Some Useful tips for your life

Friends! Hope you had a good day so far! Since you are here and helping us gain market insights with your deep knowledge and passion, we thought we can help you as well  with some tips to keep your finances strong and clean.
1. Do you have a loan  Personal loan, Auto loan, Home loan, Mortgage Loan, Jewel Loan or some other loan? If so, do you know how to decide on the maximum loans you can take at any given time in your life?
Simple  While you opt for loans, please note that the maximum loan emi per month should not be more than 0nethird of all your monthly income. For example, let us assume your personal monthly income is Rs. 50,000 and you have 3 loans  a personal loan with emi 6300, a vehicle loan with emi Rs. 4100 and a Home loan with emi Rs. 12600. Now the total emi is Rs. 5300+2100+12600 = Rs. 20,000
This is about 40% of your monthly income which means you are NOT SAFE. If your total monthly emi was Rs. 16,000, you would be safe.
So, the thumb rule for loans is 
"ONE THIRD OF INCOME IS EMI"

2. Hi friend, here is your tip on how to make more out of your Housing Loan/ Home Loan payments…
Simple idea is “Spend 10% more on your EMI towards an Equity SIP monthly throughout your Loan Tenure and earn back all your Loan Interests after maturity”
What is SIP? Strategic Investment Plan – I know that sounds weird unless you really know what it is. So, let me get this straight…SIP is a mutual fund/ Investment in stocks/shares but managed by another Bank/Agency.
So, you pay to a bank/agency and that agency manages where to invest your money. As far as history of SIP is concerned, SIP investments earn a minimum of 12% to maximum of 20% interest rate annually. I know this might sound small but let me make it even more simple.
SIP is a plan where you get COMPOUND Interest every month.
For example, in Simple interest, if your investment is Rs. 1000 at a rate of 12% annually, you get an amount of Rs. 1000+ Rs. 120 = Rs. 1120 at the end of the year.
If the tenure is 10 years, you get (10 * Rs. 120)+Rs.1000 = Rs. 2200
In Compound interest, If you invest same amount, see what happens from the table below:

You get Rs. 3,300.39 after 10 years
If you compare a simple interest and compound interest, a simple interest gives you 120% gain in 10 years whereas a compound interest gives 230% after 10 years.
So, if you have invested 1 lakh in Simple Interest, you get a profit of 1.2 Lakh whereas in Compound interest, you get a profit of 2.3 lakh…
Now, SIP is a compound interest investment. Are you clear now?
Good. Let us now see how to make the most out of your Home Loan payments by just investing 10% more EMI into SIP every month during the whole tenure of Loan.
Let us assume you avail a housing loan of amount 10,00,000 for period of 20 years at an interest rate of 9% to 10%. Let us also assume that the monthly EMI is approximately Rs. 10000 per month.
My suggestion is that you pay another 10% of EMI which is Rs. 1000 as Equity SIP investment every month for 20 years until you close your Housing Loan EMI.
After 20 years, you would have paid the below:
Housing Loan EMI for 20 years: Rs. 10000 * 240 months = Rs. 24 lakhs
Investment on SIP for 20 years: Rs. 1000 * 240 months = Rs. 2 Lakh 40 thousand
At a historical Average interest rate gain of 15% per annum, What you get out of your SIP would be as below:
Since it is tough to show you all 240 month calculation in this web page, I am just marking the same after every year.

So, at just a payment of Rs. 1000 per month, you get Rs. 15 Lakhs at the end of 20 years which is even more than the interest on your Housing Loan (which is just Rs. 14 Lakhs). So, when you close your Home loan, you also get a lumpsum to invest in your business, take care of your Kids Education/ Marriage or address most critical Hospitality needs without depending on anyone.
Hope you find this helpful.