January 16, 2014 5:12 pm
I have taken a SBI Max gain HL of 1800000, for a tenure of 15 yrs. The emi for the same has started from Aug 13. Is it advisable if I sell my gold and repay approx 8 lac of the loan amt.
Dear Sachin, the saved amount of 15-20K should be invested in the instrument of your choice. be it debt MFs or Eq. MFs or RDs or Bonds.
Personally if it’s my money, I w’d put it into Eq. MFs for my retirement.
You rightly said in one of your article that maintaining the surplus amt parked in the max gain account needs discipline. Now this thing is very difficult to maintain. What I am thinking is to bring down my emi to say about 10K to 12K, which may save my 10K per month, plus the approx rent of 5K. This total of 14 to 15 K I would like to invest for some retirement plan. Pls give your views.
Dear Sachin, why do you want to prepay at all? Yes if you offer to prepaty permanently, SBI ‘ll reduce your EMI amount. What benefit are you trying to get from this EMI reduction? Please explain your thinking process.
Thankyou sir, is there any option in SBI MG where in after pre payment my emi would come down?
Dear Sachin, are you asking to park or to payback in actual? Because parking in MG ‘ll save you the interest outgo and keep your liquidity for this 8L Rs. open, whereas the actual payback, ‘ll bring down your loan immediately by 8L Rs. but liquidity ‘ll not be there.
Personally I w’d like you to opt parking in MG account to keep liquidity open.
Thank you sir, can you guide me approx what amount should I pay back considering the loan amt and pay back tenure.
Dear Vijay, please read the reply given by dear Sachin. The Gold is in the form of pure gold rings only and not the routine ornamental gold. In all proability, this Gold was purchased with an investment point. If this Gold is not providing any positive return and at the same time, one is paying 10-11% interest in home loan, does it not make sense to prepay by liquidating these gold rings?
But what if you need gold later? Sure, gold prices and low now and there’s every indication it will remain so till the year end. Being typical Indian families, I don’t think we’ll ever come to the point of thinking of gold in terms of just “junk-ornamental-metal” with no intrinsic value!
My point being – you shouldn’t have to buy back the similar gold/jewelry at say 14-15% inflation (your current sale-loss adjusted) at the cost of 10-11% home loan. Will the gold prices shoot up like crazy in the far enough future? One can’t say. But there’s certainly good reason why US holds the largest reserve. China is stocking up to beat everyone else.
Dear Sachin, in my personal opinion, you should opt this Gold sell amount to park in MG. this ‘ll help you to save a good amount of interest.
Dear Sachin, the gold in question is pure Gold or family jewelry? 🙂
It is pure gold rings that I have
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