EMI VS SIP
Hello, Reader today I am trying to describe the power of SIP and EMI.
We are going to describe
who can be benefited from EMI?
who can be benefited from SIP?
I am going to talk both about it with example and I also
give you an excel sheet in which you can calculate and give your friend to
calculate.
Let’s start with the abbreviation of
EMI: EQUATED MONTHLY INSTALLMENT
SIP:
SYSTEMATIC MONTHLY INSTALLMENT
When you give EMI, it means every month you are going to pay a
little amount towards your buying product.
Here a lot of things come around you if you buy assets then
hopefully you will get the benefit but if you buy liability then it could be a loss.,but sometimes you get a little benefit.
Let’s take an example of when you buy a mobile the value of
your phone is RS 20000 but you have to give twenty thousand with Interest .sometimes it is interest-free EMI which is a great thing for you.
Because when you pay through EMI and you did not pay any interest its means 20000 rupees in your bank.it generating interest in it. You don’t have to utilize your full capital at the buying time .which is great but remember a very good thing which is at the end of the EMI your full amount will be on that device which is a depreciation asset which means its value decreases when time goes.
At the same time when you do SIP, it is invested regularly and it
grows regular basis with time at the end, you also get the amount you have invested
and get some appreciation value with it. its means it put money in your pocket
which means it’s an asset.
See when you buy on EMI it is unplanned which for you have to pay some charge at the end but if you plan a thing and start sip then it can contribute some amount which means EMI is taking money from your pocket but SIP contributing some money to you pocket.
Now you think about
this and try to understand and think how you can use this thing for your
benefit.
EMI is for those things which can be fulfilled with your
monthly deducting money with no appreciating value.
Yes, there has some appreciation when you buy a home and the
value goes up but my friend you are never going to sell your home that’s why
there has no appreciation.
SIP is for those things which you dream to achieve but with
appreciation.
Yes, there is some value up and down but in a run of 5-10 or
10-15 years, it always gives a good return of 15% CAGR which is an appreciating
amount for you. Now this Morden day people most have SIP in against any EMI
which makes their life appreciated. At least some money will be added to their pocket.
EMI is a habit of spending with interest which motivates you
to fulfill your dream with a bad habit.
BAD HABIT yes bad habit means when you buy things on EMI
it became a bad habit of buying things, EMI is very easily available. When your
credit score is good.EMI appreciates you for increasing your credit score. which is appreciating your bad habit and coming to them for more loans.
EMI did not give you any chance of bargain you can take
anything home with EMI. its look very small payment but when looking it properly
· It forces you to pay interest
· Force you to buy unnecessary things
· It makes a bad habit of spending without thinking.
This could not be noticed till the date when EMI became Borden
and then you cannot pay it properly.
SIP is a habit of saving with appreciation which cannot
motivate but that can fulfill your desire with a good habit.
It teaches you the habit of saving when it is automatically
deducted from your account and deposited to your mutual fund account it will
definitely benefit you in long run.
In this case, the law of averages will work for you. the SIP thing
is going to watch out for only 2 -3 years after that when you realize it
after 5 years and cheek the amount which you have been invested it might amaze
you and give you such a pleasure, I think which you can not describe and yes
you would be proud of yourself because your mind is working toward
construction.
Some wealthy salary people will tell I can pay all
my EMI with my single salary but I just want to tell them congratulation but I
also tell them just save a single month's salary and with that money start small SIP
in a different theme. Then paid your Emi, if you want to see the difference then download
the excel and put your EMI amount then put in the time and interest per year.
Click here to download the excel.
It may help you to understand
EMI is not a good or bad thing but your attitude towards it
might indicate you it's good or bad with your experience. You just pause think and use
it wisely. but one thing which I feel it create a bad habit.
Sip is not a bad or bad thing but your step towards it will lead
you to a better life.
IT is a very good tool for saving which is also known as an automatic saving habit.
It always leads you towards the good thing and better life in the future.
Just think about it and practically see or apply everything
will be clear
Thanks, you please comment your suggestion I am waiting for
it.
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