It is not enough just to look at returns and interest when comes to money. People mental peace should also be considered. Always always prepay the loan. It doesn’t matter the return you get in mutual funds or any other instruments. Mental peace always comes first.
Market risk? You can loose all of your money in market if you invest. If u pay off your mortgage your liability is gone and peace of mind. What value you will give to peace of mind? No risk.
Prepay your homeloan. Reasons are below- 1. You will get peace of mind. 2. Life is uncertain. Kutta haddi chod sakta hain lekin bank apna paisa nahi chodta. 3. Market is also uncertain. Your investment is subject to market risk. 4. Loan is burden. Your freedom is someone's hand.
@torahulj Well done nobody talking this simplified. I love your content. But in this video there were few mistakes. 1. U calculated savings on home loan for 16 years but u calculated 9%return on 5L for 19 years. Do both for 16 and you will understand the difference. 2. If anyone prepays home loan of 5L and instead of tenure, reduces the EMI amount and then invest this reduced EMI amount anywhere with 9% (possibility to get even more) then also will end up saving much more in 19 years. In my opinion one should do the math (calculate simple interest and XIRR for principal and interest on pending home loan). Prepaying home loan in early years is best. In later years around 11 and more makes no sense because you have already paid maximum interest for remaining years (paid back loan with interest rate more than 12/14%) and your actual interest rate would be less than 4% for the remaining home loan tenure.
16 years savings is taken because 5 lac was given to the bank which reduces the tenure. 19 years investment is taken because you would invest 5lac instead of giving it to the bank. For this reason your loan will continue for 19 years also. These are two different scenarios instead of a mix of both.
Finally found someone who speaks sense. Tired of seeing youtube influencers who have no idea about finance asking people to prepay the loan. This approach makes sense. Don't prepay the loan, instead invest the same money and enjoy the home loan benefits in Tax!
One fundamental aspect which i believe has been overlooked is about about the money which can be invested after the 16 year to the 20 year. The entire EMI momey is available at your disposal which should be considered 5.40 x 4 =21.20 lac...i have not even comsidered or added 45000 p.m for 4 years at the rate of 12% will be Rs 27.55 lac + 17 lac = Rs 44.50 lac
Different math.. If you prepay loan in 2 to 3 yrs... Next 17 yrs u can invest yor more Savings including saved EMI money.. Plus market cycle phase is also important... Complex maths..
True but this might not be possible for private sector employees as no job guarantee and you cannot predict what happens in future. But works for those who can earn steady income for 20 yrs.
No one tells the real picture..that 5 lakhs will become 5.5lakh in one year..second year it will become 5 lakhs again..and finally at 17th year some black swan event like covid will come and let alone your returns..the investemnt will either stay there or turns negative
If the loaner dies before 19 years, neither you will earn money nor you will be able to fulfill your loan. Always shed off the liabilities first. Clear your home loan as early as possible. You can keep some loan amount to save your taxes but the amount should be in control which you or your dependents can fulfill any day even if you are not there.
Hindsight main kuch bhi gyaan pelo .. there is nothing better than a debt free mind. Un logon sey poocho that are either going through or have gone through the job uncertainty/loss scenario...
In worst case try to pay 13 EMI every year if your loan tenure is 20+ year and thank me later , in best case pay as much as you can in 1st 5 years but this is skmething everyone knows
Those who think peace of mind they should think wisely because if u repay and not have enough liquid cash even there u lose your peace of mind..it is always a balance of both.i.e, go for systematic withdrawal plan..like if u love the comment
Disagree - paying Home loan in initial stage will reduce Interest on loan drastically So it will be far better to pay Home loan - once it came down to 50% then one can choose to opt for investing Or 75-80% loan prepayment and 25-20% investment would be better
Reasons to pay as early as possible , if you have means: 1) You get full ownership otherwise your house belongs to Bank .You are only a care taker. 2) Peace of mind. Every month no more EMI. 3) with current condition jobs are not forever, not having a permanent monthly outgoing is useful. 4) House loan is one of the biggest Emi eating you salary so not a bad idea to pre pay it. 5) once pre pay done save or invest in travel plans.
Please don’t listen to these influencers. Statistically he may be right but you never know what can happen in future specially people who are in private jobs. Maintain a balance between in your investment and saving. If after investing every month you are saving some money then prepay your home loan. It will remove a burden from you and you will not need to worry about the loan in case of any circumstances where you lost your job.
