"Own thy own home. It reduces thy cost of living and makes thy gold go further."
In 2026, there is a huge debate on social media: "Rent vs Buy". Many financial influencers will show you Excel sheets proving that renting is better than buying a house because "SIP returns beat Real Estate returns."
Mathematically, they might be right. But financially and psychologically, they are often wrong.
Arkad, the Richest Man in Babylon, did not use Excel sheets. He understood human nature. And that brings us to the Fifth Cure: Make of Thy Dwelling a Profitable Investment.
1. The Problem with Paying Rent
Arkad asks a simple question: "If you spend half your earnings paying a landlord, how can you become rich?"
When you pay rent (say ₹20,000/month), that money is gone forever. You get a roof for 30 days, and then you start from zero again. After 30 years of paying rent, you own nothing.
But when you pay a Home Loan EMI, you are technically paying yourself. A part of that EMI goes towards the interest (expense), but a large part goes towards the Principal (Savings). You are slowly buying an asset.
2. The Secret of Forced Savings
Critics say: "But if I rent and invest the difference in Mutual Funds, I will be richer."
The Reality Check: Do you actually invest the difference? Or do you spend it on a new iPhone, a vacation, or a car?
For 99% of people, "investing the difference" never happens. But an EMI is mandatory. The bank forces you to save every month. This "Forced Discipline" is why most middle-class Indians build their net worth through Real Estate, not Stocks.
3. The Value You Can't Calculate
Owning a home is not just a financial decision; it is an emotional one. Arkad says:
"Owning a home brings confidence to a man and happiness to his family. It gives his children a place to play and his wife a place to grow herbs and flowers."
You cannot calculate the ROI (Return on Investment) of:
- Your landlord NOT telling you to vacate the house.
- Your freedom to paint the walls whatever color you like.
- The stability your children feel growing up in one place.
This "Peace of Mind" is the highest dividend any investment can pay.
4. Tax Benefits and Appreciation
In India, the government encourages you to buy a home.
- Section 24(b): You can deduct up to ₹2 Lakhs interest from your taxable income.
- Section 80C: The principal repayment is also tax-deductible.
- Appreciation: Unlike a car which loses value, a property in a good location in India generally beats inflation over the long term.
Key Takeaways
- Buy When You Are Ready: Don't buy a house because "Uncle said so." Buy it when you plan to settle in a city for 10+ years.
- Don't Over-Leverage: Your EMI should not exceed 30-40% of your monthly income. House poor is a bad place to be.
- It's an Asset: Even if the value doesn't go up much, living "Rent-Free" in your old age is the ultimate financial freedom.
Frequently Asked Questions (FAQ)
Q1: Is renting a waste of money?
A: Short-term renting is fine. But renting for 40 years means you paid for the house but didn't get the title deed. That is a waste.
Q2: Should I buy a Flat or a Plot?
A: A Plot generally offers higher Capital Appreciation than a Flat, but a Flat offers immediate rental income and tax benefits.
Q3: Does Arkad say we should take a loan?
A: Yes. Arkad says, "Pay the moneylender as you would pay the landlord." He supports borrowing if it creates a profitable asset (your home).
Up next: Part 8 – The 6th Cure (Insure a Future Income).
📚 Credit & Disclaimer:
This post is a summary based on the classic bestseller "The Richest Man in Babylon" by George S. Clason.
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