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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.)

Maharashtra Bets Big on India–Africa Partnership With Landmark Business Hub in Navi Mumbai

Writer: Bhalchandra Chorghade
Bhalchandra Chorghade
May 14
2 min read

Navi Mumbai: In a major step towards strengthening India–Africa economic ties, the government on Thursday witnessed the signing of an agreement between City and Industrial Development Corporation (CIDCO) and Africa India Economic Foundation to enable the formation of a Special Purpose Vehicle (SPV) for the development of the ambitious Africa India International Development Zone (AIIDZ) at Kharghar in Navi Mumbai.

 

The agreement was signed at Mantralaya in the presence of Chief Minister Devendra Fadnavis, Deputy Chief Minister Eknath Shinde and Deputy Chief Minister Sunetra Ajit Pawar. Senior bureaucrats and diplomats, including former Permanent Representative of India to the United Nations T. S. Tirumurti, were also present.

 

The proposed Africa India Business Centre (AIBC), to be developed within the AIIDZ, is envisioned as a landmark integrated complex aimed at boosting trade, investment and cultural engagement between India and African nations. The initiative comes at a time when India–Africa trade is estimated at nearly USD 96 billion and New Delhi is increasingly positioning itself as a key player in South–South cooperation.

 

Calling the project “transformative”, Chief Minister Devendra Fadnavis said the initiative would position Maharashtra as a “key global hub for India–Africa engagement”. He said the project would create a dedicated ecosystem for trade, investment and institutional collaboration while opening “new avenues for growth, employment and international partnerships”.

 

Deputy Chief Minister Eknath Shinde said the proposed development zone at Kharghar would support world-class infrastructure for global business engagement. “Its strategic location in the Mumbai Metropolitan Region will facilitate seamless interaction between stakeholders and drive trade, investment and economic activity,” he said.

 

Deputy Chief Minister Sunetra Ajit Pawar said the project would create opportunities for MSMEs, generate employment and attract global investments by providing a structured platform for sustained India–Africa engagement.

 

Under the approved SPV structure, AIEF will hold a 74 per cent stake while CIDCO will retain 26 per cent equity. The project is expected to become operational over the next five to six years.

 

Planned on a 20-acre parcel inside the International Corporate Park at Kharghar, the AIIDZ will benefit from proximity to the upcoming Navi Mumbai International Airport and Jawaharlal Nehru Port.

 

The integrated campus will include a central business tower housing offices for 54 African nations and Indian stakeholders, a convention and exhibition centre with a 5,000–6,000-seat auditorium, hospitality facilities, cultural and retail spaces, and an Africa–India Bio Dome.

 

CIDCO Vice Chairman and Managing Director Vijay Singhal said the centre would “redefine India–Africa engagement” by integrating markets, innovation and human capital into a single collaborative ecosystem.

 

Officials said the centre is expected to host events for over 250 days annually and generate nearly US$30 million in revenue by its sixth year of operations, while also strengthening diplomatic and cultural ties between India and Africa.

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