What about the inflation after 16-17 years.the value of saving money right now and the value of the extra amount u gain so many years later will just be same or the latter will be beneficial along with peace of mind of the loan closing up sooner
Theoretically it is possible, but most of us are not that much patient to wait for 20 years investment but ironically they are ready to pay loans for 20 years. That’s why I don’t agree with this statement. Always be debt free and have a piece of mind, because life is uncertain. And try to pre pay your loan as much as possible. And then you build up your portfolio
REPAY HOMELOAN Principal as much possible and reduce your INTREST of Home loan in first 3 years. Gain of saving Intrest is very huge when you reduce your principal at first 3 years..
Can you be sure of earning 9% (Compounding interest ) for 19 years ? If yes would love to know which scheme guarantees that. If you repay 5l in aug 2025 , you would have repaid the interest component and interest on interest on Home loan will reduce . I would even advise to repay the interest debited to home loan each year to benefit from the "power of Compounding ". With the new tax regime ignoring interest paid on HL what would happen if that becomes the norm . Also for capital gains ,with indexation being removed , interest cannot be added in purchase price. So uncertainty on tax laws for 20 years can also play havoc .
Some government bonds give 9+% for the longer term. It's also not fixed. If the repo rate changes the % will be lower or higher based on that. Prepay is better for me.
Jhunjhunwala said the best investment which he didnt care is to ignoring investing in health. So considering that if a person will be mentally disturbed due to loan and loose his peace of mind, not eating well, sleeping less will indirectly effect his health so better he repay the amount reducing his loan. In addition my suggestion is if a person took loan for 20yrs and he already paid 10yrs of amount then repaying the loan is not making any sense before reaching the 9-10 yrs if he paid that will make a good sense of payment but after paying half of his loan duration if further he thought of finishing is not correct better he invest that amount will definitely provide him better returns.
All gurus pundits smartest people in the world including Warren Buffet have said - prepay your debts - markets can go up and down - for salaried people there is never a surety of job and peace of mind - taking debt to make money from market or business is for rich people not for middle class - and even rich people don’t take debt at 9 percent
Totally wrong. You will save almost 40-50% interest whatever amount you are paying. Just do one part payment and compare before and after repayment schedule. You will see difference in interest paid. You will see 30-40% interest. No investments instrument will give you this much return. So clear your loan first and then start investing
Rahul, my fathar took loan at floater. It should end by mar of 2025. Surprisingly yesterday checked his statement and realised it extends to 2 more years as it its 11.5 % shit sucks 😢. Now on this scenario repaying is always best
you should also ask your mind- are you mentally prepared to pay your emi of 50k every month year after year from last yr onwards until your early/late 50s or u want a good debt free sleep earlier?; answer rests here
Sir, please come up with Smallcase portfolio so that people like us who work and have no time to sit in front of computer can subscribe to your Smallcase and benefit from your knowledge ❤
Invest in index fund mutual fund in SIP , every month you can pay from 500 to 5000 month based on your saving and this has lower risk because by investing in index fund your money gets invested in stocks which are part of the index, safest index fund is nifty50 index fund. You can get upto annual returns of 15% and your money gets invested in TOP large cap companies like reliance, Infosys, HDFC Bank etc. ***Do your own research before investing.***
My guy calculate return like papadum. Guys if you have extra cash either buy a new home or pre pay your existing home lone. If you own your home Banks will allow to borrow more Your home is an investment with low risk. You home appreciate in value as well
17lakhs + 5lakhs = 23lakhs. I didn’t consider tax exemption saved under old tax regime 5lakhs invest at 9% will grow to 25.7lakhs then pay 12.5% long term capital gain tax I.,e 2,43,125 at the end corpus is 23.27lakhs No need to leave peace of mind for 27000/- if invested at 9%, and if invested at 12% then 15lakhs is the difference
But i think you a missed a point. Maybe only 17 lac is saved in the long term . But what about the asset appreciation after 19 years ? Doesn't make much sense in investing rather prepayment of Home loan and not to forget about peace of mind which is the ultimate.
