SIP and EMI
The festive season has started. In such a situation, you must have seen the attractive publicity and offers made by the companies. Exemption is visible everywhere online and offline. Especially e-commerce companies are offering great offers to woo customers. Somewhere no-cost EMI is getting, then somewhere a discount of 50-60 percent is getting. If you talk about money debit, from account they are through EMI or there is another option called SIP. There is a similarity between the two that the money is deducted from your account during the fixed time period. The question is who is a profitable deal between EMI and SIP. Let us understand this in detail.
Even though the money is deducted directly from your account in SIP and EMI, the methods of both show your financial health to a great extent. How they are being managed are clearly seen on your pocket. In SIP, you can control your investment and also take advantage of interest. However, the cut in EMI can also be managed, but you do not get interest in it but have to pay. Because when you take goods on EMI, it is a loan. Suppose you are buying a phone of 10 thousand. If you have deposited 5000 thousand rupees, then you have to tie EMI to pay the remaining 5000 rupees. Which is a loan only. You do not have choice that EMI is not filled. Rather, on the other hand you can close SIP at your convenience.
Correct financial approach?
If someone is asked why he earns and why he works hard. So the answer of 90 percent of the people will be that life is better, needs are fulfilled as well as some hobbies should be fulfilled. Earn for this. Let’s work hard But taking goods on EMI means buy today and keep filling the approach, is it really correct? We are not saying at all not to use EMI, but it should not happen that you get caught in the debt trap.
Let’s try to understand this with a little more example. We often hear that hobby is a big thing. For example, assume that you are 25 years old and buy a car from Maruti on EMI and on the other hand, one option is that you put the same money in Maruti shares somewhere SIPs. There is complete chance, after 30 years from today i.e. at the age of 55, the money with SIP becomes more and you will suffer some loss on EMI. But is the fun that is about walking by car at the age of 25 will be in 55? It is obvious that this is a personal choice, yet after an age, more responsibilities become more than hobbies. In such a situation, EMI will be fine. But at the same time, when you are throwing all your earnings in EMI, then you may have a problem on any financial emergency. The total accumulated thing is that it is fine to buy goods on EMI, but when the funds are not left with itself, then what will be the meaning of such EMI?
What is better in EMI vs sip
In the hypothetical situation, we now understand EMI and SIP by looking at the game with a little data. Suppose the value of any goods on EMI is currently Rs 5 lakh and after inflation, its value becomes Rs 6,38,141.
EMI calculation
- Right now the price of the product is Rs 5 lakh.
- The interest rate is 1% per month.
- 5 years x 12 months = 60 months.
- EMI Monthly
- EMI will be made- Rs 11,122 is about Rs. 11,122
- In a period of five years, you will have to pay Rs 6,67,333 instead of 5 lakhs on EMI.
Calculation of sip
Since you have not bought any goods in it, the current value will be zero. The rate of return is 1% per month. Period of installment 5 years x 12 months = 60 months monthly SIP- 7,733.32 rupees will be Rs 4,64,179 on your total expenditure on SIP in a period of about five years. At the same time, you want to buy the product, its future price will be 6,38,141 after inflation.
Which benefit is there?
With EMI, you are enjoying your shopping immediately today. However, you will also have to pay interest with the principal for the next five years. Your monthly EMI will be slightly more than 11,122, and overall you will have to pay 6.67 lakhs. You will have to pay Rs 1.67 lakh more
At the same time, with SIP, you are postponing your shopping for five years, which can increase the price of cheese due to inflation. But, SIP gets interest on every installment. Due to this, your monthly installment will be only 7,733.33 and your total principal amount will be Rs 4.64 lakh and after 12 percent interest, this amount will be Rs 6.38 lakh, which will be equal to the value of inflation. You will get benefits in low investment and there will be no debt tension.
(Disclaimer- TV9 Hindi does not recommend investing in any fund, share. This news is written only according to the information. Take the advice of experts for financial tips.)