Emergency Fund vs Loan Prepayment Priority
Decide when to prioritize emergency corpus over aggressive loan prepayment.
Should You Prepay Home Loan or Invest?
A framework to decide between debt reduction and investing surplus money.
Quick answer: The right choice depends on effective loan cost, tax impact, risk tolerance, and investment discipline.
Key Points
- Compare post-tax loan cost with realistic post-tax investment return.
- Maintain emergency corpus before aggressive prepayment.
- Use split strategy if decision is not obvious.
Related Finance Guides
Frequently Asked Questions
Should all bonus money go to prepayment?+
Not always; preserve liquidity and diversify goals.
Can investing beat prepayment?+
It can, but comes with return variability and discipline risk.