If you falls under 30% salary tax slab . You can save 2 lakh in interest every year . I will not prepay the home loan. I will keep it till the end. If I calculate my effective interest is 8.5%- 8.5*30% only works upto 2 lakh interest
Yes we will have the return but we have also need to pay the long term tax as well from your return so pls say how much the invester need to pay tax as well
Not repaying loan is Foolishness.... RBI increases the interest rate and will also increase. If you lose the job. You will end up in a financial crisis. We will be slave for banks without freedom. If you repay loans faster... You will be free and invest all the money. Because all money will be YOURS. Don't believe such wrong advice 😂
Calculation wise it is correct but again the inflation will kill your money....after 19 vs our investment could be around 25 Lakh but I strongly beleive it only had a capacity of of 10kh for todays.... That means we can only buy the things which are worth of 10 lakh now after 19 years of 25 lakh
Unable understand his math. 500000X9% PAX19 years will be 8,55,000. He tells you will have 25 lakhs? 😮. He forgot to mention tax on interest amount you will be left with nothing. Better repay your amount
@@AtanuBose-o2t the SGB are open for investment for 2-3 days every year. Sometime twice a year. The issue is directly from RBI. And you can apply to it from your trading account like you apply for IPO. Keep eye on news. I apply every year.
Peace of mind is much more important, pls prepay ur debts ❤
😂100% true you can't always measure life in money
Agree … these advisors think they are smart. If they are so smart or capable then would be relaxing somewhere instead of YouTubing.
One more thing is job uncertainty, health..better to clear off at earliest
Yes, always be a debt free.. it’s most important..
So do one thing 50 percent invest and 50 percent repay
This grandfather forgot about the ****ing inflation
It is not enough just to look at returns and interest when comes to money. People mental peace should also be considered. Always always prepay the loan. It doesn’t matter the return you get in mutual funds or any other instruments. Mental peace always comes first.
Home loan is the easiest loan to pay. There is no headache
Market risk? You can loose all of your money in market if you invest. If u pay off your mortgage your liability is gone and peace of mind. What value you will give to peace of mind? No risk.
Index funds are safe....
@@vijaykotadiya5985 Nothing is safe in case of pandemic and ww3
@@vijaykotadiya5985😂😂😂
Invest for long term, say ten years, and you're guaranteed returns that beat both the loan interest rate and gives you extra at the end.
Mutual funds never goes to 0
Prepay your homeloan. Reasons are below-
1. You will get peace of mind.
2. Life is uncertain. Kutta haddi chod sakta hain lekin bank apna paisa nahi chodta.
3. Market is also uncertain. Your investment is subject to market risk.
4. Loan is burden. Your freedom is someone's hand.
Banks will forgo your loan, if you are a billionaire or if you have the right connections
@@naveenrreddy2008 bhai topic ke hisab se baat karna, tu kaha ka matter kaha leke jaa raha hain.
@@ManojChhetri-wd9fj😂
@torahulj Well done nobody talking this simplified. I love your content. But in this video there were few mistakes.
1. U calculated savings on home loan for 16 years but u calculated 9%return on 5L for 19 years. Do both for 16 and you will understand the difference.
2. If anyone prepays home loan of 5L and instead of tenure, reduces the EMI amount and then invest this reduced EMI amount anywhere with 9% (possibility to get even more) then also will end up saving much more in 19 years.
In my opinion one should do the math (calculate simple interest and XIRR for principal and interest on pending home loan). Prepaying home loan in early years is best. In later years around 11 and more makes no sense because you have already paid maximum interest for remaining years (paid back loan with interest rate more than 12/14%) and your actual interest rate would be less than 4% for the remaining home loan tenure.
16 years savings is taken because 5 lac was given to the bank which reduces the tenure. 19 years investment is taken because you would invest 5lac instead of giving it to the bank. For this reason your loan will continue for 19 years also. These are two different scenarios instead of a mix of both.
Yes you are right. But calmness of mind from free from loan is the another thing which no one can measure from return point of view.
Finally found someone who speaks sense. Tired of seeing youtube influencers who have no idea about finance asking people to prepay the loan.
This approach makes sense. Don't prepay the loan, instead invest the same money and enjoy the home loan benefits in Tax!
