Home loans categorisation
Folks with home loans. Do you categorise monthly EMIs under your investments or consider it separate?
Expense cause the house bought to live in doesn’t count as investment for me. It’s a peace of mind purchase. Id rather think of it as expense than feel good about it being an investment.
This is the absolute right way to think about it.
I've seen some folks post here with: 2.6 Cr net-worth = 1.8 Cr house + 80 L investments.
The reality is the net-worth is 80 L. Helps with mental clarity on the way forward.
And I don’t believe in buying a house to rent as a means of investment. 😅
Liability. EMI = Liability.
The house you live in is not a part of your net-worth. It's a liability.
If it's a house that you don't live in, asset.
EMI payments are Investing Cashflows for me. I categorize it that way for a reason.
I monitor expenses from a Std of living perspective. So EMIs are independent of that. Plus, my NW=assets - loans. Any money flow which increases my NW is an investing cash flow, so EMI is investment.
However, in other contexts, like Emergency fund equal to 6X monthly expenses, I consider my EMIs as fixed costs and include them as provision.
