Is that the right strategy? Well, Maybe.

So how can you decide what is right?

Credit card vs. Home loan aka Mortgage vs. Investment

First of all, why does liability need to be repaid before its schedule?

For cutting costs.

How?

By paying lower interest.

What is interest?

Cost of Borrowing of the fund. There is a cost for everything. In this case, interest is the cost of funds. You can break it into several parts.

Interest comprises many risk premiums because lending is vulnerable to different risks. Inflation, liquidity, and solvency interest rate are some of them. When a lender is lending you money, he expects to cover all of them and receive some profit plus his capital back.

When you are repaying this (Interest + Capital) ahead of schedule, there are two meanings to it.

One: You have earned more money than you expect, or TWO: You incorrectly calculate your need for cash.

The lender, whoever he is, is also taking that fund from someone else. That’s how the financial system runs. So he is also taking a risk. So when you repay your debt, you disturb his schedule, which is terrible for the whole financial system.

But is there any advantage for prepayment of your debt? And if there is not, is investing that amount will be a good idea?

Go to any personal finance blog, and you will find one post.

So why on earth I Ashutosh tilak? Not even a finance blogger is writing on it. The reason is simple. You need to listen to ONE DIFFERENT VIEW on it.

I recently went through ET Wealth, one of the famous magazines about finance and all related things. I was shocked when I saw that it was advising for Two credit cards. Finally, after all these blogging years, I understood that lower the debt you have is better.

As I am an analyst, What I understood is Book value or Networth. So let’s see it that way.

There are two parts to your balance sheet: asset and liability. Increasing assets and decreasing liability is the final target. So when you are thinking about investment and debt, what is important is the rate of interest and if there is anything called Long-Term capital gains tax ( and that is also without. indexation )

If the interest rate is lower, Go and buy a house, set up your life. that is what you need to do.

I believe investing is what you need to do when you have sufficient money for five years. Suppose you don’t have that, don’t even think to invest. When you have a house, you have Liquid funds to cover expenditures when it comes to investing. and for investing

Don’t listen to Bloggers. Many of them are not in shape.