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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.)

Significance of Adhik Month

Writer: Kaustubh Kale
Kaustubh Kale
Jun 13
3 min read

As Adhik Maas comes to a close, it is the right time to reflect on the deeper meaning of this sacred month. Adhik Maas, also known as Purushottam Maas, is dedicated to Lord Vishnu and is considered one of the most auspicious periods in the Hindu calendar.


It is a month associated with prayer, discipline, reflection, charity and positive action.


Why Adhik Maas Is Added

Adhik Maas occurs roughly once every three years. The traditional Hindu calendar is lunisolar, which means it follows lunar months while also staying connected with the solar year and the seasons. Since the lunar year is shorter than the solar year, a difference gradually develops between the two.


To bring the calendar back into balance, an extra month is added after almost every three years to synchronise the lunar and solar cycles. In simple words, Adhik Maas is a month of adjustment, alignment and correction.


A Lesson for Our Own Lives

This idea has a beautiful message for our own lives. Just as the calendar needs realignment, our life also needs regular realignment.


Our habits, priorities, relationships, health, career and finances cannot be left unattended forever. From time to time, we must pause and ask ourselves whether our actions are matching our goals.


Realignment in Investments

The same principle applies to investments. Many people begin investing with good intentions, but after that, they do not review their investments and financial goals regularly.


A SIP may be started, but it may not be increased for years. Lumpsum investments may be delayed even when money is lying idle in the bank. Financial goals may change, income may increase, responsibilities may increase, but the investment plan remains the same.


Increase SIPs and Do Something Extra

For long-term goals beyond three years, money should be invested in growth-oriented assets such as stocks, equity mutual funds, hybrid mutual funds and gold.


If your income has increased in the last one year, your SIP should also increase. Ideally, one should try to invest at least 30% of monthly income through SIPs.


This sacred month also teaches us the importance of doing something extra. In investments, that extra effort can be in the form of lumpsum investing.


Whenever you receive additional money such as bonus, incentive, business profit, gift or surplus cash, it should be put to productive use.


Correction Is Necessary for Growth

Adhik Maas reminds us that correction is not a negative thing. In fact, correction is necessary for growth.


The market also corrects to adjust itself and build a stronger foundation for newer highs in the future. That is why markets remain volatile and uncertain in the short term, but over the long term, they reward patience, discipline and consistency.


Questions to Ask Before Adhik Maas Ends

The end of Adhik Maas should not be seen only as the end of a religious period. It should be seen as an opportunity to take stock of life and money.


Are your SIPs aligned with your current income? Have you invested your surplus cash? Are your investments sufficient for your future goals? Are you taking action, or only waiting?


Reflection Must Become Action

As Adhik Maas ends on 15 June, let us carry its message forward. Realign where needed. Correct what has been ignored. Add the extra effort required.


A sacred month becomes truly meaningful when reflection turns into action.


(The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)

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