As an investment advisor, I’m reminded of the wisdom shared by Warren Buffett, who said, “Risk comes from not knowing what you’re doing.” So let’s try and understand both the paths before deciding which one is better.
Let’s suppose the cost of the house is Rs. 50 Lakhs and you are looking at a home loan of the same amount at an interest rate of 7% for 20 years.
Option 1: Taking a Home Loan
In 20 years, you’d end up paying Rs. 1,04,35,582.
Option 2: Investing in Mutual Funds/Stocks
Assume you invest the same EMI (Rs. 38,975) in a mutual fund expecting an average return of 12% per annum for the next 20 years.
At the end of 20 years, you would have accumulated Rs. 2,89,80,416.
So, based purely on monetary terms, it looks like investing in mutual funds/stocks could potentially provide a larger corpus after 20 years. But, decisions like these should not be made based solely on the numbers.
A home isn’t just a financial investment; it’s an emotional one too. You need to consider the comfort and security of having your own home. You can’t quantify peace of mind!
The investment option comes with its own set of risks and requires disciplined regular investing and patience. There’s no one-size-fits-all solution here. It’s about what fits your financial situation, risk tolerance, and personal preferences.
For personalized advice tailored to your unique needs, consider engaging with a financial advisor. At Jama Wealth, we offer expert investment advisory and portfolio management services designed to help you make informed decisions.