One fundamental aspect which i believe has been overlooked is about about the money which can be invested after the 16 year to the 20 year. The entire EMI momey is available at your disposal which should be considered 5.40 x 4 =21.20 lac...i have not even comsidered or added 45000 p.m for 4 years at the rate of 12% will be Rs 27.55 lac + 17 lac = Rs 44.50 lac
Different math..
If you prepay loan in 2 to 3 yrs...
Next 17 yrs u can invest yor more Savings including saved EMI money..
Plus market cycle phase is also important...
Complex maths..
The expectation is you would continue to pay the same EMI amount. Only then your tenure will be reduced from 20 to let's say 16
After 20 years Long term gains 20%. Pls consider that too
LTCG is 12.5% bro
Even after 12.5% tax on appreciation, still you end of having more savings in investment
After 20 years it wont be 12.5% bro😅@@kamalahmad997
At 20 yr it might be even 20 % ltgs
@@kamalahmad997 after 20 years it may go up to 20%, so just predicted at high rate
You may stay invested for 20 years but it's very tiring to repay till 20 years. Loan Foreclosure is a peaceful process coz peace of mind is important.
This is ideal if you have really a stable job and a backup money. Imagine living with a loan that you have to pay 45,000 every month.
True but this might not be possible for private sector employees as no job guarantee and you cannot predict what happens in future. But works for those who can earn steady income for 20 yrs.
In india 80 percent people earning less than 10k monthly struggles to meet day's end forgot about loan and investment 😢
And inflation? Todays 5 lakh is equivalent to 25 lakhs after 19 years. So its to pay off today and be peaceful
I will still repay as in current scenario u dont have stability job and keeping big loan dont make sense
Exactly, I did the same thing.. That's how money management goes😊
Inflation must be adjusted ...20 years of segmental urban inflation must be quite high .
No one tells the real picture..that 5 lakhs will become 5.5lakh in one year..second year it will become 5 lakhs again..and finally at 17th year some black swan event like covid will come and let alone your returns..the investemnt will either stay there or turns negative
Market risk
Tax on gains
…. Better to. Clear debts and be free from stress
Very clear and crisp. Good video.
If the loaner dies before 19 years, neither you will earn money nor you will be able to fulfill your loan.
Always shed off the liabilities first. Clear your home loan as early as possible. You can keep some loan amount to save your taxes but the amount should be in control which you or your dependents can fulfill any day even if you are not there.
Hindsight main kuch bhi gyaan pelo .. there is nothing better than a debt free mind. Un logon sey poocho that are either going through or have gone through the job uncertainty/loss scenario...
In worst case try to pay 13 EMI every year if your loan tenure is 20+ year and thank me later , in best case pay as much as you can in 1st 5 years but this is skmething everyone knows
Staying debt free is ❤❤
Those who think peace of mind they should think wisely because if u repay and not have enough liquid cash even there u lose your peace of mind..it is always a balance of both.i.e, go for systematic withdrawal plan..like if u love the comment
Disagree - paying Home loan in initial stage will reduce Interest on loan drastically
So it will be far better to pay Home loan - once it came down to 50% then one can choose to opt for investing Or 75-80% loan prepayment and 25-20% investment would be better
Reasons to pay as early as possible , if you have means:
1) You get full ownership otherwise your house belongs to Bank .You are only a care taker.
2) Peace of mind. Every month no more EMI.
3) with current condition jobs are not forever, not having a permanent monthly outgoing is useful.
4) House loan is one of the biggest Emi eating you salary so not a bad idea to pre pay it.
5) once pre pay done save or invest in travel plans.
i have already taken home loan at 8.5% and invested the money in shares and mutual fund. Already made money for the first year interest payment.
Do consider the home loan interest benefit under income tax
Why don’t none of these financial advisors talk about tax on those returns? and what will be your effective return
Clearing the debt is more important than some fictitious futuristic calculations which may or may not work.
உண்மை. நாளைக்கு கிடைக்கும் பலா பழத்தை விட, இன்னைக்கு இருக்கும் கேலாக்காவே மேல் !!😂😂😂
And the return will be taxable, plus the risk.
Payoff quick and get a new loan
Peace of mind is also very big factor
Please don’t listen to these influencers. Statistically he may be right but you never know what can happen in future specially people who are in private jobs. Maintain a balance between in your investment and saving. If after investing every month you are saving some money then prepay your home loan. It will remove a burden from you and you will not need to worry about the loan in case of any circumstances where you lost your job.
