How a SIP works more for you than an EMI

April 1, 2016 . Lakshmeenarasimhan S

Mutual funds . Personal Finance

Buying a house means long-term commitment by way of EMI. The EMI amount is not small by
any means, either. But that has never been a deterrent for most of us. We are willing to take a 15-
year loan and pay our huge EMIs diligently, and ensure that we never miss a payment.

But this same discipline, this same giving of good sums, this same long-term horizon is not
present when it comes to our mutual fund investments. Here, we hesitate to commit a fixed sum.
We are under-invested, content to put in small sums of just Rs. 1,000 or Rs. 2,000 a month, even
while we commit over ten times of this to our EMIs.

So, what if we compare a house investment with a mutual fund investment? If, instead of paying
your EMI, you had been investing in mutual funds, what would you have ended up with?

Costs of a house

Let us assume you planned to buy a house for Rs. 37.5 lakh. This is a reasonable price to assume
for a middle class person to buy a house in the city. It also makes for easier calculations and
presentations of down-payment and loan component.

Typically, banks ask you to put in 20 per cent of the cost as down-payment which comes from
your own savings. For our house, this works out to Rs. 7.5 lakh, and the remaining Rs. 30 lakh is
taken as a home loan. Assuming a reasonable interest rate of 10 per cent and a loan tenure of 15
years, the EMI for this loan works out to Rs. 32,238. Then, you have registration costs of the
property, which is an average of 20 per cent, though individual states have different rates.
Registration adds a further Rs. 7.5 lakh to the cost. The total of the loan payments over the 15-
year period is actually Rs. 58 lakh. That brings the total cost of the house to a whopping Rs. 73
lakh (down-payment + loan + registration).

Start an SIP Now!

Now let’s see what happens if you commit this EMI amount to mutual funds through an SIP. You
will have to pay rent as you don’t have a house. A rent of Rs. 10,000 a month is a fair assumption
for a house of Rs. 37 lakh. So that gives you Rs. 22,238 to invest in a good equity fund with a
long-term track record. We assume that the increase in your rent will be taken care of by salary
hikes. This apart, there is also the Rs. 7.5 lakh each for the down-payment and registration cost,
both of which came from your savings. Let’s say you put that into a balanced fund for proper
asset allocation.

How the returns fare

Look at the table now. We have different scenarios on appreciation in property prices. We took
data on mutual fund performance for the past fifteen years (assuming also that you bought the
house 15 years ago).

Take the best-case scenario of your property growing 10 times in 15 years and compare it with
Portfolio II. You will see that mutual funds still delivered Rs. 53 lakh more. However, the
chances of a 10-fold jump in property over a 15-year period are low. In order to beat mutual
funds, your house should have appreciated by at least 12 times. And if a 10 time appreciation is
hard, a 12 time rise is even more remote.

So had you patiently allowed you money to grow over these 15 years, your mutual funds
would have fetched you better returns.

Clearly, the SIP had delivered much higher, and that too with a lower investment amount every
month (Rs. 10,000 lesser than your EMI as a result of rent).

So, what about this?

  One, if you showed the patience and ability to commit high sums for a long period of
time, like you do with your EMI, you would be able to build a far superior corpus for
your long-term goals.

 Two, you need not be in a hurry to take a loan and buy a house in your initial years of
high saving.

Happy investing!

How to offset home loan interest payout

through intelligent investing
Instead of increasing an EMI amount to pay off the housing loan
quickly, the same amount can be parked in any equity mutual fund in
an SIP.
Guest @moneycontrolcom
S Sridharan

Buying a home is one of the biggest investment in most individual’s life. Almost always, a home
is bought with a loan taken from a financial institution. Thus, one of the biggest burden on
individuals most often is repaying a home loan and the interest on the loan taken. Is there a way
to write off the interest on home loan? It is! Let me explain how it is possible.

If the loan tenure is more than 15 years, the overall interest & principal paid to the lender is more
than double that of the loan amount.

