February 2008

Given the current talk about sub prime mess in the US and its fallout, I got to think about home owner ship itself. From the perspective of a prospective home owner, not as an economist or lender or an investor into CDOs.

Let us say that I find a house to buy for 30,00,000 in Chennai (yeah, me dreams quite a lot ;-), so sue me).  Say I am able invest 10,00,000 out of my own pocket and  take a loan of 23,00,000 to pay the rest and to cover other transaction costs.  Let us assume that a lender agrees to loan me the amount at 10% fixed interest rate for a 10 year term.

At the end of 10 year term, I would have paid the lender 36,47,360 (Nifty Mortgage Amortization Schedule Calculator).

Assuming that I had put the 10,00,000 down payment instead into a 10 year term deposit earing 8% interest per annum, cumulated annually, it would have ballooned into 21,58,925, a good 116% appreciation.

So, my take is, the total invested at the end of the 10 year term is 58,06,285.  My down payment money and the interest it would have earned, the loan amount plus the interest I paid.   If I would not have dipped into the down payment and interest purse.  A Big If.  If I sell the house for 23% on top of this, I would get a 116% appreciation on the total investment of 33,00,000. But then why should I do this? For all I know, all things else being equal, I could have just earned the same on a term deposit.

I haven’t taken into consideration other costs and parameters over 10 years – taxes paid, maintenance, inflation, opportunity cost, whatever-else-that-could-put-my-naive-calculations-in-jeopardy.

So, just to ensure that I get a good return, say 70% (thrice 23%) I would have to sell the house at 98,70,685.   This is about 200% appreciation on the original 33,00,000.  Is 200% ROI over 10 years worthy of taking such a risk? If I factor in other expenses and parameters the actual ROI would be even less.

What sez you?


Wonko the Sane and Gubble-Gubble. A software opportunity? – Go read A Microsoft Marketing Man’s diary.  Humor at its best.

I Drank multiple cups of Feature-rich coffee, a default slice of familiar and powerful toast followed by and optional one on a per-egg basis, and adopted best practices in the bathroom to support daily bowel operations. I seamlessly interacted with the bathroom mirror to transform the valuable face and exceed expectations. I interoperated with the toothbrush.

Microsoft Boy announces his School Homework – Another gem of a parody.

Thanks a lot Phil!

I have a Yahoo! id and have used it for the past 9 years atleast, primarily Yahoo! Mail.  I don’t use any other Yahoo services, except for Finance, that too once in a blue moon.  I also have a hotmail id and a gmail id.  But don’t use them much.  I check them,  like,  once in a month or so, just to delete spam 😦

And what will Microsoft do if its bid for Yahoo! is successful?

  • Retain Yahoo! mail as it is (least likely?)
  • Retain Yahoo! mail ids but migrate the platform to Microsoft technologies
  • Migrate Yahoo! mail users to Windows Live Mail (most likely?)

Now I am seriously thinking of making gmail my primary account going forward.  I don’t how many Yahoo! Mail users are currently thinking of moving away from Yahoo! Mail, given that Microsoft has made a hostile unsolicited bid for Yahoo!  And thats the irony.  What use is acquisition of Yahoo! to Microsoft, if many users like me ditch Yahoo! services for good?  Seems like Flickr users are already banding together to start a campain asking Microsoft to keep its dirty hands off.

How do I download the current mail content in my Yahoo Inbox to my local hard drive?  Pointers welcome!

Update: http://www.tnl.net/blog/2008/02/01/non-obvious-winners-and-losers-in-microsoft-yahoo-deal/ – first comment!