15 replies on this article “Home Loan Prepayment Vs Investment in PPF”

1. ashalanshu says:

   January 13, 2014 at 9:28 pm

   Dear Vz, please open your PPF account now. you ‘ll get the benefit of completion of 15 FY, 1 year early. Also you ‘ll get ibnterest for 2 months as of now in FY 2013-2014.

   Thanks

   Ashal

   Reply
2. ashalanshu says:

   January 12, 2014 at 8:51 pm

   Dear Vz, in my personal opinion, start investing more for your retirement now on wards to cover up the lost time.

   Thanks

   Ashal

   Reply
   1. vz1hrp says:

      January 13, 2014 at 9:58 am

      Hello Ashal,

      Should i open a PPF account between Feb 1 -Feb 5 or should i open the PPF account between April 1- April 5 so that i get interest benefit for entire year as opposed to 2 months only? I plan to invest maximum amount in one go.

      Thanks

      Reply
3. ashalanshu says:

   January 12, 2014 at 4:10 am

   Dear Vz1, may I know how old your loan is?

   thanks

   Ashal

   Reply
   1. vz1hrp says:

      January 12, 2014 at 10:11 am

      Hello Ashal,
      I had bought an under construction apartment. Original loan amount sanctioned was 3167000. I had taken a repayment holiday of 18 months. The pre-emi interest + loan repayment holiday then made loan amount principal to 3650000. My first emi started in june 2009. I have been aggressively prepaying any surplus funds(matured NSC’s,bonuses,few FD’s) and as of today outstanding loan amount is 2365000. Hence was wondering if i still need to prepay or is time for me to start divesting surplus funds(PPF + prepayment). As mentioned i have a low risk appetite. Other retirement savings i have are EPF,Superannuation & Gratuity. Will start investing in VPF once direct tax code is implemented

      Thanks

      Reply
4. rahul123 says:

   January 9, 2014 at 9:41 pm

   Policy change can happen to any financial investment….Equity/MF /PPF anything…we don’t know whats there in future.

   Thanks,
   Rahul

   Reply
5. rahul123 says:

   January 9, 2014 at 12:49 pm

   Vz1hrp,

   I think, this is the right time for you to plan for your retirement.

   I will advise you to open an PPF account (lockin period 15 years) and invest Rs 1,00,000 (max limit). and use 50000 for prepayment.

   Even thouhg the interest which you will get from ppf is less than home loan rate, i believe the first priority should start investing for retirement. Every year keep invested extra amount (like bonus,surplus) in ppf , exhaust the 1,00,000 limit and then only think of prepaying the loan with remaining money.

   Home loan is not a bad loan (like credit card/personal loan). Please set a realistic goal to get over it. No need to hurry 🙂

   Thanks,
   Rahul

   Reply
   1. vz1hrp says:

      January 9, 2014 at 4:17 pm

      would PPF still be tax free once Direct Tax Code is implemented?

      Reply
6. Syamantak says:

   January 8, 2014 at 2:31 pm

   Pattu created an awesome calculator for the dilemma – whether to save or to pay off debt

   please use below link for further information :

   http://freefincal.com/loandebt-calculators/pay-off-home-loan-or-invest-for-retirement-calculator/

   Reply
   1. vz1hrp says:

      January 9, 2014 at 9:29 am

      Thanks a lot. I will look into this

      Reply
   2. vz1hrp says:

      January 9, 2014 at 10:21 am

      I read this. Does it make sense to diversify? i.e half money in ppf and half for prepayment?

      Reply
7. Raja says:

   January 8, 2014 at 2:04 pm

   I think it is better to clear your liability which takes away interest at 10.25% rather than invest it for 8.5% gain. You will save more in terms of interest lost than the interest which you will gain. Also money will get locked into PPF

   Reply
   1. vz1hrp says:

      January 8, 2014 at 2:12 pm

      Thanks Raja. That was my thought too. I will be saving lot of interest if i make a prepayment

      Reply
8. rahul123 says:

   January 8, 2014 at 1:53 pm

   What are your other savings and how are you planning for your retirement?

   Thanks,
   Rahul

   Reply
   1. vz1hrp says:

      January 8, 2014 at 2:11 pm

      Regarding retirement planning->I just have my superannuation and EPF. I am planning to start contributing for VPF next financial year

      Reply

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