I m 42 years old and took home loan of Rs. 58 lakh for 25 years with EMI of Rs. 47300p.m. my monthly income is 1.30 lakh. I can save Rs. 10-15000 pm. Please suggest me this saving amount 10-15000 should invest or deposit in home loan account.
Ans: It's commendable that you're looking to make the most of your savings to optimize your financial situation. Here are some considerations for your decision:
• Emergency Fund: Before deciding whether to invest or pay off your home loan, ensure you have an emergency fund set aside. This fund should cover at least 3-6 months' worth of living expenses to provide a financial buffer in case of unexpected events.
• Interest Rate on Home Loan: Evaluate the interest rate on your home loan. If the interest rate is relatively low compared to potential investment returns, it might make sense to invest your savings in avenues that offer higher returns.
• Investment Options: Explore investment options that align with your financial goals, risk tolerance, and investment horizon. Consider investing in mutual funds, SIPs, or other diversified investment vehicles that have the potential to generate higher returns over the long term.
• Loan Repayment: On the other hand, reducing your home loan principal by making additional payments can help you save on interest payments over the long term. It also brings you closer to becoming debt-free and owning your home outright, providing financial security and peace of mind.
• Balancing Act: You can strike a balance between investing and repaying your home loan. Allocate a portion of your savings towards investments to grow your wealth while directing the remaining amount towards making extra payments on your home loan principal.
• Consultation: Consider consulting with a Certified Financial Planner (CFP) to assess your overall financial situation and determine the best course of action based on your individual circumstances, financial goals, and risk appetite.
Ultimately, the decision to invest or pay off your home loan depends on various factors such as interest rates, investment returns, and personal financial goals. By carefully weighing your options and seeking professional advice, you can make informed decisions to optimize your financial well-being.
