How to buy wants and use them
If there are no buyers of wants, there will be no development at all. Today, there is a thin line between a want and a need; yet, the best marketing minds are now employed to devise strategies to make people have the most important aspiration for wants. This article seeks to focus on how an individual can become a buyer of such wants, and use them wisely.
The hot summer season has just started. The day temperatures will go up to even eighteen degrees at hill stations. Millions will seek refuge in cooler climates. The mad scramble for satisfying a variety of all wants will start at the beginning of the Indian Premier League (IPL) season. The advertisements will simply overwhelm any Indian. Yet, we need to make a clear distinction between a need and a want and buy any want after proper planning, without making a hole in our savings or landing in excessive debt. For example, an air-conditioner is a want. Even in summer, in the rural areas and the villages, pan-India, it is quite common to see people putting out their cots and happily sleeping in the space available in front of their houses. The community youngsters take turns to do the rounds and ensure that everyone is safe. Since the temperatures drop after midnight, the expenditure on wants is avoided. Yet, if one decides to have an air-conditioner for some comfort during the day, it is wise to have recurring deposits that mature from March to July every year, to take care of the additional expenditure on electricity bills. A recurring deposit of just Rs.150 in a good bank for 36 or 48 months, will enable us to meet the additional expenditure. The air-conditioner mentioned above is just one want. Given the multiple choices of used cars now available, and the good number of loans now freely available, which includes personal loans, the middle class is busy buying used cars. However, the wise among the buyers do not use cars to go to the office, as it is very costly, and still use the two-wheelers or the metro, wherever it is available. The weekends are the times when the car is taken out for short picnics or to go to the temples in the nearby towns within a seventy-five-kilometre radius and so on. Check out Forum for new postsIntroduction
In this connection, it is relevant to:
Plan for buying and using a want
This is exactly the strategy that is required. And it is always wise to liquidate the loans on a diminishing basis, far in advance of the actual schedule of payment. This will make the cost of acquisition of an asset rather cheap and release the rest of the money for investment in good savings vehicles such as the PPF. Furthermore, it is not wise to invest in a washing machine, when it is somewhat possible to find a good domestic servant maid for a reasonable cost, particularly in semi-urban areas and smaller cities and towns. It is also wise to invest in well-built independent houses in the outskirts of tier 2 cities, in the developing areas, where the houses are few at the moment, but where construction of new houses happens at a fast pace. The independent house will zoom to the highest prices, much faster than a flat or an apartment that is purchased for a hundred one hundred thousand rupees. The flat will show some increase and then decrease, as the new buyers will settle for better options than buying an old flat or apartment.
One can always visit the houses during the weekends and appoint a caretaker to take care of the house. If the rent is not substantial, it is wise to not rent out the house but to use it as it is a second home to spend a few days at a time. And when the dual incomes are good, it is wise to repay the loan so quickly and secure the property. What is today available for thirty-one hundred thousand rupees, will zoom to three times this figure within the next eight years, when the new developments happen in the tier-2 cities or the big villages. Since the internet connectivity is reaching the big villages, it is wise to even invest money in the big villages and buy a much bigger house and remodel the house. Since there is a recession, it is fine to buy such a house and repay the loan within seven years.
Choose between the best alternatives
Will gold prices shoot up further? Say, to 75000 rupees per sovereign of eight grams? This is unlikely to happen. There will be massive protests and the Government of India will be forced to take action. A wiser investment will be the liquid funds of a good Mutual Fund, which should be held for over 24 months and then sold when the profit is in the region of Rs.50,000/-, as any amount more than one hundred thousand rupees is taxable. And in the long term, even a foreign holiday, to a location such as Singapore, can be a real possibility with such savings. Similarly, in cultures where gold is not viewed as essential, it is not wise to invest in gold. A good growth scheme of a leading Mutual Fund, such as the mid-cap fund is the ideal alternative. Similarly, the money should be used to buy a good want wherever it makes sense to the family. For example, a treadmill is a very good investment in metro cities. People are hard-pressed for time and a little exercise on a treadmill is a good thing for the health of the person, particularly those who work in the corporate sector.
Never settle for local unorganized brands
There were serious fatal accidents that happened when the air-conditioners purchased from the unorganized sector (that is, assembled units) exploded and there was a big fire accident, killing at least four in the family. Such products are always dangerous. They do not have any quality and only untrained people manufacture or assemble such units. It never pays to buy any want from the unorganized sector. Plots of land purchased in a hurry from the rowdy elements, who might come up with advertisements that they have the local panchayat approval, for example, are those that are being sold illegally.
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Always plan for the very long term
During the initial ten years of a middle-level executive's life in the Corporate sector, it is unwise to invest in a car. The cost of used cars will never increase, even after ten years. One can always find cars with a limited budget. When the savings are good and not much of an investment is required to buy any costly asset, it is always better to check if the want is required and the cost involved. For instance, wherever the quality of drinking water is not good, the wiser thing would be to immediately take a loan, if necessary to buy a good water filter. There is a recurring cost of Rs.5000 per annum to change the parts of the water filter, but this is a required want. Such wants should never be postponed.
Buying a want and using the same should always be for the long term. Taking a Vande Bharat Train, for example, to travel between two cities is a clear want that can be avoided. Building a good corpus that should never be touched for any expense every month, is the priority. Only when the savings is good, and after the planning for the very long term is firmly done, buying the asset should be done. For instance, as already mentioned, in the big metro cities, living in the outskirts is far more advisable than buying a flat at exorbitant prices.
Conclusion
Some ideas, based on some real-world examples of people who plan to buy a want, and also a wise use of any such want, have been discussed above. However, it is always essential to set a good amount apart for savings and then think of buying any want. Liquidating the loans taken on a priority basis is a must at all times.
Today a large number of gadgets and equipment are available in the market using which we can have comfort and luxury in our lives. But everyone cannot afford such luxury and depending on one's resources one has to plan for buying these facilities after a thorough understanding of whether it is required or not. Just accumulating the gadgets in the house has no meaning if we don't use them judiciously. Even rich people would not buy an unwanted item. People belonging to middle-class or below-income groups cannot buy whatever they want. They have to think twice before buying an item and see its utility for the whole family. They will go for a durable item seeking fewer maintenance expenses. In fact, in many middle-class families, people don't buy a new gadget and either get the old one repaired or buy a second-hand which is nowadays available at a very reasonable cost.