Monday, September 8, 2008

Own a house early in Life ... What it means ?

House has always been the most cherished assets of any individual in all the times. There are two significant type of assets that a person owns in his life. The first being the assets which makes him earn his livelihood. Historically for a farmer, it was the land and currently for a skilled professional, it is the skillset. This is the biggest investment of his life. He invests time, money and effort. Second, comes the House. The house in which he wants to spend the rest of his life peacefully with his family. He works hards, saves money and tries to get the house as soon as possible. The question is how soon is soon ????

Going back to the historical trends in US. There was a time, when automotive engineers were in great demand around 40's-60's. The average income for these engineers was much more than their peers in other industries. This resulted in letting them own the house earlier than their peers. As the industry matured, the average kept pushing higher and higher. Now its same as the average age in any other industry. The same thing happened for software professionals in early 90's but it has now gone to the same levels as the other industries. As a matter of fact, it is now  lower than other industries becuase offshoring started in 90's.

If you look at the trends, you will find out that an average software professional in India can own a stable and reasonable  house a the age of 30-35 in India. The average age of owning a house for a professional in this industry is much lesser than average age for other industries. What is the reason for the anomaly? Ofcourse, the anomaly comes from the $$ money that they earn at onsite in US for 3-4 years of their life. Is it going to continue??

With improving technology, there will be lesser and lesser component of onsite roles. With coutries like Brazil and Vietnam coming up as outsourcing centers, India's role in outsourcing industry will go down. The Indian software industry will become mature and growth rate would go down too. Inturn, this will result in the increase in average age to own a house among indian software engineers in India. Few years down the line, it will be no better than professional in any other industry. 

Average people who own the house very early in life are the ones who made the right choice about the industry. The other average people who surpass them in making up more and better assets are the ones who invest in the long term.  

The trend shows that if you get into a industry which is growing and is still in the nascent phase, the growth in the industry is phenomenal and leaves so much money with you as savings that you can afford to have bigger assets early in life. The problem is not only this advantage goes away very soon but is also followed by lull in the industry because of intense competition in the market.  Therefore, Make hay while sun shines. 

The other way to buck the trend is to keep investing in the other big asset you have. Your skillset. The key is the agility in terms of aquiring new skills and moving up the ladder. This is the long term investment. It might sound like loosing a golden goose at a point in time, but it is a failsafe approach. It never hurts.