sentimental value. Buying the first home can be overwhelming as it requires a considerable amount of corpus, so one has to plan meticulously."

She believes that it is not only important to start saving early but invest in the right product mix that can yield returns to make the down payment which in itself is 10%-15%.

Also, on the occasion of Women's day which was prior to Thursday, Aditya Damani, Founder, and CEO of Credit Fair said, "Women need to take charge of their finances. It’s heartening to see the rising workforce participation of women. However, unfortunately, most women outsource financial management to their families."

Further, as per Gandhi, EMI (in case of a home loan) stamp duty, registration charges, and interior designing, all of it require continued financial strength, not to forget the silent creep - inflation.

Also, Gandhi said, women need to save more than men because of the gender pay gap. They can open special savings accounts with banks that offer zero account balances and women should also familiarize themselves with the tax benefits that they can avail.

In Gandhi's view, understanding how much money is needed at the end of 5 years can act as a starting point. It is very important to budget & stick to the plan, cut big-ticket expenses, and automate savings. One has to look at returns of anywhere between 12% to 15%. With a multitude of options available today, a woman can look to invest in professionally managed Mutual funds with the right asset allocation to suit her needs, fixed income instruments, REIT's etc. that will help them build the corpus necessary to buy her first home.

Meanwhile, Damani said, the first step is for them to take charge and determine their own objectives and set their financial plan. There is a universe of investment options and many of which might be more suitable than buying a house. If buying a house is the objective, they should start doing a SIP to accumulate for the down payment in five years. They should also do research.

Damani also said, "Women are eligible for a lot of exclusive benefits such as lower stamp duty and home loan rates as of now. If they’d like to take advantage of them before the government changes the provisions, they can try to advance the home purchase timelines to under 3 years. There are options to avail loans for a home down payment, stamp duty, and interiors in such scenarios."

Currently, home loan rates have gone up due to RBI's monetary policy tightening and rate hike cycle for the current fiscal, an effort to bring stubbornly high inflation under control.

How despite the rate hike, the real estate sector has witnessed strong flows which also has boosted the aggregate household income in India.

As per the latest report by ICICI Securities, analysis using National Accounts Statistics since the 1950s indicates that a rise in investments in residential real estate has coincided with a rise in the aggregate disposable income of households.

Brokerage's note added that reason for the above relationship is that real-estate development is estimated to be the second-largest employment generator in India after agriculture and largely in the unorganized segment.

Going forward, ICICI Securities note said, the Household real-estate investment cycle is rising after a decade of stagnation during which its share in GFCF dipped from 37% in FY12 to 25% in 2021. The cyclical recovery in residential real estate will boost the income growth of the related stakeholders mentioned above. Workers involved in the leisure segment, which again is dominated by the unorganized segment, are also likely to see buoyant income growth. However, agriculture wages remain a the key risk to aggregate income growth, given its large weight within the aggregate workforce, as they will be driven by prospects of how monsoon and agriculture output pans out in FY24.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 09 Mar 2023, 08:54 PM IST
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