For example, the below table explains, the home loan taken for an amount of Rs.25 Lakhs for a
period of 20 years with an interest of 8% per annum.

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The Key points to be noted

The interest amount is pre-calculated and taken upfront. This means during the initial 10 years
more than 70% of the interest are being debited from the client. So preclosing or paying more on
premiums after a period of 10 years will certainly not going to benefit the clients.

Depreciation on the property price. If one has bought a flat or an apartment, the property value is
going to depreciate after a certain period of time. On individual house though land value
increases while property price falls down

The best possible solution to write of your home loan interest is to build a corpus simultaneously
that generates a higher corpus with better returns. We recommend the individual to start an SIP in
any equity mutual fund. A monthly SIP of a small amount could help generate returns that can
completely wipe off the interest amount.

How is it possible?

If the investment is made in any equity-oriented funds which generate an average post-tax return
of 12% it will help them to build a corpus of 25 Lakhs. This is the interest amount paid by the
customer for the entire 20 years for Rs 25 lakhs housing loan taken.

Instead of increasing an EMI amount to pay off the housing loan quickly, the same amount can
be parked in any equity mutual fund in an SIP mode to accumulate a corpus. Additionally, at the
end of the EMI period, you have a house to live and a portion of a retirement corpus also ready
to have a peaceful retirement.
Example

An individual at the age 38 has taken a housing loan of Rs 25 lakhs with an EMI of Rs 21,000.
He or she simultaneously starts an SIP of Rs 2500 in any equity mutual fund. Assuming the SIP
amounts to CAGR post-tax return of 12%, it will accumulate a corpus of 25 lakhs after 20 years.

At 58, the accumulated corpus of Rs 25 lakhs can be parked in an FD or any debt mutual fund
which generates an average return of 7-8%, with monthly payout of Rs 16,600 interest income.
This amount can be utilized for house hold expenses which may creep in at the time of
retirement.

An early start of an SIP will help a customer to write –off his entire housing loan interest as well
accumulate a corpus which supports his retirement too.

(The writer is Head, Financial Planning, Wealth Ladder Investment Advisors)

Buy a home and pay EMI (~35k) vs SIP 25k
per month and live in a rented house. Which
will have better ROI?
16 Answers

Muthuraman R M B, Author/Owner at Perfingyan.com (2017-present)

Answered Nov 23, 2017 · Author has 64 answers and 218.7k answer views

Dilemmas are something that is unavoidable when we have 2 options and have to choose one. In
this blog post, we are going to look at the biggest dilemma of choosing between EMI and SIP.

While applying loan (EMI) to buy products you often end up paying more than the actual cost.

SIP (In equity mutual funds) is profitable 99.9% of instances as SIP itself an investment. With
SIP you can buy depreciating assets at a cheaper price than the actual cost and appreciating assets
at less value to be more profitable than what EMI offers.

There were 2 friends Rohit and Varun, Rohit’s having exposed to financial planning and mutual
funds decided to put his money there for investments and Varun wanted to buy him a home via
EMI.

Varun bought a house for 40 Lakhs with other charges his total cost came to ₹43 Lakhs. He
made 10 lakhs as down payment and for remaining ₹33 Lakhs he availed bank loan at 9.5%
interest on an average. For which he pays an EMI of ₹29691 for 20 years.

Cost of the house

₹ 40,00,000.00

Stamp duty and registration fees( assumed 7% on Average)

₹ 2,80,000.00
Bank processing fee and MOD etc.., assumed at 0.5%

₹ 20,000.00

Total Cost

₹ 43,00,000.00

Down payment

₹ 10,00,000.00

Loan taken

₹ 33,00,000.00

Home Loan EMI

₹ 29,691.00

Interest rate

9.50%

Total Interest paid

₹ 38,25,830.00

Total Cost of home

₹ 81,25,830.00

Market value of house after 20 years (assuming 9% returns)

₹ 2,24,17,644.00

Now let’s look at how Rohit’s investments have generated corpus

House rent per month (Assumed the cost of the house to be 25 times the annual rent paid.)

