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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Should You Prepay Your Home Loan?

For many families, a home loan is the biggest financial commitment of their lives. So, it is natural to think that the faster you repay it, the better it is. After all, becoming debt-free sounds emotionally satisfying and financially responsible. But personal finance is not only about emotions. It is also about opportunity cost. Cheap Money A home loan is usually among the cheapest forms of borrowing available to an individual. In many cases, especially for younger borrowers with longer...

Should You Prepay Your Home Loan?

For many families, a home loan is the biggest financial commitment of their lives. So, it is natural to think that the faster you repay it, the better it is. After all, becoming debt-free sounds emotionally satisfying and financially responsible. But personal finance is not only about emotions. It is also about opportunity cost. Cheap Money A home loan is usually among the cheapest forms of borrowing available to an individual. In many cases, especially for younger borrowers with longer tenure loans, the interest rate tends to be in a moderate range and is often on a floating basis. In the long term, as the economy grows, interest rates eventually reduce.  If your home loan is currently costing you around 7.5% to 9%, this rate of interest will eventually go down in the future. Importantly, your long-term investments can potentially grow at 10% to 15% if you build a good basket of stocks, mutual funds, and gold. Thus, aggressively prepaying the loan may not always be the smartest move. The money used to reduce a relatively low-cost loan could possibly work harder elsewhere - in equity mutual funds, hybrid funds, direct equities, and gold as part of a balanced portfolio. The Mistake This is where many people make mistakes. They become obsessed with closing the home loan quickly and end up diverting most of their surplus income towards prepayment. In the process, they ignore other equally important goals such as retirement, children’s education, children’s marriage, and vacations. Basically, a home is one financial goal, not the only financial goal. So, should you prepay your home loan? Yes, you can. But do not overdo it. Smarter Way A practical way to handle this is to increase your loan repayment gradually rather than aggressively. For example, if your income rises by 10% this year, you may consider increasing your effective home loan outflow by a similar percentage. If your EMI is 20,000 and your salary rises from 1 lakh to 1.10 lakh per month, paying around 22,000 instead of 20,000 can be a sensible middle path. Similarly, if you receive a bonus, you may use a portion of it, perhaps one-third of it, for prepayment. This method helps you reduce the burden gradually and in a staggered manner, while also creating wealth in parallel by increasing your monthly investments in other assets. Dividing Income A useful rule of thumb is to divide your income equally into three buckets - regular living expenses, loans and EMIs, and long-term investing for future goals. If too much of your money goes into home loan prepayment, your long-term wealth creation may suffer. Remember, life will continue to demand money for many other important goals. Compounding Work So, do not chase home loan prepayment blindly. Build financial assets in parallel through smart investing, prepay moderately, and let compounding work in your favour. (The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)

Warriors of Night

Updated: Oct 22, 2024

We name our daughters Durga, Lakshmi and Saraswati; we worship the divine feminine power in the temples but oppress, repress and even attack the feminine power amidst us. That is the irony in the way India sees its women.

After the safety of the daylight fades, women are seen as easy prey by the predators of the night.

We mark the nine nights of Navratri, the festival of the goddess, by celebrating the dedication and valour of nine real-life women who brave the challenges of the night to pursue their dreams.


Part - 4


Never felt unsafe

The singer says there has been a generational change over the last two decades

Never felt unsafe

Work has no timings for Aisha Sayed. Sometimes, she begins her studio recording at 12 AM and finishes by 5 AM; at other times, concerts and live shows start at 9 AM and she’s done by midnight. In her field of work as a performer and singer, Sayed is used to not getting a night’s sleep and often returning home when most of the city is set to wake up. “I have been travelling at night but I have never, ever, felt unsafe in Mumbai,” says the singer-performer who began her career at the age of 13 years. Her father spotted her talent for music and took her to meet a sound engineer who was their neighbour in Bandra. The family helped her get opportunities and from there, her career began.

Being among the top contenders in Indian Idol, season 3, in 2007 catapulted her to fame and it opened up a world of new performance opportunities across the country. “I was just 20 years then and I was travelling the world, performing at the most lavish weddings, staying at the most luxurious hotels and performing at big corporate gigs,” she says. Safety, while on work, is has never been an issue for her for the organizers arrange a security detail for the performers. “They escort us until we reach the room. And since we travel with our team in a big group, there is always safety in numbers,” says Sayed, who sings in 10 languages. Her peers have faced instances of audience members being rowdy. “Once in Delhi, a group of drunk men followed my colleague to her room and kept banging on her door late into the night. But I have been fortunate,” she says.

Work assignments have taken to varied places, from the most luxurious international destinations to far-off venues in the hinterland of India where she’s travelled through dark, dense forested areas. “I have driven through areas where the only light is that of your car’s headlights. Turn around and you see pitch darkness,” says Sayed. She’s always got a little prayer on her lips when travelling through these remote areas for miles together. She recalls a show in Chattisgarh where she had to travel for nine hours at a stretch through remote and forested areas. “No place in our country is as safe as Mumbai,” she stresses. She would know, considering her extensive travels. She advises women to travel in groups while in places that are unfamiliar or unknown and never to venture out at night alone. “Keep your family informed of your whereabouts,” she says.

While her agreements state that proper security at all times, Sayed says that she drives her own car if she’s out at night for parties or personal work but insists that the people of Mumbai are largely helpful and cooperative. A rickshaw driver who once drove to home in the wee hours of the night, after a recording, waited at her gate until the watchman let her in. Friends and colleagues have dropped her home several times.

Mumbai, she feels, has changed—and it’s for the better, in the past two decades. “Earlier, on buses and trains, men would use the crowd as an excuse to touch women inappropriately. That has gone down. There is a generational change that I see,” says Sayed. She used to take the BEST buses and trains to her training classes and for recordings in the early days of her career.

Her timings are inconsistent and her shows take her to various cities and towns. But the Mumbai-bred girl emphasizes that her city is very safe for women, despite the various incidents of violence. “Mumbai is the only place where a woman can wear what she wants, wear bright red lipstick, leave her hair open and look glamorous and still be safe.”

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