Start SIP with EMI : In the recent months, there has been a sharp rise in property prices. Buying a flat in big cities like Delhi, Noida, Mumbai or Gurugram is now becoming a challenge. But if the job is here, then you will have to buy a house. If you do not have cash equal to the price of the house, then you will have to take a loan. If you take a loan, you will have to pay more interest than that. That is why after buying a house, as soon as the EMI starts, if you are able, then it is wise to start SIP. This will not only prove you to be a smart investor, but by the time the loan ends, you can at least make its interest free.
SIP winners: These 5 large cap funds top the return charts, 18 to 22% annualized return in 11 years, value of Rs 5000 SIP becomes Rs 32 lakh
Home loan: How much interest do you pay on the principal amount
Let’s assume that you are taking a loan of Rs 50 lakh from the bank. You have set the loan period as 20 years and the bank is charging you 9.50 percent annual interest on the loan. According to the SBI home loan calculator, your monthly EMI will be Rs 46607. On this calculation, you will have to pay Rs 61,85,574 as interest to the bank for a loan of Rs 50 lakh in 20 years. Which is more than your principal amount. That means the total price of the house will be Rs 1,11,85,574.
Total home loan: Rs 50 lakh
Interest Rate: 9.50%
Loan tenure: 20 years
EMI: Rs 46607
Interest: Rs 61,85,574
Total payment to the bank against the loan: Rs 1,11,85,574
(SBI Interest Rates)
Airtel Finance FD: Opportunity to book up to 9.1% interest on FD, Airtel Finance launched scheme, deposit up to Rs 5 lakh is 100% safe
SIP: Invest 20% of your monthly installment in SIP
Monthly SIP: Rs 9320 (around Rs 9300)
Duration : 20 years
Estimated Annualized Return: 12%
Total investment in 20 years: Rs 22,32,000 (Rs 22.32 lakh)
Value of SIP after 20 years: Rs 85,54,673 (Rs 85.55 lakh)
Wealth gain in 20 years: Rs 63,22,673 (Rs 63.22 lakh)
SCSS: Facility of monthly income up to Rs 40100 after retirement, if you do not withdraw money, you will get 24 lakh interest
SIP gives more benefit than home loan interest
It is clear from the calculator that the total fund accumulated by doing SIP in 20 years was Rs 85.55 lakh. But for this you invested Rs 22.32 lakh in 20 years. Even if you withdraw your investment, you got a profit of Rs 63.22 lakh from SIP.
In the first case, you have paid interest of Rs 61,85,574 on a home loan of Rs 50 lakh. In this way, you have benefited more from SIP than the interest on the loan. That is, if you start SIP of just 20 percent of one month’s installment as soon as the EMI starts, then after 20 years you will get the value of the total interest paid on the bank loan.
(Note: We are giving information here based on discussions with experts and the average returns given by different funds in 20 years. This is not an investment advice. There are risks in the market, so definitely consult an advisor before investing.)
