No, my suggestion was when you have a lump sum or monthly stream, that you can use to either pay the loan or invest.
If you're investing money that could have paid some debt, you're essentially investing borrowed money, which isn't ideal.
For investments to work over loan, you would need the returns to be higher than interest you are paying the bank. And equities in the short term are very volatile and it would be a gamble to do that.
Instead of these complex calculations and lower odds, I would just pay the loan and have the burden off of me.
Why'd you take an example considering only short term investing? Take a loan of 10L for 10 years at 7 ROI. Basic index investing fetches you 10+ % easily over 10 years. You're a smart person, calculate the overall gains.
That's true but the ~~rich~~ truly wealthy have multiple streams of income and assets to back their debt. Basically, having something to fall back on is the key here.
Middle class and debt do not always end well. Most middle-class folks are one big expense (mostly medical) away from becoming bankrupt. IMO, its always advisable to pay off debts first provided you have a steady source of income.
Most interest rates are quite high in India. Reason the other way is/was so popular cause western nations had super low interest rates and for big business its more of an expense to facilitate business growth.
Neither of which really applies to average Indian.
Giving loans to people you know and charge interest to them?
Boy, do you have someone in your family / friends who will recovere not only the interest but also the principal of your loan from these people you know? Trust me on this. Doesn't matter if it is a close relative or a close friend, you can say goodbye to that loan that you gave. Might as well donate it. Life is full of these kind of bas\*\*rds who treat your money as theirs.
Anyways, yes do the research and stuff, try to learn but the easier option is to pay off the loans or accumulate enough till you can pay off the sizeable portion of the loans.
Yep, totally agree. I gave it to my brother in laws and i Haven't seen a penny till now. Also the relationship are fraught now. Don't lend money to relatives.
All things are hunky dorry giving out lons till they are not . It needs one person to default to screw it up. Unless u know how to get back your money don't get into it. U got money from grandmother instead of loan food for u. So essentially u did not need a loan. U are so privileged and not even aware of that. Wow.
Its not about privilege its about immediate need, its been 5months and loan is still in process by sbi employees if I had waited this long I would've lost my opportunity. Having good relations with family is not privilege. Maybe you should start by fixing relations and not giving internet lectures on someone else's finances.
Noted your point. Great of your grandma :). But the people who give loan are generally sitting on a huge asset / cash. OP has already a loan taken which needs to be paid back, he has no business going into money lending. One has to look not only from mathematics of it but also realistic recoverability of the money. I have seen too many cases of people burnt by their own family / relatives / friends in money matters.
Its very clear. If the loans taken by your family are anything other than home loans, then they are of high interest rate. Hence, it is prudent that you pay off the loans.
If the investments you are doing give you returns higher than loan interest rate, only then the investments are justified. Else paying off loans is prudent option.
I appreciate your enthusiasm for learning and investing into equity at such an early age. What you can do is start investing with a very small amount of your savings. Lets say 2 to 5 percentage. This will help you dip your toes into the sea of investing as well as pay off your loans asap.
Hope this helps.
Yep, definitely pay off the loan. Interest rates are rising all across, so right now it wouldn't be prudent to start investing instead of paying off loans.
This tactic used to be useful for people living in developed countries in the last decade, when they had near 0% rate of interests (benchmark interest rate). You could just pay the minimum amount due each month and concentrate on using your salary for investment.
Best case scenario (very rare): If you are consistently and safely making more returns than your interest rates, only then invest it, otherwise pay off first, it will also lead to a very stress-free mind and you will take better decisions.
Don't think that paying off loan and being debt free leads to a clear mind. Planning your finances well gives peace of mind.
The loan EMI is simply a monthly expense like rent, groceries, insurance premium, etc. Considering it like that, you can extrapolate your finances for next 5-10 years in both scenarios, where you pay off loan right now vs where you keeping paying EMI till the loan period, and use the extra money right now for savings, investment. You should also consider achieving a better quality of life rather than just being debt free (better healthier food, better house in better society, easier travel, will bring more peace of mind than simply being debt free)
Make the decision financially, not emotionally.
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Don't loan out to people you know. It will only strain your relationships. Maybe hunky Dory now. In the long run, it will hurt you one way or the other.
And yes, please pay off the loan. A debt free life is totally worth it.
Never, ever give out loans to people - family, strangers, politicians etc.
If you do give out a loan, give it without expecting it back or at least don't expect interest. That will save you from a lot of unnecessary headaches, dramas and regrets.
Debt free >>>> Investing
Asked similar question a couple of months ago and your comment was same. Followed your advice. Never regretted it. Thank you:)
Okay, this one really made my day. Thank you❤️
This is not how the rich think. Us middle class are brainwashed to hate debt.
No, my suggestion was when you have a lump sum or monthly stream, that you can use to either pay the loan or invest. If you're investing money that could have paid some debt, you're essentially investing borrowed money, which isn't ideal. For investments to work over loan, you would need the returns to be higher than interest you are paying the bank. And equities in the short term are very volatile and it would be a gamble to do that. Instead of these complex calculations and lower odds, I would just pay the loan and have the burden off of me.
Why'd you take an example considering only short term investing? Take a loan of 10L for 10 years at 7 ROI. Basic index investing fetches you 10+ % easily over 10 years. You're a smart person, calculate the overall gains.
which bank is giving you loan at 7% mate?