₹ 13,500.00

Interest-free advance to homeowner (5 Months’ rent)

₹ 67,500.00
Initial investment of 10,00,000 excluding rental advance

₹ 9,32,500.00

Average return

15%

Monthly SIP

₹ 16,191.00

Corpus generated after 20 years

₹ 3,81,51,359.96

Any hike in house rent will adjust to salary hike of Rohit. It is clearly evident that SIP’s have
generated more corpus than home Loan EMI’s.

Also with demonetization and other regulatory measures implemented by current NDA govt has
brought the property prices down significantly. Also, real estate may not grow in line with their
own historical growth numbers as the government is keen on linking Aadhaar with properties to
take down the benomy properties.

Similarly, if you want to buy an iPhone X the cost of it comes around ₹1,00,000 rupees, whereas
when the same phone is bought on EMI @13% interest the cost of the iPhone becomes
₹1,07,181 which is 7% higher than the market rate. However if the same was planned for a year
and invested in SIP the cost of iPhone would have been just ₹94000 (assuming 12% returns)
which is 6% less than actual cost.

The above examples clearly prove that if planned better through SIPs, it helps us to save a lot of
money when compared to EMIs. The only difference is planning. When you plan your
investment and use it to achieve your investment goal it can help you to save a significant
amount when compared with taking a loan and paying EMI’s.

Source: SIP Vs EMI - Which is the best option ? | Perfingyan (Personal Finance Gyan)

Disclaimer: I am the Author/Editor/Owner of Perfingyan (Personal Finance Gyan) which is

quoted as source of the above example.

76k views · View 342 Upvoters · View Sharers

Related QuestionsMore Answers Below

 Is it better to buy a home and pay 20 years of loan with stress of EMI or SIP with rented house?

 What is better, to buy a house now and pay huge EMIs or save money and buy the house later?
  Is it better to take a home loan of 40L to save taxes or rent a home and invest money in mutual
funds using a SIP?

 Should I buy a house in Mumbai on loan, have been living on rent paying around 10k per month
having an income of 4 LPA?

 Bengaluru: Why do residents pay high rents than buy the apartment and pay the EMI?

Hemanth K, Data Scientist

Updated Dec 19, 2018 · Author has 80 answers and 11.8k answer views

Buy a house, it will let you think about other sources of income to pay loan back at the earliest.
What i have done is…i increased my savings every month and waited till it become my down-
payment for buying new house by doing my regular job and some investments with the help of
Fund Manager. It worked… with in a 1.6yrs my amount got doubled and made a down-payment
for an house before i become greedy. Now My emi of House loan has become 20% of my salary
and since my house is not an asset my monthly expenses were 40–50% of my salary. My home
loan has helped me to save my Income tax. Remaining 30% i invested to generate monthly and
quarterly returns and profit amount into savings account and i was sure i can close my home loan
with in 7 Years.

Few things to consider.. if you are planning to settle in a place choose area first or buy in the area
where you are staying longer. Because moving from place to place always makes us stranger to
the city. Settle in one place and let people know you are localite.

I have read a book ‘Think and Grow rich’, in one of the story it teaches us we cannot do all the
jobs in the world, we have to hire specialist work on that. In a company owner will not do
everything, he hires potential professionals and hire them to grow his/her company. We hire
lawyer/advocate, if we want any registration or for any legal advice because we cannot do on our
own and they are professionals, then why take a wrong step in Financial decision without
approaching Financial advisors.

Pls do good research and hire them and refer them to your friends or take reference from your
friends. Don’t trust fund managers who works for free, they are threat. Take a appointment with
your research(go for no.1 advisor) and pay them for their consulting fees and take entire chart of
your’s financial cycle and start applying. Don’t put your money into their hands, its foolish. You
take plan and apply it.
People say staying in rented house can make you richer after 20 years, pls ask your better halves
they will tell you truth of staying in rented house or ask those people staying in rented house
from past 10 years.

