The game of chess has its deep strategies and complex moves. Your 40 lacs is like a queen – powerful and pivotal. You’re deciding whether to advance it directly, buying a fortress (a home) or to employ a clever tactic: placing it in a fixed deposit (FD) and drawing from its returns to play out a longer game with a home loan.
- Direct Home Purchase: Deploying the entire 40 lacs to buy a home means zero debt. This path ensures immediate ownership, peace of mind, and the joy of living in a space you truly own. But, like a queen charging forward without any cover, it can leave you with reduced liquidity for other goals or emergencies.
- FD & Home Loan Combo: Keeping 40 lacs in an FD at an average interest rate of, let’s say, 6%, can fetch you around Rs. 20,000 monthly. Simultaneously, if you take a home loan, its EMI might be somewhat similar or more. Here’s where the real magic is: The interest paid on a home loan is tax-deductible under Indian tax laws, leading to potential tax savings. And, having a significant amount in FD ensures liquidity. This strategy, much like a well-planned chess game, may lead to multiple benefits.
As the great Rakesh Jhunjhunwala, the Indian stock market veteran, once said, “Risk comes from not knowing what you’re doing.” It’s key to understand both strategies and their implications.
Yet, there’s more than just mathematics here. Owning a home outright brings an intangible emotional satisfaction. But the FD-loan route provides financial flexibility and potential tax advantages.
To sum up, choices in financial strategies, like in chess, should align with your overall game plan. Jama Wealth’s LSG framework (Liquidity-Safety-Growth) can help determine the right move for your unique situation. And as the game unfolds, having a SEBI Registered Investment Advisor by your side can make all the difference. Consider Jama Wealth’s portfolio management services and associate investment advisory services for guidance.
