New Delhi: A Bengaluru couple earning Rs 1 lakh each offset the interest burden of Rs 80 lakh home loan by investing smartly.
In a LinkedIn post, Sujith SS, founder of Moneydhan.com, shared how a couple was able to beat home loan interest without having to make additional repayments by investing in SIP.
Sharing the LinkedIn post, Sujith SS said that a couple earning Rs 1 lakh each took a 20 year home loan in 2022 at 8.5 percent interest, locking in an EMI of Rs 69,426. Over 20 years, they would pay the bank Rs 1.67 crore.
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One year later, the wife’s salary went up by Rs 10,000 per month. “Out of the Rs 10,000 hike, we asked her to simply invest Rs 8,700 per month into a Large Cap ETF / Mutual Fund. Forget about it. Treat it like it never existed. Just keep paying the EMI as before, and keep this SIP running,” he wrote.
“In 20 years, she will end up investing 20 lakh 90 thousand as SIP. But at 12% CAGR, which is a fair expectation, the SIP can give a profit of 66 lakh to wife’s SIP amount. Thus in 20 years they have 86.9 Lakh,” he wrote.
“Do you see the magic? The bank earns Rs 86.6 lakh interest over 20 years. The wife earns Rs 86.9 lakh from her SIP in the same 20 years. She has completely set off the bank’s interest pain by just ignoring a single salary hike!” he wrote.
Most people wonder whether they should pre-close their home loan. “Here is what we believe, If you prepay, your money vanishes into the bank. Next time you need capital, you’ll again go to the bank for another loan??? But if you invest the hike via SIP, the money stays in your control. It grows steadily.
And in an emergency, you can dip into it. It becomes your wealth cushion + emergency corpus,” he wrote.
Netizens react
The LinkedIn post has received widespread response from users.
One user commented, “This is how wealth is actually built – small hikes redirected into assets, not lifestyle!”
Another user commented, “The burden of loan is much greater than the control & comfort of investing it elsewhere.”
“Many people lose control on the investment during bad phases of life & market and end up on early withdrawals/exits,” commented a user.
One user commented, “Great advice simple and easy.”
One user commented, “And if it is step up SIP with 10% incremental then magic more.”
