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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.)

Choking Mumbai

Correspondent
Apr 22, 2025
2 min read

For decades, Mumbai was perceived as a rare urban oasis, where the saline sweep of the Arabian Sea blunted the worst ravages of India's air pollution. That illusion has now been dispelled. A meticulous four-year study by Respirer Living Sciences (RLS), using data from its AtlasAQ platform, reveals the bleak truth that the city’s air is thick with pollutants all year round, with no ‘clean season’ left.


Mumbai’s annual average levels of PM10 (particulate matter ten microns or less in diameter) have consistently breached the national safety threshold of 60 micrograms per cubic metre (μg/m³). This is not merely a seasonal malaise tied to cooler winter months, as once assumed. Alarmingly, the city’s pollution levels persist even through the hot season, a time when improved atmospheric dispersion should offer natural reprieve.


Across the city - from Chakala in Andheri East to Deonar, Kurla, Vile Parle West and Mazgaon - pollution has become an unrelenting, ubiquitous presence.


The culprits are well known: traffic emissions from a burgeoning number of vehicles; unregulated dust from frenzied construction; industrial activity in and around the ports; and a conspicuous lack of dust control measures. Mumbai’s ceaseless growth now risks becoming a chronic liability.


Worryingly, the regulatory response remains sluggish. Mumbai’s urban planning continues to treat clean air as a peripheral concern, not a foundational necessity. Development plans rarely integrate environmental impact assessments in a meaningful way.


A sharper, citywide strategy is urgently needed. Dust suppression rules at construction sites must be enforced strictly, with financial penalties for violators and incentives for best practices. Traffic management systems should be overhauled to ease congestion and encourage the use of public transport. Expansion of clean, reliable mass transit network needs to be urgently prioritised. In addition, comprehensive real-time air monitoring at the ward level should be deployed, enabling authorities to respond to localised pollution spikes swiftly rather than relying on citywide averages that conceal dangerous hotspots.


Longer-term, clean air targets must be hardwired into the city’s master planning and transport policies. Green buffers along major traffic corridors, stricter emission norms for commercial vehicles and incentives for rooftop gardens and urban afforestation could all play a part. Industrial zones near port areas should be subjected to rigorous air quality compliance measures, not token self-certifications. Private developers and large infrastructure firms, often among the worst offenders, must be made stakeholders in the clean air mission through binding regulations.


Mumbai’s commercial dynamism - as a magnet for migrants, entrepreneurs and investors - depends not just on glittering skyscrapers but on something far more basic: the ability to breathe. Unless clean air becomes an unshakeable priority, the city risks suffocating its own future. For a metropolis that prides itself on its resilience against terror attacks, monsoon floods and economic shocks, the real test will be whether it can muster the will to fight an invisible, pervasive enemy slowly corroding the lives of its 20 million citizens.

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