I have Rs 5 lakh in my savings account. Should I repay my home loan or invest it?
Whether to use the surplus money to repay debt or to invest it is often a choice between a rational and an emotional approach.
Jayant R. Pai CFP and Head of Marketing, PPFAS Mutual FUND replies: Whether to use surplus money to repay debt or to invest is often a choice between a rational and an emotional approach. The rational approach is to consider trade-offs between the opportunity cost of prepaying the loan: the potential return that you will forego, if you use the money to pay the loan, plus the home loan tax benefits that you will lose. The emotional approach mainly involves the palpable relief one experiences once the burden of debt has been lifted. The relative importance given to each of these will vary from person to person. I prefer prepayment of the loan, and suggest that you too opt for it.
I want to invest in mutual funds directly. Should I invest via third-party distributors or directly via the various funds' websites?
Prableen Bajpai Founder, Managing Partner, FinFix Research & Analytics replies: You should opt for mutual funds' direct plans only if you understand the nuances of mutual funds and investing. The simplest way is to invest via the respective websites of fund houses. This is a foolproof way of direct investing and does not involve any fee to any outside entity. However, it doesn't offer the ease of investing in schemes from different fund houses at one place. This is where some third-party platforms such as MF Utilities India, registrar and transfer agents of mutual funds (CAMS and Karvy) or new age robo-advisory platforms and direct investment portals come into play.
Each of these platforms has different offerings and you need to look into each. Do remember that even direct plans have expense ratios. The difference in expense ratios of direct and regular schemes has also reduced, which makes a case for considering a good adviser/distributor. Overall, please take a call based on your knowledge of mutual funds and investing process, assistance-needed with regards to paperwork and financial planning guidance, specific requirements, if any, and preference for online/offline transactions, among other things.