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By:

C.S. Krishnamurthy

21 June 2025 at 7:45:51 pm

Let Your SIP Fight Your EMI

When Ramesh bought his first home, he was delighted. The keys were finally in his hand, but another number immediately occupied his mind: the monthly EMI. “Now that I have some money left after paying my EMI, what should I do with it?” he asked his financial adviser. “Or should I start investing? And if I invest, won’t I be carrying a loan unnecessarily?” A home loan can run for 15, 20 or even 25 years, while the desire to become debt-free keeps growing. But does a borrower necessarily have...

Let Your SIP Fight Your EMI

When Ramesh bought his first home, he was delighted. The keys were finally in his hand, but another number immediately occupied his mind: the monthly EMI. “Now that I have some money left after paying my EMI, what should I do with it?” he asked his financial adviser. “Or should I start investing? And if I invest, won’t I be carrying a loan unnecessarily?” A home loan can run for 15, 20 or even 25 years, while the desire to become debt-free keeps growing. But does a borrower necessarily have to choose between repaying the loan faster and investing for the future? What if both could be pursued simultaneously? Could a Systematic Investment Plan (SIP) create a corpus that eventually helps reduce or even close the home loan? The idea merits consideration. A SIP is not a magic formula for becoming debt-free, but it can create a second financial track alongside the regular EMI. Two tracks, one objective Consider an illustration. Suppose a borrower takes a home loan of ₹50 lakh at an assumed interest rate of 8.5 pc for 20 years. The EMI would be around ₹43,400.
Instead of putting every available rupee into the loan, the borrower could consider investing ₹10,000 a month through a SIP, provided the household cash flow permits it. At an assumed annualised return of 12 pc, a ₹10,000 monthly SIP could grow to roughly ₹8.24 lakh in five years, ₹23.23 lakh in 10 years, ₹32.22 lakh in 12 years and ₹50.45 lakh in 15 years. While these are not guaranteed returns, the possibility of higher returns is also not ruled out. Meanwhile, the outstanding home loan would gradually decline through EMIs. Over eight to 10 years, the SIP corpus could become substantial enough to give the borrower an additional financial option. The important point is not to decide today exactly when the loan will be closed, but to review the position when the time comes. Why not simply prepay? Prepaying the home loan provides a relatively certain benefit because every rupee of principal repaid reduces future interest outgo, subject to the loan terms and applicable rules. The SIP serves a different purpose. It creates a financial asset and, over the long term, gives the investor an opportunity to participate in the growth potential of financial markets. The decision point comes later The strategy need not have a fixed finish line. After eight to 10 years, the borrower can review the situation rather than mechanically redeeming the SIP. What is the outstanding loan, the investment value and its performance? What are the prevailing market conditions? Is part-prepayment more appropriate than full repayment? These questions can guide the decision. If the corpus has grown sufficiently and circumstances are favourable, the borrower may consider using part of it to reduce the outstanding loan or, if appropriate, redeeming enough to close the loan completely. If the investment is better retained for the long term, there is no compulsion to exit merely because 10 years have passed. The strength of the strategy lies in this flexibility. Think beyond the loan A long-term SIP is not merely a future home-loan repayment fund. It can become a wealth-creation vehicle in its own right. Compounding rewards patience. A disciplined monthly investment held for the long term can help build a corpus for retirement, children’s education, other life goals or financial independence. Thus, while the home loan moves towards closure through the EMI, the investment has the opportunity to grow alongside it. Once the loan is eventually closed, the EMI disappears. Instead of allowing that money to quietly disappear into lifestyle expenses, the borrower can redirect some or all of the former EMI towards investments. A sensible balance This approach is not a universal prescription. Some borrowers may prefer aggressive loan prepayment, while others may find the combination of EMI and SIP more suitable. The SIP amount should also be comfortable. If ₹10,000 strains the monthly budget, start with less. The strategy should strengthen financial security, not create financial pressure. Adequate emergency savings and appropriate insurance should also form part of the overall financial plan. The larger lesson is simple: a home loan need not automatically put wealth creation on hold. With disciplined cash-flow management, a long-term investment approach and periodic reviews, the EMI can continue paying for today’s home while the SIP works towards tomorrow’s financial freedom. In the end, the question need not be, “Loan or investment?” It can be: “How can I use both wisely?” Disclaimer: “Mutual funds are subject to market risks. Read all scheme-related documents carefully.” (The writer is a retired banker and author. Views personal.)

Beyond the Protest: The Gen-Z Test for Indian Democracy

Aug 25
5 min read

Ever since the protests at Jantar Mantar over the NEET paper leak, Gen-Z and its zealous outbursts against several issues in society are quickly becoming national headlines. Ranchi saw Gen-Z protesting against irregularities in the functioning of JPSC and JSSC. CJP started the ‘School Thik Karo’ campaign against mismanagement of schools in villages. Even an individual woman tourist in Jammu and Kashmir attempted, single-handedly, to lead a protest against the Indian Army for blocking a road as part of a security protocol.


Wary of the sequence of events at Jantar Mantar and the cross-party mass appeal that the cause of that protest commanded, governments are going out of their way to demonstrate their commitment to addressing issues concerning the youth. Across all major political parties, there is renewed rigour on this count. Initiatives are being taken to reach out to Gen-Z on a large scale through social media as well as by visiting college campuses frequently.


These reactive measures only highlight the fact that such incidents almost always happen because basic processes, which should have been in place and monitored regularly, are routinely violated with no accountability at any level.


