Most of us take a look at loans the flawed method. 😓
We incorrectly assume that decrease the curiosity quantity paid the cheaper it’s.
Well, not precisely. ❌
Instead of curiosity quantity paid we must always take a look at efficient rate of interest.
For residence loans and schooling loans the efficient rate of interest after tax advantages is round 4-5% !
No ask your self this – If you may have some more money, would you need to use it to avoid wasting 5% curiosity or make investments it to get 10%-12% returns from inventory market.
I do know you may say inventory market isn’t assured. But residence loans are for 20 years. Over 20 yr interval NIFTY has given 15% CAGR.
I’m being extra conservative and assumed 10-12%.
👉🏻 For me the reply is the latter.
However, if dealing with loans is just not your cup of tea or in case you have unstable earnings then prepaying is the higher possibility.
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#financewithsharan #loanofficer #mortgage #savemoney #investing #stockmarket #stockmarketindia
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