One crore retirement fund or 40 lakhs home loan repayment!
What should you target first?
Read the thread to know ⤵️
What should you target first?
Read the thread to know ⤵️
There is no one answer to this query as it always depends on an individual’s financial situation and their emotional relationship to money.
How to decide?
#personalfinance #investing
How to decide?
#personalfinance #investing
👈 Emotional Factor : Some people are not comfortable with a large loan and to reduce their stress they may want to get rid of the loan burden at the earliest.
Like people with unstable earnings or some serious health condition should first focus on debt repayment.
Like people with unstable earnings or some serious health condition should first focus on debt repayment.
👈 Tax benefit : If a home loan does not give you mental stress, it makes sense to continue with the regular EMI schedule as you will able to enjoy the tax benefit for longer tenure.
- 80C : The principal component of the EMI
- Sec 24: The interest component of the loan
#tax
- 80C : The principal component of the EMI
- Sec 24: The interest component of the loan
#tax
👈 Return on investment : A thumb rule that helps you decide⬇️
If Return from investment > loan interest rate , go for investment. Otherwise its better to focus on loan repayment.
#StockMarket
If Return from investment > loan interest rate , go for investment. Otherwise its better to focus on loan repayment.
#StockMarket
The home loan interest rate is around 6.5 -7%.
Low risk options such as PF, PPF, SSY and some bonds offer higher return than this, thus it makes sense to invest in them.
If your risk-taking ability is higher and time horizon is longer, you can consider investing in equities.
Low risk options such as PF, PPF, SSY and some bonds offer higher return than this, thus it makes sense to invest in them.
If your risk-taking ability is higher and time horizon is longer, you can consider investing in equities.
👈 Evaluate your other goals : Figure out how much you need to invest for each goal and prioritize on the basis of horizon,
For eg: You need to invest Rs 20k pm for your child's education & Rs 25k pm for your retirement and have an EMI of Rs. 45k
Here is what you should do ⤵️
For eg: You need to invest Rs 20k pm for your child's education & Rs 25k pm for your retirement and have an EMI of Rs. 45k
Here is what you should do ⤵️
- Start investing the full required amount of Rs 20k pm for child’s education.
- For retirement, you can start investing a smaller amount than what is required.
As you would have more time for this goal, so when your 1 goal matures you can divert that fund in retirement.
- For retirement, you can start investing a smaller amount than what is required.
As you would have more time for this goal, so when your 1 goal matures you can divert that fund in retirement.
So let’s say, you start with Rs 15k-20k per month towards retirement.
The additional Rs 5k-10k, you can use to start prepaying your home loan as well if you want to accelerate home loan prepayment. If you don’t want to do that, then increase your retirement investment.
The additional Rs 5k-10k, you can use to start prepaying your home loan as well if you want to accelerate home loan prepayment. If you don’t want to do that, then increase your retirement investment.
Also, you can consider making additional payments to home loan using ur incentive or bonuses.
But before making these decision, do ensure
- You have enough emergency fund, health and life insurance cover.
Get a detailed view of your financial profile at Recipe.finology.in
But before making these decision, do ensure
- You have enough emergency fund, health and life insurance cover.
Get a detailed view of your financial profile at Recipe.finology.in
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