1. Its key lies in postponing today's "desire" for a "cheaper" gadget, and buying a "more productive" gadget tomorrow, by utilizing power of compounding in SIP investment, without even taking a "costly" personal loan or credit card loan.
2. Suppose the gadget costs 1 lakh today, for which you're thinking of taking a personal (or credit card) loan for 5 years, say @20% interest p.a., and whose Equated Monthly Installment (EMI) will then be 2,650.
3. Instead of buying this gadget on loan, which will finally cost 1,59,000 (1 lakh + 59,000 interest) after 5-year loan period, start a 5-year Systematic Investment Plan (SIP) of 2,650 in an equity mutual fund (say Hybrid Aggressive).
4. In 5 years, even at 10% CAGR, fund value becomes 2,05,000, i.e. double of today's gadget price - while total invested "outgo" remains 1,59,000 !
5. Therefore, besides buying a loan-free "superior" gadget (by utilizing the differential value of 46,000), you can also continue SIPs in this fund for any gadget upgrade later!
6. A tip - Choosing a tax-saver ELSS fund will also enable 31,800 tax benefits u/s 80C per year, besides "postponing" any "early urge" of buying the gadget, albeit with a withdrawal amount arrived after considering 3-year lock-in period of each SIP.
2. Suppose the gadget costs 1 lakh today, for which you're thinking of taking a personal (or credit card) loan for 5 years, say @20% interest p.a., and whose Equated Monthly Installment (EMI) will then be 2,650.
3. Instead of buying this gadget on loan, which will finally cost 1,59,000 (1 lakh + 59,000 interest) after 5-year loan period, start a 5-year Systematic Investment Plan (SIP) of 2,650 in an equity mutual fund (say Hybrid Aggressive).
4. In 5 years, even at 10% CAGR, fund value becomes 2,05,000, i.e. double of today's gadget price - while total invested "outgo" remains 1,59,000 !
5. Therefore, besides buying a loan-free "superior" gadget (by utilizing the differential value of 46,000), you can also continue SIPs in this fund for any gadget upgrade later!
6. A tip - Choosing a tax-saver ELSS fund will also enable 31,800 tax benefits u/s 80C per year, besides "postponing" any "early urge" of buying the gadget, albeit with a withdrawal amount arrived after considering 3-year lock-in period of each SIP.