I have taken home loan of 20L in 2011 and paying 20300 as monthly EMI, already 42 EMIs are gone and 168 EMIs are outstanding. Current ROI is 9.5%. Now I planned to increase my EMI amount 4 to 5 thousand additionally so that want reduce the EMI period. Instead of this if I invest that proposed 4 to 5 thousand in mutual fund in sip and continue the housing loan as per existing schedule , which one would better choice? Need your advice
Abhi-If your other goals like retirement and all are already started well and your question is only towards additional investment of Rs.4,000 to Rs.5,000, then I suggest to invest in mutual fund. Reason is, the tenure of loan is 10+ years. By investing the same you can earn around 10% to 12% return. Whereas currently the interest rate is 9.5%. But this interest rate is not constant. It may go up or down. Worst condition if we consider as 11%, then still you be in profitable. However, do remember that sticking to long term in mutual fund is very much important. Because of it’s liquidity in nature, sometimes people tend to withdraw for their other emergencies.