In one single line “Rented House is like a Credit Card”.

I don’t think so any body have questions on this, if you feel its not the right move, sorry you are
too late its already proved plan and only 16 Months left for me to close my entire home loan,
now my thinking has changed and making money with my profits(Short term).

Loan tenures will be 20Years but we can close in 7 Years too, we may end up paying more but
remaining 13 Years are waiting to give opportunity to you. Treat your better halves royally and
buy them what they want, let your kids study in No.1 convent in the city and weekend in
golf/tennis court, their thinking will become richer with the contacts they will establish there.
Don’t forget golf/tennis are rich people games. This is how you become rich.

If you are again planning for 20 years to become rich, then you will of-course earn money but
not rich status.

Dear Professionals become Financially independent, then you get time to think and grow rich.

Pls Win.

Hemu.

2.6k views · View 16 Upvoters

Madhusmita Das

Answered Nov 21, 2018

There are so many considerations in this aspect.

Buying a home includes the following factors:

1. Down Payment

2. Monthly EMI

3. Property Tax Every Year

4. Monthly Society Maintenance Costs

 5. If you are buying an on-going project, you would require 2–3 years to get hold of your flat, which
means rent+EMI

6. You would be exempted from the interest part only to a certain extent.

7. You have to pay your EMI whatever may be.

8. Maintenance costs on your flat(You will have every year).

Renting a flat includes the following factors:

1. No maintenance costs (at least this is the case in Mumbai, the owner already includes that in
your rent)

2. Ease of shifting

3. If you do negotiate with your owner, you can save on the rental hikes every year. I had got into
rented flat without involving any broker (yearly brokerage saved) plus signed a 22 months
agreement (rent fixed for 22 months).

4. HRA exemption

Even if you consider appreciation to your house, in a 30 year period, your flat would be too old,
and there would be other flats available, which prospective buyers would consider. Also, do
remember that newer housing societies come with better amenities.

In my opinion, renting is the best way forward.

1.7k views · View 7 Upvoters

CA Dev Mehta, Incorporation & Compliance Consultant

Answered May 14, 2017 · Author has 167 answers and 89.4k answer views

2nd option is better.

Why-

1. House is not going to give now return more than 8-10%.It’s on peak already.

2. Rent is not going to go up so fast.

 3. You can invest it in mutual fund and can fetch 12–20% return.

4. You will get exemption as well for investing into equity or so.

5. You will not have any liquidity issue as you can sell shares in shorter term.

6. Home will go in bad shape in 20–25 years till the time you actually own the house.

7. If you are working you will have flexibility to change are,city or country.

8. In case of bad time,You won’t have pressure of loan for 25 years.

9. If all goes well you can become very rich till the end of 10–20–30 years with investing that
money into SIP or any business.

However if you are not very ambitious or does not want to take risk and you have surety to give
loan back even you don’t have any Job and you already decide city and are to live for life you
can look option to buy home.

Thank you…

3k views · View 8 Upvoters

Related QuestionsMore Answers Below

 Which will give a better return in 3 years, Rs 10k per month in one SIP or Rs 5k per month in two
SIPs?

 My salary is 40000 and I give rent 6000 I can save 15000 per month. is it right to buy a home or
stay in rented house on home loan?

 I wanted to buy a house in Chennai. Please advise me how home loan works. Is there any
possible way of buying a house by paying 10k monthly EM...

 Is it advisable to buy a house in Gurgaon or stay on rent and invest the money in a SIP which
would otherwise go in EMI?

 What is your opinion on home loan EMI vs SIP?

