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Debt Vs. Investment

Discussion in 'Chit Chat' started by bhavesh393, Dec 8, 2017.

  1. bhavesh393

    bhavesh393 Member

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    Hello Shabbir,

    Recently I buy new 2bhk apartment. And I sell stocks almost alltime high market - 12 lakh for payment of home. Now in my portfolio having 1.5 lakh in stock and 3.5 lakh in Mutual fund (tax saving).

    I have some debt – list (interest % per annum)

    1) Home loan axis bank 17,85,000 rs – interest 8.30 % , EMI 15,320

    2) ICICI Bank Gold loan 2,00,000 – interest 11% , yearly payable

    3) Company I Working 4,50,000 – interest 0 %, compulsory installment 9,500 per month

    4) Friend 85,000 – interest 6%, compulsory installment 6,000 per month

    5) Friend 30,000 – interest 12% , no emi

    Now my question is how to balance between investment and debt. When I have no debt i invest almost 35,000 per month in stock/MF. After purchase house I have extra 10,000 to 15,000 only per month.

    So, I focus on investment or debt free? and how ?

    Thanks.
     
    bhavesh393, Dec 8, 2017
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  2. shabbir

    shabbir Administrator Staff Member

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    Never invest when you are in debt. Invest in your debt and I always prefer it that way. There are some arguments with some of my friends about taking loan at cheaper rate of 9% and then investing for 15% in mutual funds for the long term but I never prefer doing ti.
     
    shabbir, Dec 8, 2017
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  3. shabbir

    shabbir Administrator Staff Member

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    The next question that you have is HOW. The best is to sort the loans based on the rate of interest and then start paying off the one at the top.

    First one to pay off is Gold loan even if they ask for pre payment penalties.

    Then 30k of a friend.

    Then get to the Axis bank.
     
    shabbir, Dec 8, 2017
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  4. bhavesh393

    bhavesh393 Member

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    Thank you Sir,

    start paying off the highest insterest rate loan first - I realy like this.

    In office my colleagues said that keep investing and pay loan installment as required so I am very confused. But now I am clear to first pay off all debt then investing.

    thanks ones again.
     
    bhavesh393, Dec 9, 2017
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  5. shabbir

    shabbir Administrator Staff Member

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    This will depend on whom you are asking and many financial advisor even recommend doing it the same way of paying off the loans later and start investing early but I don't buy that.
     
    shabbir, Dec 10, 2017
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