Active Stocks
Thu Mar 28 2024 13:59:22
  1. Tata Steel share price
  2. 155.60 1.80%
  1. HDFC Bank share price
  2. 1,454.10 0.93%
  1. Power Grid Corporation Of India share price
  2. 277.55 2.40%
  1. ITC share price
  2. 430.95 0.69%
  1. State Bank Of India share price
  2. 755.20 2.88%
Business News/ Money / Personal Finance/  Should I invest or prepay home loan with my 5 lakh bonus?
BackBack

Should I invest or prepay home loan with my ₹5 lakh bonus?

In such cases, it is most often suggested that the person should use the money to invest instead of prepaying the home loan.

This is an excellent strategy to follow in the bullish marketPremium
This is an excellent strategy to follow in the bullish market

Nirav recently received a 5 lakh half-yearly bonus, and he is now in two minds whether to prepay part of his home loan or whether to invest the money. 

In such cases, it is most often suggested that the person use the money to invest instead of prepaying the home loan. This is mostly, first, because of the taxation benefit. Secondly, since the home loan rates are low if you compare them with long term equity-linked investments, most assume investing the money would be a better strategy to follow. 

Yes, that is definitely a thing to consider, said Deepak Krishnan, financial planner at Mangrove Wealth, adding. “Home loans are within the window of 7 to 8% and for equity investments you could get a minimum 11% returns."

This is an excellent strategy to follow in the bullish market, but same can turn disastrous in the bearish market, said Krishnan. In that case, the investor will end up with a depressed portfolio. 

What should Nirav do? 

Under no circumstances, one should hold on an financial liability or hold a loan if there is an opportunity to prepay it early, opined Mehta. 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 05 Oct 2021, 08:55 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App