ADVISORKHOJ, Mutual Fund Research and Financial Content

Answered Jul 20, 2016 · Author has 801 answers and 516.3k answer views
In both the options you are proposing, you will have two streams of expenditure.

case 1:

You rent a home and invest in SIP every month

Hence, you will have to pay the rent and invest in SIP every month. However, there is creation of
only one asset i.e your SIP in the long run.

Case 2

Buy a home on EMI and SIP every month

You will have to pay for EMI every month quarterly or on a fixed period basis along with the
monthly SIP investments.

In both the cases, you have to weigh out, which will have a higher future value. Buying a home
in EMI has a higher future value, than renting a place. When you buy a home and invest in EMI,
you are creating two assets, both of which is essential for wealth creation. In the long run, you
have a sell-able asset and a corpus created from your monthly SIP investments.

Rs 25,000 every month invested for 20 years and generates a return of 12.5% your total corpus is
2.67 crs. Use this calculator to find out the possible future value of your investments. Mutual
Fund SIP Calculator, Systematic Investment Plan

Home loan Calculator, Housing Loan EMI Calculator you can use this to find out the monthly
installments of the EMI and the total amount that needs to be paid.

Hope this helps!

Priyanka Chakrabarty

www.advisorkhoj.com

4.5k views · View 6 Upvoters · Answer requested by Deepak Chaudhary

Altamash Muhammad, Cost and management accountant.

Answered May 21, 2016

You see there are two sides to it

1 SIP: You benefit from the effect of compounding and this can result in unimaginable gains

On the other side

2. Once you book a property and start paying off EMIs you become the owner of the house and
the rate is fixed for you

In any case later if you don't want to continue paying the EMIs and want to give up the properly
you can sell it at a premium (down payment+ EMIs paid upto date + your profit)

You can do this because the rate of the property is never fixed and therefore you can take
advantage of this because the rate you'd pay is fixed after you clear the downpayment

2.1k views · View 4 Upvoters

Prasad, Btech Marketing & Homeloans, JSS Public School

Answered Dec 16, 2018 · Author has 282 answers and 55.8k answer views

Buying a home with homeloan is good idea but better to go with NBFC low interest rates and
rate guarantee facility also available

Welcome to Bajaj finserv,As per bangalore natives a most trust worthy and rate guarantee facility
company “Bajaj finserv”(Bajaj housing finance limited)

1.He gives loans against property ,flats, individual house, under construction,

2.and main thing here done is BT means balance transfer ,if one who are an already homeloan
taker in any other banks paying more interest rates,bajaj finserv helps to switch that complete
loan amount gives an best low rate of interest

3.mainly in Bajaj finserv there is no foreclosure and preclosure charges here

4.after an one month EMI you any time close the complete loan amount with one shot

4.very less amount of processing fees 0.3% to 0.5 % that is also comes under your EMI

5.bajaj introduces Rate guarantee facility is there means, actually any bank homeloans are
decieded and fix by RBI only,but some banks are raises more than RBI interest,but in bajaj we
always follow RBI interest infact less than 2.5compare to RBI ROI
Documents Required,

1. Pan card

2. Aadhar card

3. Address proof

4. 3 months salary slip

5. 3 months bank statement

6. Sanction letter

7. Sale deed

Eligibility for homeloans

1.person must be a salaried person only

2.property must be in A or B kathas only

3.E katha also applicable but electronic kathas only

4.Must be in the city of bangalore

If you have any queries or doubts feel free to call me on any time,

Regards

Assistant manager

Bajaj Housing finance ltd

Prasad S

Mob:9945407520

8884294381

659 views

Sandip Biswas, Project Manager at Mumbai Aviation Fuel Farm Facility Pvt. Ltd. (2017-present)
Answered Nov 24, 2017 · Author has 1.1k answers and 1m answer views

Nothing is better than ownership though it costs too much. If you live in a rented house it is
cheaper, if you hiring taxi for your conveyances it is cheaper, if you dine daily at normal
resturant it is cheaper, even if you don't marry you can get the same at cheaper rate.

So don't compare the ownership of house vs other things.

