JEE Mains 82.15 percentile in OBC: Can I get CSE or Electrical Engineering in a government college?

Ans: Your approach is sincere and responsible. Managing Rs. 29 lakh home loan while investing Rs. 1 lakh monthly needs clarity. You also invest in gold. Your focus seems on building wealth and becoming debt-free. Let’s assess your current situation from all angles and guide accordingly.

Understanding the Current Scenario
You have a home loan balance of Rs. 29 lakh.

Loan interest rate is 8.80%.

Loan tenure left is 25 years.

You are investing Rs. 1 lakh every month in mutual funds.

You are also buying gold regularly.

You are paying regular EMIs.

You are also thinking to prepay the home loan partially.

This situation is not uncommon. Many in your position face the same decision. Let us now break it down for better understanding.

Loan Repayment vs Investment: Core Conflict
Loan EMI gives guaranteed interest saving.

Mutual funds and gold have market risk. Returns are not fixed.

Loan rate is 8.80%. This is a high cost in long term.

Mutual funds can give 12% in long term. But no guarantee.

Gold can give 6-7% return over long term. Also not guaranteed.

So comparing loan vs MF or gold is not just about return.

Risk, liquidity, and financial goals must be seen together.

Evaluating Home Loan Repayment Strategy
Home loan gives tax benefit on interest under Sec 24(b).

But this benefit reduces over time as interest part reduces.

Long tenure increases total interest paid.

If you prepay loan now, you save high future interest.

Partial prepayment every year brings great interest saving.

Even Rs. 1 lakh prepayment per year can cut 4-5 years from loan term.

So prepayment makes sense if no other high priority goals pending.

Understanding Mutual Fund Investment Potential
You are investing Rs. 1 lakh monthly. That is commendable.

Mutual funds help build long term wealth.

Actively managed funds perform better than passive ones in India.

Index funds don’t beat inflation much after tax.

Active funds adjust to market cycles better.

Your SIP of Rs. 1 lakh may give strong corpus in 15-20 years.

Taxation on MF has changed now. Need to plan redemption smartly.

Short-term capital gains are taxed at 20%.

LTCG above Rs. 1.25 lakh is taxed at 12.5%.

Role of Gold in Portfolio
Gold acts as hedge in portfolio.

It protects against currency devaluation and global risk.

But gold alone should not be large part of investment.

It gives 6-7% return in long term.

It is not cash flow generating.

Use gold for diversification only. 10-15% is enough.

Assessing Your Loan Repayment Capacity
If you can spare extra Rs. 20-30K per month, loan prepayment makes sense.

Continue EMI as usual. Add lump sum when possible.

Avoid using your mutual fund SIP for prepayment.

Don’t stop gold purchase fully. Just reduce it if needed.

Balance your cash flow between all goals.

Combining Both: Smart Way Forward
You can do both prepayment and investments side by side.

Continue Rs. 1 lakh monthly in mutual funds.

From bonuses, windfalls, use part for home loan prepayment.

Avoid stopping SIP. It compounds over time.

Increase SIP by 5-10% yearly if income grows.

This way you build wealth and reduce debt slowly.

Tax Impact and Liquidity Planning
Prepaying home loan gives emotional peace.

But MF investments are liquid in emergencies.

Loan prepayment is not reversible.

Once paid, money is locked in property.

Keep emergency fund ready. 6 months expenses is good target.

Your Child and Family Needs
You have a child. Future education will need funds.

Mutual funds can fund child education and marriage.

Prepaying loan is less flexible than investing for child's future.

So don’t rush to be debt free if child goals are underfunded.

Cash Flow Planning for Better Balance
Track your monthly cash flow closely.

Prioritise emergency fund first.

After that, child education fund.

After that, home loan prepayment.

Avoid big gold purchases if loan EMI is tight.

Keep gold for portfolio balance only.

Emotional vs Logical Decision-Making
Loan-free life feels peaceful.

But wealth creation needs patience.

Don’t get swayed by fear of loan.

Instead, make clear plan.

Mix investment with prepayment.

What You Can Practically Do Now
Continue SIP of Rs. 1 lakh.

Build emergency fund equal to 6 months expense.

Invest at least Rs. 5-10K monthly for child education.

Reduce gold purchase to 10-15% of monthly investment.

Once emergency fund is ready, prepay Rs. 1-2 lakh per year in home loan.

Final Insights
Your loan is at 8.80%.

Mutual funds can beat this in long term.

But loan is risk-free return.

Emotional peace matters too.

Balance both wisely.

Stay consistent.

Do yearly review of all investments.

Increase SIP and loan prepayment step-by-step as income grows.

Avoid random investment decisions.

Be goal-based always.

Invest through certified professionals who guide with long-term vision.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment