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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.)

Fadnavis’s Report-Card Warning Rattles Pune BJP

4 hours ago
3 min read

A poor turnout at a crucial campaign meeting has exposed concerns over organisational complacency, civic engagement and the widening gap between the BJP’s electoral dominance and its grassroots performance.

Pune’s political circles are abuzz after Chief Minister Devendra Fadnavis delivered an unusually sharp reprimand to BJP corporators, warning them against seeking positions without demonstrating their commitment to the party. “If you come only to ask for positions, I will pull out the ‘report card’ of each one of you,” he cautioned at a campaign meeting for the Legislative Council elections to the Teachers’ and Graduates’ constituencies.


The remark has resonated within the BJP, exposing growing unease over the functioning of its local organisation despite its commanding majority in the Pune Municipal Corporation (PMC). But it was the circumstances that preceded the outburst that have drawn attention: poor attendance by corporators from Pune and Pimpri-Chinchwad at a meeting convened by the Chief Minister himself, amid complaints that several elected representatives were not actively participating in the election campaign.


Low Turnout

Fadnavis was reportedly already displeased with the lack of involvement. The thin attendance only aggravated his concerns, prompting him to question Pune’s low voter turnout in comparison with the 80 per cent recorded in the Konkan constituency. His message was unambiguous: the party’s shortcomings needed to be addressed, and its representatives had to get back to work.


The episode has brought into focus a paradox confronting the BJP in Pune. Despite its numerical strength in the civic body, the party has struggled to establish the same visibility and political aggression displayed by opposition corporators, particularly those from the Congress and the Nationalist Congress Party (Sharadchandra Pawar).


Opposition representatives have continued to command media attention, raising questions about whether the BJP’s overwhelming numbers have translated into effective political engagement. The concern is not new. Union Minister of State Murlidhar Mohol had earlier convened a meeting with BJP corporators to impress upon them the need to become more active and responsive. Yet, according to party insiders, the desired improvement has remained elusive.


Local leaders have also flagged poor attendance at municipal proceedings and a lack of enthusiasm for expanding the party’s membership base.


For a party that places considerable emphasis on discipline and cadre mobilisation, the disconnect between electoral strength and day-to-day political activity presents an uncomfortable challenge.


Complacency of Power

The BJP’s success in securing a commanding position in the PMC may itself have contributed to a degree of complacency. With no major general election immediately on the horizon, some elected representatives appear to be concentrating more on individual ambitions than on strengthening the organisation, according to a BJP office-bearer.


Pune is witnessing major infrastructure initiatives involving the Metro, a ring road, airport development and river rejuvenation. The BJP leadership is keen that these projects become part of a visible political narrative, demonstrating the benefits of the party’s presence in power at both the state and national levels.


However, development projects do not automatically translate into political dividends. If party representatives fail to connect these initiatives with citizens, the political advantage of being in government can diminish.


The leadership’s concern, therefore, is about whether the local organisation is adequately equipped to convert governance into public support.


Fadnavis’s unusually stern tone has also invited interpretations about his broader approach to party management. Generally regarded as measured in his public interventions, the Chief Minister appeared unwilling to tolerate what he perceives as a weakening of organisational discipline.


The BJP has, by and large, avoided the kind of debilitating factionalism that has weakened the Congress in Maharashtra. The leadership of Prime Minister Narendra Modi and Fadnavis remains firmly established within the party. But leadership cohesion at the top does not necessarily guarantee efficiency at the local level. The challenge is to ensure that discipline and political energy permeate the organisation beyond its senior ranks.


The unease is compounded by complaints over the selection of candidates for the Teachers’ and Graduates’ constituencies. Some party members have questioned whether geographical representation was adequately balanced and whether the contributions of workers have received due recognition.


Such grievances could complicate an election campaign in which the BJP is already anticipating a stiff contest in the Teachers’ constituency.

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