The above examples what I have mentioned people pay extra for safety and security. So think on
that angle. Suppose tomorrow your owner ask you to vacate just add the Transportation cost
along with other cost and mental harassment.

Future can't be calculated on the basis of money only.

2.4k views · View 7 Upvoters

Anil Rego, Founder & CEO of Right Horizons Financial Services

Answered May 20, 2016 · Author has 165 answers and 228.3k answer views

Usually option two i.e. living in a rented house and investing the balance in SIP works out to be
the best option. However, there are few variables to be considered – it totally depends on the
returns generated, rental payout increases every year – so in order to work this option really in
your favor, make sure the investments generate high returns and also the investment amount is
increased by a certain percentage in order to nullify the impact of rise in rental payouts.

Apart from financial benefits, it also helps you to avoid a long term liability in your books
wherein you are under obligation to pay EMI for 20 yrs which almost works out to paying
double of what you had actually borrowed.

Also the amount saved on downpayment, because on any house purchase 20% is the
downpayment – also needs to be invested under option II. Also make sure post retirement when
you stop earning income – the corpus generated is sufficient enough to take care of your monthly
expenses including rental expense too.

4.5k views · View 8 Upvoters

Abhinesh Kumar, Founder & President at INFIRUPEE.COM (2004-present)

Answered May 12, 2017 · Author has 653 answers and 1.1m answer views

Living on rent appears cheaper initially but it actually becomes costly over a period of time due
to raise in rents on renewal. Moreover changing home after every few years has its own social
and financial issues ! So on general advice , I would always prefer a home first !

Now the place where you are living , jwellery you are wearing, Furniture's u are using actually
holds emotional value, but financially it matters only when u sell it or leverage it for more
borrowing ! So do not compare your home buying with wealth creation — atleast not in the case
of first house.

If you look it in another way , 35k would actually mean 27000(approx) or may be less after
considering the tax advantage ! And there is fair chance that this will come down in future when
our economy gets into low inflation low interest rate scenario . Consequently u are getting a
wealth / asset in form of ur house by a SIP of Rs 27000( approx)

So I suggest go for the home first and stretch urself , if u could manage extra savings for SIP also
.

However , for complete advisory I would need to know many more things , like - ur future plan
of career , ur age , ur other assets and it's valuations etc

9.3k views · View 27 Upvoters · Answer requested by Dewaker Koti

Gaurav Jain, Co-Founder of a Financial Education Company

Answered Dec 11, 2017 · Author has 1.2k answers and 1.4m answer views

When you buy a home, you pay for things you don’t have to pay for as a renter: loan interest,
property taxes, insurance, and even maintenance and repair costs. That’s part of the argument in
favor of renting: there are so many additional costs and factors that get overlooked. That goes for
both sides, though, and the details vary depending on the situation. Here are a few commonly
overlooked factors that make up the specifics.
  How long you’ll live in the home: This varies depending on the market, but in general, the
longer you’re in the home, the better it is, because your costs are spread out over time.

 The cost of housing in your area: In most cases, people rent because houses are just too
expensive, but it all depends on the market in your area. If renting is extremely costly in your
area, it might be more affordable to buy a home.

 The opportunity cost of your taxes and insurance: What kind of long-term return could you get
if you invested this money instead, in the stock market, a CD, or even a “high interest” savings
account?

 The opportunity cost of your down payment: Similarly, how much of a return could you get if
you invested that lump sum instead?

To make a decision , watch the following video:

Thank you!!

3k views · View 4 Upvoters · View Sharers

FundsIndia, India's friendliest online investment platform

Answered Oct 22, 2016 · Author has 284 answers and 320.1k answer views

Thanks for the A2A, Dinesh.

A SIP in mutual funds would be the better option for long-term wealth generation. This is
because, as an asset class, equity performes better than real-estate.

Our Mutual Fund Research Team has even written an article comparing two similar situations
and the returns generated by each (link below).

