Hello sir, I am 39 years old and having monthly in-hand salary of 1.7L. I took SBI home loan of 95L at 8.5% ROI in April 2023. EMI is 73K. I am doing regular prepayment of 77K in addition to EMI. Can you please advise if this is correct approach or I shall invest in market rather than doing prepayment?
Ans: Your diligence towards prepaying your home loan is commendable. It's a significant step towards reducing your debt burden and achieving financial freedom. However, it's essential to strike a balance between debt reduction and investment for future goals. Have you considered the potential returns you could earn by investing in the market compared to the interest saved by prepaying the loan?
A Certified Financial Planner often suggests evaluating the interest rate on your loan against expected market returns. Sometimes, investing in the market can offer higher potential returns, especially over the long term.
While reducing debt is crucial, investing also plays a pivotal role in wealth creation. It's like nurturing a tree; while pruning is essential, so is watering and providing it with the right environment to grow.
Considering your age and income, diversifying your approach by balancing loan prepayment with market investments might be worth considering. It's about optimizing your financial resources to align with both short-term and long-term goals.