You forget a parameter of time horizon
What about floating rate of loan. They increase the principal and keep reducing the interest. So at what time you prepay is the key.
What about the inflation after 16-17 years.the value of saving money right now and the value of the extra amount u gain so many years later will just be same or the latter will be beneficial along with peace of mind of the loan closing up sooner
What about the peace after finishing loan?
Theoretically it is possible, but most of us are not that much patient to wait for 20 years investment but ironically they are ready to pay loans for 20 years. That’s why I don’t agree with this statement. Always be debt free and have a piece of mind, because life is uncertain.
And try to pre pay your loan as much as possible. And then you build up your portfolio
REPAY HOMELOAN Principal as much possible and reduce your INTREST of Home loan in first 3 years. Gain of saving Intrest is very huge when you reduce your principal at first 3 years..
😂 This video was made for me. I took home loan of 50 Lakhs at 9% in August 2024. From AICICI
THANK YOU FOR THE VIDEO
Can you be sure of earning 9% (Compounding interest ) for 19 years ? If yes would love to know which scheme guarantees that.
If you repay 5l in aug 2025 , you would have repaid the interest component and interest on interest on Home loan will reduce . I would even advise to repay the interest debited to home loan each year to benefit from the "power of Compounding ". With the new tax regime ignoring interest paid on HL what would happen if that becomes the norm . Also for capital gains ,with indexation being removed , interest cannot be added in purchase price. So uncertainty on tax laws for 20 years can also play havoc .
Yes, even I want to know the sane
Some government bonds give 9+% for the longer term. It's also not fixed. If the repo rate changes the % will be lower or higher based on that. Prepay is better for me.
Jhunjhunwala said the best investment which he didnt care is to ignoring investing in health. So considering that if a person will be mentally disturbed due to loan and loose his peace of mind, not eating well, sleeping less will indirectly effect his health so better he repay the amount reducing his loan. In addition my suggestion is if a person took loan for 20yrs and he already paid 10yrs of amount then repaying the loan is not making any sense before reaching the 9-10 yrs if he paid that will make a good sense of payment but after paying half of his loan duration if further he thought of finishing is not correct better he invest that amount will definitely provide him better returns.
Loan is always a loan in people mind
All gurus pundits smartest people in the world including Warren Buffet have said - prepay your debts - markets can go up and down - for salaried people there is never a surety of job and peace of mind - taking debt to make money from market or business is for rich people not for middle class - and even rich people don’t take debt at 9 percent
Totally wrong. You will save almost 40-50% interest whatever amount you are paying. Just do one part payment and compare before and after repayment schedule. You will see difference in interest paid. You will see 30-40% interest. No investments instrument will give you this much return. So clear your loan first and then start investing
What about the central government taxes?
Please pay your debts … peaceful mind is 1000% happier than this profits.
I don't think anyone e would get 9%. CAGR won't be that much. People think it as P&L% but it's actually CAGR%
Rahul, my fathar took loan at floater. It should end by mar of 2025. Surprisingly yesterday checked his statement and realised it extends to 2 more years as it its 11.5 % shit sucks 😢. Now on this scenario repaying is always best
But what about the tax consideration?
Calculation looks good. But actual peace of mind is to debt free life. It will be better if you make some sensible content rather than fooling people.
you should also ask your mind- are you mentally prepared to pay your emi of 50k every month year after year from last yr onwards until your early/late 50s or u want a good debt free sleep earlier?; answer rests here
What if the market gone negative 😅...Peace of mind is more important than market returns....
❤🎉
Did you forget Nirmala Seetharaman!!
Sir, please come up with Smallcase portfolio so that people like us who work and have no time to sit in front of computer can subscribe to your Smallcase and benefit from your knowledge ❤
Invest in index fund mutual fund in SIP , every month you can pay from 500 to 5000 month based on your saving and this has lower risk because by investing in index fund your money gets invested in stocks which are part of the index, safest index fund is nifty50 index fund. You can get upto annual returns of 15% and your money gets invested in TOP large cap companies like reliance, Infosys, HDFC Bank etc.
***Do your own research before investing.***
My guy calculate return like papadum.
Guys if you have extra cash either buy a new home or pre pay your existing home lone.
