Most of us look at loans the wrong way. ????

We incorrectly assume that lower the interest amount paid the cheaper it is.

Well, not exactly. ❌

Instead of looking at interest amount paid we should look at effective interest rate.

For home loans and education loans the effective interest rate after tax benefits is around 4-5% !

No ask yourself this – If you have some extra money, would you want to use it to save 5% interest or invest it to get 10%-12% returns from stock market.

I know you might say stock market isn’t guaranteed. But home loans are for 20 years. Over 20 year period NIFTY has given 15% CAGR.

I’m being more conservative and assumed 10-12%.

???????? For me the answer is the latter.

However, if handling loans is not your cup of tea or if you have unstable income then prepaying is the better option.
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#financewithsharan #loanofficer #loan #savemoney #investing #stockmarket #stockmarketindia

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