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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.)

India’s Dilemma: The Specter of a Three-and-a-Half-Front War

Jan 1, 2025
4 min read

Updated: Jan 2, 2025

In the first of a two-part series, we examine India’s growing security challenges, both internal and external, and the strategic steps needed to navigate these complexities

India’s Dilemma

The world is a powder keg. Unrest in Iran, Iraq, Israel, Syria, and across the Middle East coincides with the protracted war between Russia and Ukraine. These crises ripple across borders, leaving no country untouched. For India, the stakes are particularly high. In Asia, tensions with Bangladesh and Pakistan, coupled with an unresolved standoff with China, exacerbate an already precarious security environment. Adding fuel to the fire, domestic challenges further intensify the risks, raising the alarming possibility of what strategists dub a “three-and-a-half-front war.”


India’s geographical location offers both an advantage and a disadvantage. Strategically positioned as a hub for global logistics, the country is critical to ensuring regional stability. Yet, its proximity to two longstanding adversaries—China and Pakistan—complicates matters. Bangladesh, with its shifting allegiances, has added a new dimension to this calculus. The volatile domestic situation, marked by communal and political unrest, completes the trifecta, with internal challenges forming the “half front” in this ominous scenario.


Indo-China relations have long tested India’s diplomatic mettle. For decades, China has pursued a strategy to keep India on edge, using a mix of psychological and military provocations. Rooted in its desire to avenge the ‘Century of Humiliation,’ China’s worldview is deeply shaped by a need to dominate its regional neighbours.


India’s rapid ascent on the global stage poses a direct challenge to China’s ambitions of regional and global supremacy. Beijing views New Delhi’s rising stature with unease, particularly its growing influence in the Indo-Pacific, its robust infrastructure along contested borders and its leadership in multilateral forums like the Quadrilateral Dialogue (QUAD). The refusal to join initiatives like the Belt and Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP) has further strained ties.


The 2020 Galwan Valley clash, a tragic flashpoint in Indo-China relations, epitomized China’s aggressive designs. Beijing’s displeasure with India’s border infrastructure development and its closer ties with Western allies has only fuelled its belligerence. Militarily, China holds the upper hand, leveraging its advanced arsenal against India’s aging defence systems. This disparity emboldens Beijing to test India’s resolve repeatedly, creating a perpetual state of tension.


Beyond its direct provocations, China’s deepening ties with South Asia complicate India’s security calculus. Bangladesh, once a trusted ally, now edges closer to Beijing. Economic investments through the Belt and Road Initiative, strategic military partnerships, and increased political engagement hint at a significant shift in Dhaka’s priorities. While India continues to invest in its ties with Bangladesh, the growing influence of China in the region presents challenges that are impossible to ignore.


Since Partition in 1947, India and Pakistan have shared an acrimonious relationship. Pakistan’s grievances, from the creation of Bangladesh to its inability to annex Kashmir, have defined its hostile posture toward India. While India’s economic growth and diplomatic successes have widened the gulf, Pakistan continues to rely on asymmetric warfare through state-sponsored terrorism.


India has responded firmly with cross-LoC strikes and diplomatic efforts like pushing Pakistan onto the FATF grey list. However, Islamabad’s deepening ties with Beijing, including advanced weapon supplies, have strengthened its military, forging a troubling China-Pakistan nexus. This partnership, with potential strategic collaboration in Siachen and Ladakh, poses a serious challenge to India, raising concerns of a coordinated assault from both adversaries.


Bangladesh, once a close ally, now emerges as a wildcard in India’s security landscape. While the two countries share historical ties rooted in India’s role during Bangladesh’s liberation, recent developments suggest a drift. Dhaka’s growing economic partnership with Beijing and its reluctance to fully endorse India’s regional leadership underscore this shift.


China’s significant investments in Bangladesh’s infrastructure, ranging from ports to power plants, mirror its strategy in other South Asian countries. For India, this growing influence represents not just an economic challenge but a strategic one. The possibility of Bangladesh aligning with China in regional disputes adds another layer to India’s external threats.


The Domestic ‘Half Front’

India’s security challenges are compounded by internal issues like communal tensions, political polarization, and insurgencies in Kashmir and the Northeast, which strain resources and create exploitable vulnerabilities. Kashmir remains a flashpoint, with unrest offering Pakistan opportunities to stoke proxies, while Northeast insurgencies require constant vigilance. To counter the threat of a coordinated three-front assault, India must recalibrate its security policy with investments in defence modernization, strong alliances, and diplomatic finesse.


Modernizing the armed forces, with a focus on indigenization and reducing dependence on foreign suppliers, is imperative. Simultaneously, India must strengthen its regional partnerships, leveraging platforms like the QUAD and the Indian Ocean Rim Association to counterbalance China’s influence. Engaging with Bangladesh to rebuild trust and counter Beijing’s narrative will be equally crucial.


A united and resilient nation is less susceptible to external manipulation, ensuring that the ‘half front’ does not become a full-blown crisis. The challenges are formidable, but so too is India’s resolve.


(The author is a retired Indian Naval Aviation Officer and a geo-political analyst.


(In Part Two tomorrow, we focus on Bangladesh’s potential to emerge as a third front in the conflict, explore how India’s domestic situation constitutes a ‘half front’ and examine key remedial measures India must adopt to mitigate the threat)

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