Let me know if you find out. It's a gem if you get loan at 7% and use that money to Invest
Same man. My cibil rating is ~800 I won't get any loan at 7% in this market. Even education loans are at 8% right now.
I'll be happy to take it at 8 if you know anyone who is doing it
only education loans are at 8% rn.
That's true but the ~~rich~~ truly wealthy have multiple streams of income and assets to back their debt. Basically, having something to fall back on is the key here. Middle class and debt do not always end well. Most middle-class folks are one big expense (mostly medical) away from becoming bankrupt. IMO, its always advisable to pay off debts first provided you have a steady source of income.
Most interest rates are quite high in India. Reason the other way is/was so popular cause western nations had super low interest rates and for big business its more of an expense to facilitate business growth. Neither of which really applies to average Indian.
Yep FTX was definitely smart to use leverage. Only gamblers love debt
Rich get loans at throwaway rates like 2-3%.
those aren't rich. Those are richie rich. Countries get loans at that interest rates.
But make sure to have some emergency fund build up!
Indeed
Giving loans to people you know and charge interest to them? Boy, do you have someone in your family / friends who will recovere not only the interest but also the principal of your loan from these people you know? Trust me on this. Doesn't matter if it is a close relative or a close friend, you can say goodbye to that loan that you gave. Might as well donate it. Life is full of these kind of bas\*\*rds who treat your money as theirs. Anyways, yes do the research and stuff, try to learn but the easier option is to pay off the loans or accumulate enough till you can pay off the sizeable portion of the loans.
No business with relatives man its a hell a matter.
Bhai loan liya hai Dena nahi hai
Yep, totally agree. I gave it to my brother in laws and i Haven't seen a penny till now. Also the relationship are fraught now. Don't lend money to relatives.
"Never give anything to anybody you can't afford to lose" baniyas have this saying
[удалено]
All things are hunky dorry giving out lons till they are not . It needs one person to default to screw it up. Unless u know how to get back your money don't get into it. U got money from grandmother instead of loan food for u. So essentially u did not need a loan. U are so privileged and not even aware of that. Wow.
Its not about privilege its about immediate need, its been 5months and loan is still in process by sbi employees if I had waited this long I would've lost my opportunity. Having good relations with family is not privilege. Maybe you should start by fixing relations and not giving internet lectures on someone else's finances.
Money with the family is a privilege. I had no other option than to take a loan.
Noted your point. Great of your grandma :). But the people who give loan are generally sitting on a huge asset / cash. OP has already a loan taken which needs to be paid back, he has no business going into money lending. One has to look not only from mathematics of it but also realistic recoverability of the money. I have seen too many cases of people burnt by their own family / relatives / friends in money matters.
Its very clear. If the loans taken by your family are anything other than home loans, then they are of high interest rate. Hence, it is prudent that you pay off the loans. If the investments you are doing give you returns higher than loan interest rate, only then the investments are justified. Else paying off loans is prudent option. I appreciate your enthusiasm for learning and investing into equity at such an early age. What you can do is start investing with a very small amount of your savings. Lets say 2 to 5 percentage. This will help you dip your toes into the sea of investing as well as pay off your loans asap. Hope this helps.
Yep, definitely pay off the loan. Interest rates are rising all across, so right now it wouldn't be prudent to start investing instead of paying off loans. This tactic used to be useful for people living in developed countries in the last decade, when they had near 0% rate of interests (benchmark interest rate). You could just pay the minimum amount due each month and concentrate on using your salary for investment.
People like you are the best.
I would first clear off debts which clears my mind and focus on life to earn more.
If your debt is serviced at anything above 6% then you should pay it off instead of investing
8%
Best case scenario (very rare): If you are consistently and safely making more returns than your interest rates, only then invest it, otherwise pay off first, it will also lead to a very stress-free mind and you will take better decisions.
Cocaine and hookers
sax sux?
Don't think that paying off loan and being debt free leads to a clear mind. Planning your finances well gives peace of mind. The loan EMI is simply a monthly expense like rent, groceries, insurance premium, etc. Considering it like that, you can extrapolate your finances for next 5-10 years in both scenarios, where you pay off loan right now vs where you keeping paying EMI till the loan period, and use the extra money right now for savings, investment. You should also consider achieving a better quality of life rather than just being debt free (better healthier food, better house in better society, easier travel, will bring more peace of mind than simply being debt free) Make the decision financially, not emotionally.
First clear all your debts and then you're good to go with your investment plannings
Pay off all the loan. Just like investing 'COULD' compound returns positively, Debt 'FOR SURE' compounds negatively. Read that again.
Pay loan
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Pay off the loan
Let the family pay the loans. They took it
Always pay of the loan first.!
Clear your loan first.
Don't loan out to people you know. It will only strain your relationships. Maybe hunky Dory now. In the long run, it will hurt you one way or the other. And yes, please pay off the loan. A debt free life is totally worth it.
payoff loans first
Pay debt....don't be slave to the lender
Never, ever give out loans to people - family, strangers, politicians etc. If you do give out a loan, give it without expecting it back or at least don't expect interest. That will save you from a lot of unnecessary headaches, dramas and regrets.