How a SIP works more for you than an EMI

2.5k views · View 2 Upvoters · Answer requested by D K Mishra

Manish Hinger, Chief Believer Officer, Financial Hospital

Answered Jul 19, 2016 · Author has 935 answers and 843.4k answer views

Hi Deepak,

Systematic Investment Plan (SIP) is a kind of investment scheme offered by mutual fund
companies. Using SIP one can invest small amount periodically (weekly, monthly, quarterly) into
a selected mutual fund. For retail investors, SIP offers a well disciplined and passive approach to
investing, to create wealth in long term (using the power of compounding). Since, the amount is
invested on regular intervals (usually on monthly basis), it also reduces the impact of market
volatility.

This calculator will help you calculate the wealth gain and expected returns for your monthly SIP
investment.

Benefits of SIP as compare to Lump sumps investment

 You don't need to speculate or focus on timing the market (which isn't the right way for
generating returns over long term)

 Amount is invested on monthly basis, so there is little to no impact of market volatility (unit cost
averaging)

 Passive and automated (monthly installments can be deducted automatically) approach makes
you more committed to guaranteed saving/investment

 It's very flexible - you can create/update/cancel SIP anytime. Most of the funds starts as low as
Rs. 1000 per month

Visit For more information on Financial Planning, Tax Planning, SIP’s , Retirement Planning

1k views · View 1 Upvoter · Answer requested by Deepak Chaudhary

Sudhir Sharma, Lived in India

Answered Oct 14, 2016 · Author has 2.5k answers and 2.3m answer views

SIP does not have specific , guaranteed return assured by any Fund manager. All are come to
earn money & pay to their team ( Employees). Few SIP specifically give dates alike 1,
5,10,15,20, 25 for investment.
All data of market variations , how much for buy or sale accordingly they invest or in & out from
market. It is quite enough for a General Idea how you can not earn money as Investment will be
shown on high cost you cannot track or object. Once you have give authorisation.

On other Hand You will pay Rs35k on EMI means you are in ITax range. Calculate Interest &
principal part on this app Financial Calculators - Android Apps on Google Play amortization.

See it.

On 80 C of Income tax act & section 24 on interest you will get tax benefits & Property return
shall be 10–15% per annum at-least. That is Sure return instead on SIP as devaluation on money
also to be counted.

1.7k views · View 1 Upvoter

Uday Dhoot, CFA, CIPM, CFP, Founder @ www.oyepaisa.com

Answered Jul 20, 2016 · Author has 448 answers and 757.5k answer views

Hi! Deepak,

Any answer to this question is dependent on too many variables to say confidently what works
best. All answers will be flavored by the recent happenings and individual experiences.

So let’s get hold of the variables first:

Doing SIP:

 Scheme Type - Equity / Balanced / Fixed Income

 Market Performance

 You sticking to the investment plan and not moving money out (happens many a time, though
you wont sell your house as often)

 Taxation on Income Generated (equity funds are currently tax free)

Buying a House:

 Your funds
  Loan Amount, how much leverage you have

 Interest Rate

 Tax Benefit Claim Available

 Location of your property

 Taxation on realisation post sale

Given the no of moving variables, it is very difficult to say with certainty that SIP will do better
or House will do better. There are too many locally dependent variables, on what you expect the
specific property to do as well.

Therefore it is best to look at all these variables as a framework, input your own specific data
points and try to find an answer. Also know that once could surely go wrong. In which case to
reduce your regret, you may just want to split the money between real estate and funds.

Hope this helps :) All the best :)

5.3k views · View 4 Upvoters · Answer requested by Deepak Chaudhary

Parag Bafna, former Independent Contractor

Answered Oct 19, 2018

I am not taking about numbers because those may go into favour of mutual fund investment. But
no one can give you assurance about mutual fund return. "Past performance is no guarantee of
future results."

Everything is not about numbers in life. Consider happiness of staying in your own house.

You can make money but not time.