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35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

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35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

Last updated: July 10 2014
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  • 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

    Hello everyone,

    Please Help me decide on this dilemma & advice further.

    I bought a flat in year 2008 and has a outstanding loan of 35 lakhs. I also have 35 lakhs in Fixed Deposit. Question is

    1) Should i repay my loan in one go ?
    2) or invest further ? if invest then where ? I may do short term investment for 2 years.
    3) or should i invest a little & repay a little ?

    Please advice.

    Thanks
  • #2

    #2

    Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

    This question cannot be answered in isolation.Repayment of housing loan in lump or instalment by prepayment is a question which needs all factors to be examinbed.Having said this,i would prepay some part of the loan so as to reduce my total outgo over a period pof time.
    If I keep some loan o/s i get benefit of tax rebate which is valueable.
    I will off set the tax paid against FD and see whether it is better to pay back the loan to waht extent.
    You need to examine all this with care and put pen to paper,use a calucluator and work out cost effectiveness.

    Comment

    • #3

      #3

      Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

      Thanks vaibhav.

      i am thinking to repay 15 lacs and invest the remainng amount somewhere in pre-launch ( though no idea where etc ) ?

      I am also aware that this much money won't get me any decent property, i can only invest for 2 years max.

      Other members, please give more suggestion

      Thanks

      Comment

      • #4

        #4

        Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

        Property market is stagnant. It is not a good time to invest in property.

        Comment

        • #5

          #5

          Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

          Better invest this 15lac in FD or if u hv sum risk appetite, then in mutual funds. It wont be wise to put this money in RE as after some time u may find it difficult to get rid of that new RE....Remeber the old wise thing.. Never put all ur eggs in the same basket..

          Comment

          • #6

            #6

            Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

            excelsior,
            My sincere advice just keep away from prelaunch.
            invest in FDs or post MIS etc.
            Pre launch in this period(economic state of the country)has severe risk-builder may not complete the project in time and end up paying more than planned.
            Do things which will grow your wealth and not diminish the amount.

            Comment

            • #7

              #7

              Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

              Originally posted by excelsior View Post
              Hello everyone,

              Please Help me decide on this dilemma & advice further.

              I bought a flat in year 2008 and has a outstanding loan of 35 lakhs. I also have 35 lakhs in Fixed Deposit. Question is

              1) Should i repay my loan in one go ?
              2) or invest further ? if invest then where ? I may do short term investment for 2 years.
              3) or should i invest a little & repay a little ?

              Please advice.

              Thanks
              At this point, equities are a much better prospect than real estate IMHO

              All opinion polls are predicting a Modi win and all ratings agencies/brokerages are forecasting a stock market surge if Modi wins

              Nobody expects the real estate market to revive anytime in the foreseeable future.

              Comment

              • #8

                #8

                Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

                Other points

                There are various other issues that also need to be considered ...

                Income - Are you confident that your gross income is enough to cover all expenses and you will definitely not lose income in the near future

                Liquidity - Do you have 12 months gross expenses in liquid savings? If not, it needs to be built up or stacked away

                Family - Are you single or married? Kids? The minute you have them, your expenses in the future will balloon to levels you may not have considered. Plan this accordingly

                Insurance - Have you covered for Life and Health. You will be surprised by the amount you need to put away for decades before you are secure. Plan for this, especially if you have family

                If you cover all this, you might have much less left "free" for investment. If you already have a house free and fully owned, look towards putting money elsewhere instead of putting everything into RE.

                In my opinion, Stocks are a big risk today. Modi rally would be temporary as he cannot control the change of external events that are likely to be negative for our country for some more time.

                You might want to buy and store some gold/silver, despite the substantial negative feeling towards them. This is true largely because of western propaganda and our own Govt supressing real assets because it gives them power to borrow and spend recklessly. My own understanding is, most global currencies (including $$$) are likely to weaken over the next 5+ years and this will enable gold/silver to show rather good returns as they gain against weakening curriencies.

                If you do not know how to speculate, try and find someone who has a track record doing it and get it done professionally. In today's world not having a small sum in speculative activities is not good for your financial health as the world's govts are forcing people to get into speculatives by slashing interest on savings. Why not do it smartly then?

                cheers

                Comment

                • #9

                  #9

                  Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

                  Originally posted by wiseman View Post
                  There are various other issues that also need to be considered ...

                  Income - Are you confident that your gross income is enough to cover all expenses and you will definitely not lose income in the near future
                  Ans - yes I am confident and also set aside one year of expenses

                  Liquidity - Do you have 12 months gross expenses in liquid savings? If not, it needs to be built up or stacked away
                  Ans - Yes, It's there

                  Family - Are you single or married? Kids? The minute you have them, your expenses in the future will balloon to levels you may not have considered. Plan this accordingly
                  Ans - yes family man but kids are school going not college.

                  Insurance - Have you covered for Life and Health. You will be surprised by the amount you need to put away for decades before you are secure. Plan for this, especially if you have family
                  Ans - Yes, money back one but no term plan

                  If you cover all this, you might have much less left "free" for investment. If you already have a house free and fully owned, look towards putting money elsewhere instead of putting everything into RE.

                  In my opinion, Stocks are a big risk today. Modi rally would be temporary as he cannot control the change of external events that are likely to be negative for our country for some more time.

                  You might want to buy and store some gold/silver, despite the substantial negative feeling towards them. This is true largely because of western propaganda and our own Govt supressing real assets because it gives them power to borrow and spend recklessly. My own understanding is, most global currencies (including $$$) are likely to weaken over the next 5+ years and this will enable gold/silver to show rather good returns as they gain against weakening curriencies.

                  If you do not know how to speculate, try and find someone who has a track record doing it and get it done professionally. In today's world not having a small sum in speculative activities is not good for your financial health as the world's govts are forcing people to get into speculatives by slashing interest on savings. Why not do it smartly then?

                  cheers
                  Thanks Wiseman, My responses are above in bold

                  Then what do suggest in the end - should i repay 15 lakhs loan and buy Gold/silver worth 20 lakhs ? Do you think it's ok ? or

                  15 lakhs in gold / silver
                  10 lakhs loan repayment
                  10 lakhs in FD

                  I mean if you were me then how will you balance / juggle this ?

                  I have no knowledge of share market but have lost money in the past in mutal funds ( Reliance & Hdfc )

                  Thanks

                  Comment

                  • #10

                    #10

                    Re : 35 lakhs in Bank FD & outstanding home loan worth 35 lakhs - Should I invest or repay my loan ???

                    Sir

                    Please go ahead and extinguish your home loan. Remember you are paying 11%+ interest rate and in the initial years it's just the interest. (If you have the money, stay loan-free, it's the best feeling). Also, no asset class has the capability of generating post tax 11%+ (with surety)

                    Buy a term plan asap

                    Start SIP for long term in 2-3 equity MF and be disciplined about it.

                    Formulate an asset allocation going foward with your monthly savings.

                    Stay away for RE for speculative purposes.

                    Lastly, please do not invest your hard earned money basis random advise by people. Do your due dilligence because remember people who gave you advise have nothing to lose. This includes me as well.




                    Originally posted by excelsior View Post
                    Thanks Wiseman, My responses are above in bold

                    Then what do suggest in the end - should i repay 15 lakhs loan and buy Gold/silver worth 20 lakhs ? Do you think it's ok ? or

                    15 lakhs in gold / silver
                    10 lakhs loan repayment
                    10 lakhs in FD

                    I mean if you were me then how will you balance / juggle this ?

                    I have no knowledge of share market but have lost money in the past in mutal funds ( Reliance & Hdfc )

                    Thanks

                    Comment

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