This article tells you why buying a house early in your life is a very good idea.

There was a time when people lived in rented houses or company provided quarters for most of their lives, and started thinking about buying an apartment only when they turned 45 or 50. But the trend is changing, and more and more people are buying their houses in their 20s or 30s.

And this is a very healthy trend - buying a home of your own early on in life makes tremendous sense.

Building an Asset

The most important thing is that when you buy a house, you are buying an asset. And it is an appreciating asset.

When you are young and have some surplus, you might be tempted to buy some other big ticket item, like a car, a fancy cell phone, an LCD TV or a laptop. But these are depreciating assets - which means that their value decreases every day. The moment you take these things out from the shop, their value goes down by 20-25%!!

Buying such big ticket items on loans is even worse - you acquire an asset whose value goes down every day, and you pay interest for this!

A house is different - it is an appreciating asset. Its value increases as days go by. In the short term, the price might fluctuate, but in the long run, the price of real estate always goes up. (Just like stocks - please read "Stocks - The winning bet for the long term" for more details)

And it is logical too - the supply (land) is finite, but the demand keeps growing as population goes up! And the demand in cities goes up even faster as more and more people migrate to cities.

Thus, a house is always a winning bet!

Major goal achieved early on

As I mentioned, buying a house is on top of the wish list for most people! Doing it early means you take care of a major goal aggressively.

Saving on Rent

You need to live somewhere - if you don't buy a house, you would have to rent it. Which means that you would be paying rent every month.

And rent is sunk cost - you pay the amount, and it is gone. You do get to live in the rented house by virtue of the rent paid, but that's it - you do not build any asset in return of the massive rent that you pay!

If you buy a house, you save on all the rent. You might pay a slightly higher amount every month as EMI, but you also build an appreciating asset of your own!

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Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.