Pay Loans Or Invest? What Should You Do?

Please ask your questions HERE and rediffGURU Purshotam Lal, a chartered financial analyst and founder of Finphoenix Services LLP, will answer them.

Anonymous: I am 34 years old, married, with no children yet, but we plan to start a family by the end of this year.
Our monthly household take-home income is 4.5 lakh. We have cumulative EMIs of 1.50 lakhs per month: (1) Home Loan (1 Cr Outstanding, 9 years left): 1.1 lakhs per month, (2) Car Loan (8 lakhs outstanding 4 years left): 25k per month (3) Personal Loan (4 years left) - 15k per month.
Our investments include 55 lakhs in stocks and mutual funds, and 30 lakhs in PF. I have a term plan with cover till age 85, costing additional 1.3 lakh per year in premium for next 7 years.
My wife and I are covered by our employer for medical insurance, and our parents will also have PSU pension and medical cover after retirement.
We spend around 1.2 lakh per month on household expenses renting and groceries in Gurgaon. We invest 1 lakh monthly having 10-90 split in stocks and MFs and keep 2 lakh in an emergency savings account.
My long-term goal is to pay off all loans, build a financial buffer to move back to my hometown a tier 2 city and do remote work from there -- this might reduce our household income by 30-40%.
Given these details, how should I plan our investments to achieve the goals and how many years are we looking to achieve this?

You are just on the right pitch to play your shots and fulfill/enjoy this inning very well. In my opinion with your current portfolio and monthly investment discipline if you maintain then after 10 years you might have a reasonably good investment corpus (also having paid off all loans) and then take decision to move back to your hometown and start another inning of your work life.

You should contact a Certified Financial Planner for the necessary guidance in this regard.

Vinod: I am 50 yrs old; want to have a retirement corpus of about 6 Cr.
My MF SIP's include HDFC mid cap growth - 10k, hdfc children gift regular - 5k, canara rebeco - 20k, bandhan nifty alpha 50 regular growth - 10k, parag parikh flexi cap growth - 25k. Lump sum and old investments - 50L. Bank FD - 5L, No loan.
Which MF should i invest for much higher corpus than my 3 Cr using better investment options?

Your investment decision shall be dependent on, first your risk profile, period of investment and your life goals or milestones.

Most importantly, one has to have minimum time horizon of 10 years+ if you intend to invest in equity MFs for reasonably good returns and getting benefits of power of compounding.

Please note that the asset allocation based on your risk profile and continuity of your investments will be the key determiner for accumulating the desired retirement corpus.

Sudhir: I am 43 years old. I am investing in below mutual funds. 1) SBI Small cap -SIP 25000 2) Quant Small cap- SIP 10000 3) Bank of india small cap SIP 5000 4) Motilal Oswal small cap SIP 5000 5) Canara rebecco emerging equities - SIP 10000 6) Quant flex cap -SIP 10000 7) Motilal oswal mid cap SIP 5000.
Kindly suggest on my portfolio.

You are having very aggressive equity portfolio focused primarily on small and midcap funds. But if these are held for long term that is beyond 10 years then these may provide good returns commensurate to scheme risk profile. Portfolio looks good.

Sukhvinder: I have an outstanding Home Loan of 40 Lakhs at 8.25%. With certain plan i intend to close it by 2029 Q1. However i have an option to close it earlier by 2027 Q1 if I redirect my current mutual funds accumulated fund and SIP investments towards repaying the home loan.
Please advise what will be right step. Continue with SIP Or prioritise home loan closure and then restart SIP again in 2027 onwards.

In my opinion if you are adopting new tax regime, then I suggest you to continue with repaying home loan as per EMIs and also continue your MF/SIPs investment if the portfolio is invested in equity oriented MFs.

Rest depends on your personal priorities.

Please connect to a Certified Financial Planner for taking the help so that they will be able to understand your risk profile, period of investment and your life goals or milestones.

Anonymous: I have spare money of Rs 10 lakhs. Which mutual fund should i invest in to get best returns in a year?

Your investment decision shall be dependent on, first your risk profile, period of investment and your life goals or milestones. Most importantly, one has to have minimum time horizon of 10 years+ if intend to invest in equity MFs for reasonably good returns and getting benefits of power of compounding.

For a year's investment the suggested mutual fund could be any equity arbitrage fund and/or medium term debt MF plan (subject to short term capital gains tax). 

• You can ask rediffGURU Purshotam Lal your questions HERE.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.