Let us take an illustration.

Assumptions:

  • House rent Rs 10,000 per month for a house costing Rs 60,00,000. Rent increase by 6% every year.

  • Home Loan EMI at 9% interest rate is about Rs 45,000 per month.

You stay on rent and save the spare cash into a diversified equity Mutual Fund scheme. You invest in the Direct Plan of the mutual fund. The fund gives you 15% per year over next 20 years. There are many such funds which have done so in the last ten years.


Following table is the cash flow in both options on an Yearly basis.