How 10% of your EMI is enough to pay for your house
You just have to invest it the right way
Here are some numbers for thought.
Let’s say a your dream house costs a crore, which you can borrow at 9% from your bank, for 20 years and pay an EMI of Rs 90,000 a month. In 20 years you would have paid Rs 2.16 crores; 1 crore of the principal and 1.15 crores of interest to your bank.
Essentially, your house costed you Rs 2.16 crores, not 1 crore.
So here’s the strategy: invest 10.5% of the EMI amount in a portfolio of growth stocks every month. Think Bloom if you are a Minance Partner. Think multi cap mutual funds if you are not, which earns a reasonable 18% per year (around 2% more than the NIFTY)
So, if your EMI is Rs 90k a month, set aside another Rs 9500 (10.5% of Rs 90k), that shouldn't pinch the pocket too much, right? Rs 9500 invested each month compounding at 18% per annum is Rs 2.26 crores in 20 years*.
Your 22.8 lakh investment earned you 2.26 crores.
You now live in a free house.
*Assuming a CAGR of 18% for 20 years.
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