If you own your home
Banks will allow to borrow more
Your home is an investment with low risk.
You home appreciate in value as well
17lakhs + 5lakhs = 23lakhs. I didn’t consider tax exemption saved under old tax regime
5lakhs invest at 9% will grow to 25.7lakhs then pay 12.5% long term capital gain tax I.,e 2,43,125 at the end corpus is 23.27lakhs
No need to leave peace of mind for 27000/- if invested at 9%, and if invested at 12% then 15lakhs is the difference
Totally agree
For 19 years period a CAGR of 9 % is also very high expectation
But the ROI for the loan is not going to be constant across 20yrs ryt. Neither the taxes and increment rates on investments
Please consider LTCG from the investment
Pre pay will improve your risk taking capacity to buy more properties or investment mein kab kitnaa tax baadh jaega kisko pataa
Don't forget Tax on LTCG..
But i think you a missed a point. Maybe only 17 lac is saved in the long term . But what about the asset appreciation after 19 years ? Doesn't make much sense in investing rather prepayment of Home loan and not to forget about peace of mind which is the ultimate.
If you falls under 30% salary tax slab . You can save 2 lakh in interest every year . I will not prepay the home loan. I will keep it till the end. If I calculate my effective interest is 8.5%- 8.5*30% only works upto 2 lakh interest
You don't save 2L but you save / get a rebate on 2L which effectively means you save 60k (30% tax on 2L)
Logical but not applicable for everyone.
I have recently partially prepaid my home loan.
Boss mental peace is important.
Yes we will have the return but we have also need to pay the long term tax as well from your return so pls say how much the invester need to pay tax as well
Not repaying loan is Foolishness.... RBI increases the interest rate and will also increase.
If you lose the job. You will end up in a financial crisis.
We will be slave for banks without freedom.
If you repay loans faster... You will be free and invest all the money. Because all money will be YOURS.
Don't believe such wrong advice 😂
Calculation wise it is correct but again the inflation will kill your money....after 19 vs our investment could be around 25 Lakh but I strongly beleive it only had a capacity of of 10kh for todays....
That means we can only buy the things which are worth of 10 lakh now after 19 years of 25 lakh
Safe investment is nowhere in world
And who would pay taxes?
I would pre pay loan..No one in this world is guaranteed to have income stream for next 20 years
No caption.u must feel loan free ❤❤
Sir kindly guide where we invest for 10% minimum risk
Prepay home loan
Rather than paying useless 12.5 % tax as long term gains.
Prepay. Finish loan as soon as possible.
But on 2500000 rs you would have to pay long term capital gain tax and you don't know what would be the percentage then.
Unable understand his math. 500000X9% PAX19 years will be 8,55,000. He tells you will have 25 lakhs? 😮. He forgot to mention tax on interest amount you will be left with nothing. Better repay your amount
Invest in what?
What is guaranteed to give 12% returns year on year for 19 years?
Loan ends in 16 years, returns calculated for 19 years wow
In scenario 2 when you invest, you will need to calculate returns for 19 years only.
Who count inflation rate
How...5,00,00*12%= 60,000....19 years =11,40,000/-
Where to invest??
Where should we invest?
Which traditional method gives 9% without paying tax on maturity?
Sovereign Gold Bonds
@@jayvardhanpatil which SGB gives 9% without tax... kindly share info...
@@AtanuBose-o2t the SGB are open for investment for 2-3 days every year. Sometime twice a year. The issue is directly from RBI. And you can apply to it from your trading account like you apply for IPO. Keep eye on news.
I apply every year.
What about risk ?
Still I want to repay my Home Loan for Peaceful Live...
If invested upcoming desires may be upgraded as per the requirements and will be utilized for . But if loan is prepayed liability will get decreased
Thanks sir
where to invest ? 5L investment with 9percent interest , 8.5L we will earn as interest
Being debt free is more important
you forgot gst on emi while calculating.
Rahul, pls suggest if opting for a higher pension in EPF is beneficial?
URGENT, AS THE LAST DATE FOR SUBMISSION OF APPLICATION IS 30TH NOV
9%return come ,,they will cut tax also
Prepay is much better to remove any liability
actual me 10 saal k baad koi mf ho returns under 10% hi ho jata hai…☝🏼
Is just filling a hole bucket with water