Have you ever imagined that even a serious subject like financial planning can tickle your funny bones. For example, when I read about Life Insurance it seem to be kind of funny. If you purchase a life insurance product, you are paying money for something you will never use !! Life insurance implies the money that goes to your nominee when you die. So obviously you cannt make use of your life insurance. The worst part is that the agents use your "guiltiness" to sell their product. They will pitch the product saying "Have you ever thought of what will happen to your dear ones if you suddenly die?" "What your wife will do?" And this set the ball rolling in your mind, you feel guilty and buy the product.
Take another example, my parents are living a retired life. They get a meagre pension of 5000 Rs per month after serving the government for their entire life. If I try to analyse their situation, they put their majority of saving into buying a house. Now thats funny since today they are large asset-owner but cash-deprived. All their sons are well-setteled (enough to take care of their own families), so what is the use of such a huge house sitting out there while my parents struggle for cash. And they wont accept money from any of their sons.
There should be some scheme reverse of home-loans. I mean when you want to buy a house, you go to a bank, take a loan and give back money in the form of EMI. The idea is that the house is a mortgage with the bank until you repay the entire loan. Wouldnt a reverse scheme be nice. For example, the bank might have a contract with the elderly people who are house owners. Once the person retires and wishes to enroll in the scheme, he will sign a contract with the bank. As per the estimated price of the house, the bank will pay a monthly EMI to the customer (say 10,000 Rs per month) till the customer is alive (which could be say 20-25 years after retiring at the age of 60 years). After his death, the house ownership instead of going to the legal heirs will go to the bank. The bank can then do whatever it wants. Isnt that a win-win situation for everyone.
Take another example, my parents are living a retired life. They get a meagre pension of 5000 Rs per month after serving the government for their entire life. If I try to analyse their situation, they put their majority of saving into buying a house. Now thats funny since today they are large asset-owner but cash-deprived. All their sons are well-setteled (enough to take care of their own families), so what is the use of such a huge house sitting out there while my parents struggle for cash. And they wont accept money from any of their sons.
There should be some scheme reverse of home-loans. I mean when you want to buy a house, you go to a bank, take a loan and give back money in the form of EMI. The idea is that the house is a mortgage with the bank until you repay the entire loan. Wouldnt a reverse scheme be nice. For example, the bank might have a contract with the elderly people who are house owners. Once the person retires and wishes to enroll in the scheme, he will sign a contract with the bank. As per the estimated price of the house, the bank will pay a monthly EMI to the customer (say 10,000 Rs per month) till the customer is alive (which could be say 20-25 years after retiring at the age of 60 years). After his death, the house ownership instead of going to the legal heirs will go to the bank. The bank can then do whatever it wants. Isnt that a win-win situation for everyone.
Yes this is a win win situation and especially in places which are characterised by high density of population.
ReplyDeleteThe banks need not take up this, instead non banking financial institutions must take up this.
But the snag in the proposal is that, the future generations wouldnt be too happy about this. They wouldnt want 'their' assets to go off to the bank. A family crisis can take place.
And here in the place where I'm currently taking shelter, where sons care little to help their parents in old ages, downgrade their 3 bed room flats to studio apartments and make a huge money in arbitrage (I dont get to use a better word) to live off peacefully!
ReplyDeleteI guess it is up to parents whether they want to live off a comfortable life while they are alive or keep thinking of offending their sons after they die. Imagine a retiree who is getting 3K-4K .. suddenly gets 15K per month.. wont he enjoy it to fullest with that money... and the sons are supposed to be capable enough to fend for themselves..
ReplyDeleteYou are talking about a reverse mortgage which the banks are willing to offer in India.
ReplyDeleteEven if this happens, middle class would have worked to pay EMI's throughtout their life only to reverse mortgage it towards the ned.
Better invest your money in equity when you are young and stay on rent which would leave you with more wealth during your grey days.
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