Home Loan EMI vs SIP vs Lump Sum: Rs 50 lakh loan or Rs 50 lakh investment? Know what one can do with this amount
Home Loan EMI vs SIP vs Lump Sum: If someone is in their 40s and don't have many years to earn income, they may go for a home loan, but if they are in their 20s or early 30s, they may pick either of the options or both.
Home Loan EMI vs SIP vs Lump Sum: Home loan or investment in mutual funds through SIP or lump sum? Should one take a home loan or invest the same amount in a mutual fund through SIP or lump sum? This depends on an individual's requirements. If they are in their 40s and don't have many years to earn income, they may go for a home loan, but if they are in their 20s or early 30s, they may pick either of the options or opt for both. In this write-up, we are not suggesting what they should do, but we will show how a Rs 50 lakh amount can pan out in a home loan, SIP, and lump sum investments.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
Home Loan Conditions
We are taking the example of a Rs 50 lakh loan for 20 years at 9.5 per cent interest rate.
EMI and repayment
The estimated EMI in such a case will be Rs 46,607, the estimated interest will be 61,85,574, and the repayment will be Rs 1,11,85,574.
Tax benefits on home loan
In the Income Tax Act, 1961, there are two provisions related to tax benefits on a home loan. The home loan borrower following the old tax regime gets up to Rs 1.50 lakh benefits in a financial year on the interest paid.
On the payment of principal, they can get up to Rs 2 lakh tax benefits. Thus, maximum tax benefits that they can avail is Rs 3 lakh in a financial year.
SIP investment: Rs 50 lakh investment in 20 years
At a 50 lakh investment in 20 years, the monthly SIP investment for 20 years will be Rs 20,833.
What if one gets 8% SIP return on it?
The estimated capital gains in such a case will be Rs 73,52,949, while the estimated corpus will be Rs 1,23,52,869.
What if one gets 10% SIP return on it?
At that growth rate, estimated capital gains will be Rs 1,09,51,844, while the estimated corpus will be Rs 1,59,51,764.
What if one gets 12% SIP return on it?
With that, estimated capital gains will be 1,58,15,329, while the estimated corpus will be Rs 2,08,15,249.
Corpus on Rs 50 lakh lump sum investment (at 8% growth)
At 8 per cent annualised return, estimated long-term capital gains will be Rs 1,83,04,786, and the estimated corpus will be Rs 2,33,04,786.
Corpus on Rs 50 lakh lump sum investment (at 10% growth)
At 10 per cent annualised return, estimated long-term capital gains will be Rs 2,86,37,500, and the estimated corpus will be Rs 3,36,37,500.
Corpus on Rs 50 lakh lump sum investment (a 12% growth)
If one gets 12 per cent annualised return on a Rs 50 lakh investment, their estimated long-term capital gains will be Rs 4,32,31,465, and the estimated corpus will be Rs 4,82,31,465.