Vague Outcomes

As far as the Jantar Mantar protest is concerned, a minister has resigned, FIRs against protesters have been cancelled in most cases, compensation to the families of students who committed suicide has been agreed to ‘in principle’, a task force has been set up to suggest measures to minimise paper leaks in future, and the Supreme Court has set up a committee to look into the violence and alleged excessive use of force by the State.


Given that the recent NEET paper leak happened right at the level of paper-setters, it remains to be seen how much improvement technology-led solutions will bring to the examination process in particular, and what will be done to address issues in the education system at large that go far beyond a paper leak.


In Ranchi, the government has cancelled several past JPSC examinations, as demanded by the protesters. However, this has put a question mark over the employment of candidates who cleared those examinations and are currently in public service.


As a result of a complaint by volunteers of the ‘School Thik Karo’ initiative, the state administration in Maharashtra suspended one school principal over alcoholism; while in Rajasthan, CJP volunteers faced a violent mob, similar to what police faced during the CJP protest at Jantar Mantar.


All of this reveals how far such initiatives can go. They may provide eye-catching headlines and viral reels, but they will not move the needle where it really matters.


Lessons to Be Learnt

There are lessons in all this for several stakeholders in Indian democracy: Gen-Z protesters; the larger society, as a silent supporter that believes in the cause of the protest; opposition parties; and finally, governments and respective ruling parties at the national and state levels.


Gen-Z protesters need to realise that their protests will be constructive and create a positive impact only if they remain within the rule of law. If their own behaviour smacks of the same vices, they will quickly lose that goodwill and support. They also need to differentiate between optics and substantive change.


The silent majority that supported the genuine cause of the protesters will need to carefully assess the means used, and not just the stated end objective. Resorting to mobocracy, anarchy and violence will do no good to anyone. It will have to ask hard questions of those who have been, or currently are, in power.


It will also have to discern hidden political agendas and selective outrage, if any. The reasons for the meteoric rise of the AAP from a protest in Delhi and its subsequent spectacular fall are a lesson in themselves. Legitimate opposition parties, whether at the national level or in different states, need to realise that it was their responsibility to take up such issues proactively and hold the government of the day accountable through constitutional means, right in Parliament and state assemblies.


It is amply clear that they have failed in their duty, thereby ceding their space to other entities to occupy. Having lost that initiative and the first-mover advantage, they need to at least differentiate themselves in the manner and methods used to conduct a protest, instead of simply mimicking the street protests of CJP or any such outfit. Not doing so can only further erode their relevance and make them an also-ran.


Firstly, they need to acknowledge the hitherto downplayed fact that chronic issues faced by the middle class and urban India are as urgent and important as those affecting poor sections of society, farmers and rural India.


Popular schemes that offer direct financial help, a loan waiver or a subsidy are neither a solution nor even an expectation in this case. All that this section of citizens is expecting is good governance, fairness and transparency — which is perhaps a far more difficult ask than directly transferring money into a bank account or giving a loan waiver or subsidy.


Just as with the examination malpractices or the quality of schools that CJP took up, there are several other issues waiting to be tapped by anyone who wants to take that initiative.


Examples are plentiful: pathetic road conditions year after year that result in casualties almost daily without any accountability; rampant encroachments on roads and footpaths to an extent that the Supreme Court has to explicitly say that the right to walk is a fundamental right; the quality of public transport; the quality of government hospitals; mismanagement of traffic on roads, railways and now even in the skies. The list goes on.


All of these will resonate equally with the masses. Although these are chronic issues, they have reached a tipping point.


This systemic decay has happened under the supervision of many opposition parties for a very long period. Hence, they have very little, if any, credibility left to question the party in power or offer solutions.

However, the BJP, or any relatively new party in power, will have to offer credible and sustainable solutions with visible progress that citizens can experience for themselves in their day-to-day lives. While massive infrastructure development, new freeways and metro lines are all important, what lies under that metro line or on both sides of that elevated freeway is no less important.


Secondly, while Gen-Z may push demands that carry better optics and offer instant gratification than systemic and lasting reforms, governments and respective ruling parties need to resist the temptation to readily oblige by taking ad hoc decisions in a hurry.


Cancelling JPSC examinations without giving the matter sufficient thought, or giving amnesty to protesters who blatantly took the law into their own hands, are examples of the latter that should have been avoided.


Although unrelated to Gen-Z protests, it is noteworthy in this context that, just like the cancellation of JPSC exams, even the aggressive drive by the FDA in Maharashtra has attracted strictures and fines from the High Court, even when the cause taken up by the FDA is right.


If governments cannot differentiate optics from systemic reforms, it will amount to the ‘Gen-Z-fication’ of governance itself, which will do more harm than good.


Thirdly, considering the complexity of these issues and the equally complex, time-consuming solutions they call for, action on the ground will need to be backed by clear communication.


Gen-Z, and citizens at large, need to understand that even with the best efforts, nothing can be one hundred percent flawless. Without such communication and mass sensitisation on this point, vested interests can always question the entire system at any time, irrespective of the improvement taking place.


Gen-Z protests have shown the mirror to several stakeholders in our democracy. All those stakeholders need to look into that mirror, learn their lessons and initiate the change that it calls for. After all, as it is often said, the best way to change the system is to be the change that one wants to see.


(The writer has worked in the Information Technology sector. Views personal.) 

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