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Diwali Bonus: Where to invest Diwali bonus money, repay loan or invest, what experts say?

Highlights

At present the interest rate on FD is very low, which remains around 7 percent.
If you want, you can plan for investment through SIP.
If you are thinking of paying off the loan with this money, then this can be a better option.

New Diwali. The festival of Deepawali also passed away. This Diwali Bonus If you have not spent on festivals and are looking to put it in the right place, then we are telling why which option is right for you. While many might be thinking of investing Diwali bonus, some would like to pay off the loan from it. When we talked to the experts about this, the correct picture of both the options came out.

Investment advisor Balwant Jain says that if you invest your bonus money in FDs or mutual funds, then it can give decent returns in the long term. However, the interest rate on FDs is still very low, which remains around 7 percent. You will also have to invest more money in mutual funds, so that its profit can also be higher. If you want, you can plan for investment through SIP. This option will give you huge profits in the long run. If you are knowledgeable about the stock market, then you can also invest the bonus money in equity. There will be risk here but if the bet is right then you will also be able to earn huge profits. Yes, if you are thinking of paying off the loan with this money, then this can be a better option.

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Reduce debt burden amidst rising interest rates
To contain inflation, the Reserve Bank is continuously increasing the repo rate and in the same proportion the interest rates of your loan are also increasing. In such a situation, it is important that you reduce your EMI burden as much as possible. If you want to pre-pay the loan, then first of all put money in such loans which have high interest rates. Banks charge higher interest on credit cards and personal loans and if you repay or prepay these loans, then the EMI burden will be reduced significantly.

Home loan prepayment is most effective
If you have taken a home loan, settle it with your Diwali bonus money or prepay the loan. With this small step, you can get big benefits in future. Actually, a home loan is a long-term loan and a small reduction in its principal amount can yield huge benefits in the long run.

Home loan has two parts principal amount and interest rate. When you prepay the loan, this amount is higher than your regular EMI and is put into your principal amount. That is, your principal amount decreases. Since, the interest is charged on the principal amount, the interest added to your EMI also comes down. This way, by prepaying the loan, you will not only pay lower EMIs, but also get your loan repaid faster.

In this way, understand the mathematics of saving
If you have got the bonus money in lump sum, then if you want, you can invest it in lump sum. Or keep this money in a liquid fund where you will get more interest than the savings account and you can withdraw it whenever you want. In such a situation, if you make an additional payment of Rs 2,000 on a home loan every month over and above your EMI, then there can be huge savings in the long run.

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Suppose, you have taken a loan of Rs 20 lakh at 9.5% interest for 20 years, the EMI of which goes to Rs 18,643. In this case, you will pay a total of Rs 24,74,320 as interest till the loan is repaid, but if you pay more than Rs 2,000 every month, you will save 55 EMIs for the entire tenure of the loan. This means that you will save Rs 6,60,585.

Tags: business news in hindi, Diwali, Home loan EMI, Interest rate of banks

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