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Loan Repayment vs Lumpsum Mutual Fund

Loan repayment  vs  Lumpsum mutual fund

The same rupee. Two different roads.

  • Put a lump sum to work in a mutual fund and let it compound
  • Borrow the same amount instead, and you repay it - with interest on top
  • Every field is editable - change the amount, rate or years on either side
Yield earned vs interest paid - the net gap
₹28.73 L
Investing the amount leaves you about 3.5× ahead of borrowing the same and repaying it.
Put the money to work
Lumpsum Mutual Fund
  • Invested₹5,00,000
  • Wealth gained₹35.31 L
Grows to₹40.31 Labout 8.1× your money
Borrow the same amount
Loan Repayment
  • EMI / month₹4,825
  • Total repaid₹11.58 L
Interest paid₹6.58 Lon top of the ₹5.00 L borrowed
A deeper question

Buy now  or  wait & pay later?

Buy today with a loan, or defer the purchase?

The loan is on the table either way - the only real question is when you buy. Every field below is editable; the percentages in brackets are editable too.

₹
₹(%)
₹7,50,000(50%)
₹(% of loan)

Structured Product  vs  Endowment plan

Same premium. Two different endings.

  • An endowment bundles your cover with a low-return savings plan
  • Split the same money into pure term cover plus a mutual-fund SIP
  • Same protection, a dramatically bigger corpus
₹
  • Endowment premium for this cover: ₹80,293 / month (₹9.64 L / year)
  • That is the budget we restructure into term + SIP
32
15%
67
Extra corpus by age 80 • same cover, same outlay
₹60.11 Cr
Term + SIP leaves you about 16.8× more than the endowment policy.
What most people already have
Endowment Life Insurance
  • One product for both cover and savings
  • A guaranteed-style return that barely outpaces inflation
  • Premium / month₹80,293
  • Total premiums paid₹3.45 Cr
  • Life cover₹1 Cr
  • Matures at age67
Maturity benefit₹3.80 Crafter paying ₹3.45 Cr in premiums
The structured alternative
Term Insurance + Mutual Fund SIP
  • Buy the same cover as cheap term insurance
  • Invest everything left over in a disciplined SIP
  • Life cover (pure term)₹1 Cr • same
  • Term premium / month₹8,029
  • Premium paying term20 years
  • Total term premiums paid₹3.37 Cr
  • Into SIP / month₹72,264
  • Total invested₹3.04 Cr
  • Investment horizon35 years
  • Assumed CAGR (net)14%
Projected corpus*₹63.91 Crfor the same ₹1 Cr of cover
How the two grow apart
EndowmentTerm + SIP
Assumptions & disclosures

    Black Numbers Law · AMFI-registered Mutual Fund Distributor · ARN-342488

    Structured Product  vs  Money-back income plan

    Same money in. A rising income for life.

    • A money-back plan pays a fixed income that never grows
    • Split the same money into pure term cover plus a mutual-fund SIP
    • A rising income for life, instead of a flat one
    ₹
    Estimated pure life cover₹29 Lfrom ₹1,500 / month at age 45
    15%
    12%
    20
    100
    32
    Your income from age 60 • rising every 5 years, for life
    Starting at about 4.1× the money-back plan's flat income, for life.
    The plan you're offered
    Money-back Income Plan
    • A fixed lifelong income, plus a one-time bonus at maturity
    • Income stays flat while your expenses keep rising
    • Life cover₹22 L
    • You invest₹27.0 L
    • Total income received₹69.2 L
    • Maturity bonus₹2.39 Cr
    • Lifetime "you get"₹3.08 Cr
    Income / year • flat forever₹1.73 Lfor 40 years, then ₹2.39 Cr at age 100
    The structured alternative
    Term + SIP, then step-up SWP
    • 10% buys real cover, 90% compounds in a SIP
    • Withdraw 8% a year, stepping up 25% every five years, for life
    10% • Term insurance
    ₹1,500 / mo
    90% • Mutual fund SIP
    ₹13,500 / mo
    • SIP contributions run for 15 years
    • Term premium payable for 20 years, cover active to age 65
    • Withdrawals begin at age 60
    • Life cover (pure term)₹29 L
    • Premium paying term20 years
    • Corpus at age 60₹0.90 Cr
    • Total income drawn₹7.89 Cr
    • Corpus left at 100*₹99.7 Cr
    • Assumed return15%
    Starting SWP income / year₹6.58 Lrises 25% every 5 years, for life

    Income, five years at a time

    • Their income never moves
    • Yours steps up 25% every five years, while the corpus keeps compounding underneath
    Age bandMoney-back planStep-up SWP
    Your corpus keeps climbing • even as you withdraw more
    Money-back maturitySWP corpus
    Assumptions & disclosures

      Black Numbers Law · AMFI-registered Mutual Fund Distributor · ARN-342488

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