Raja : I want to start SIP of Rs. 10000 in two different mutual fund companies Rs.5000 each.
Jawahar : Why two companies?
Raja : As warren buffet says.. NEVER PUT ALL YOUR EGGS IN ONE BASKET
Jawahar : That's true but in other sense. Here the basket is ASSET CLASS Meaning Gold, Real Estate, Equity and Bank FD.
Tell me yr Home Loan details and your Salary.
Raja : My salary is 1 Lakh and my EMI is Rs. 50000. I took 52 Lakh loan for 75 Lakh Home. 3 years completed.
Jawahar : Great dear. Your Current Monthly Expense?
Raja : Rs. 30000 and I can Save now Rs.10000 as my Car Loan EMI is completed.
Jawahar : ߙ⠈ey.. great. Meaning your savings was Rs. 50000 EMI Home + Rs. 10000 EMI car = Rs. 60000. Now you want to start SIP instead of EMI. But have you checked, how much % of your savings goes to your home loan?
Raja : Around 85%
Jawahar : That's my worry. You are putting all your eggs in one basket (Real Estate - Home)
Raja : But, it is necessary. I want to save tax
Jawahar : Oh..what tax? Only 2 lakh interest of home loan (30% tax bracket - Rs. 60000 save in a year)
Raja : Yes.
Jawahar : But my dear Raja, at the cost of interest of your home loan, Your EMI is 50k for 20 years. Meaning 50 x 12 x 20 = 1.2 Crore against your Loan of Rs. 52 lakh.
1.2 crore - 52 lakh = 68 lakh interest for 20 years almost 3.5 lakh interest per annum by saving Rs. 60000 per annum tax. Your loss is 3.5 lakh - 60000 = 2.9 lakh per annum. (Interest)
Raja : OMG. ߘᰟ豦lt;br /> Really? Nobody told me about this. Not even my CA.
Jawahar : And yes.. If you invest those Rs. 50,000 Per Month in SIP for 20 Years @ 10% CAGR, you will get 3.5 Crore or @ 12% 4.5 Crore.
Raja : ߘﰟ袰 Oh.. why have I purchased second home?
Thanks Mr. Jawahar. I will tell everybody not to buy Second Home for Investment. Instead Start SIP. Don’t Save Tax. Save Money.
Jawahar : And yes...Mutual Fund SIP average Return in 20 years is 18%.
So it comes to Rs.10 Crore
Raja : What about 25 Lakh Down Payment?
Jawahar : 7 Crore after 20 years
Raja : Meaning 17 Crore total.. ߘᰟ豦lt;br />
Oh.. Don’t tell me. My 75 lakh home after 20 years will Never give me 17 Crore. ߘట谦lt;/p>
