Loan + investment calculator
Can you earn back what the loan costs you?
A loan you already have costs you a fixed, knowable amount of interest. This works out what you would have to invest each month to end up with that much — and then shows you the alternative nobody publishes beside it.
An assumption, not a forecast. Equities have historically returned around this over long periods — in a line that was never straight.
Interest only makes the borrowing notionally free. Everything you repay means ending the tenure with the whole outgo back — a far bigger target.
The SIP that would get you there
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Indicative only, based on the assumptions below. Not an offer or a guarantee.
What this assumes
- The return is YOURS to set and it is an assumption, not a forecast. Equity does not deliver a steady rate — it delivers an average made of very good and very bad years, and which ones land near the end matters enormously.
- Tax on redemption is not deducted. Long-term gains on equity funds are taxable when you sell, so the amount you actually keep is smaller than the figure shown.
- A fixed loan rate for the whole tenure. Floating-rate loans move with the repo rate, and over twenty years they will.
- No deduction is taken for tax relief on the loan interest, and none for the cost of investing.
- The SIP is treated as a debit at the start of each month, which is how fund houses quote it — the same convention every mainstream SIP calculator uses, so the figure above should reproduce exactly if you check it elsewhere.
- The monthly figure is rounded UP to the nearest ₹100, because that is an instruction a fund house will actually accept, and every number beside it is computed from that rounded figure rather than from an unrounded one. It is why the corpus comes out a little above the interest rather than exactly on it.
- This is arithmetic on the numbers you entered. It is not advice, a projection, or a recommendation to borrow or invest.
The boring bit
What this actually shows, and what it does not
The arithmetic is sound and it is not new. Run a SIP beside your EMI for the same number of years and, at the assumed return, the corpus reaches the interest you paid. Plenty of people publish this as "invest 10% of your EMI and your home loan becomes free".
It does not become free. You still pay the lender every rupee of that interest, on time, whatever the market does. What you have done is run a second and riskier asset alongside the loan and hoped it wins. If it does, you are ahead. If the last five years of a twenty-year SIP go badly, you have paid the interest and missed the target — and there is no version of this where the lender shares that outcome with you.
Which is why the third row is the one to read. A rupee paid into the loan earns your loan rate, guaranteed, tax-free, with no sequence risk. A rupee invested earns a return nobody has promised you. The gap between those two rates is what you are being paid to take the risk — and if your loan rate is close to your assumed return, you are taking the risk for almost nothing.
Work both routes all the way to the end and the result is worth seeing. On ₹50,00,000 at 8.75% over 20 years the SIP is ₹5,700 a month, and after 20 years you hold ₹56,95,143 against ₹56,04,529 of interest paid to the lender — you are square, with a little over. Put that same ₹5,700 into the loan instead and it clears years early, after which the whole freed-up instalment is available to invest for what is left of the tenure. The two routes finish close enough that the difference is noise on a twenty-year decision. One of them required the market to deliver 12%. The other required nothing.
Change the return to 8% and the SIP more than doubles, to 21% of your EMI. That is the sensitivity this hides: almost the entire case rests on a number nobody can give you.
The honest cases for investing instead are real: liquidity you can reach in an emergency, a loan with a prepayment penalty, or a rate low enough that the gap is genuinely wide. The honest case against is that most people who start this stop the SIP in the first bad year and keep the loan. Ask us which one you are, and we will tell you.
Monthly SIP = Target ÷ [ (((1+g)^n − 1) ÷ g) × (1+g) ], where g = assumed return ÷ 12, n = months, and Target = total interest (or total repaid)
FAQ
Questions about this calculator
Does this make my loan interest-free?
No. You pay the lender exactly what you were always going to pay. If the investment reaches the target you separately end up with a matching amount — which is a good outcome, but it is a second asset that worked, not a discount on the first.
Is it better to invest or to prepay?
Prepaying gives you your loan rate, guaranteed and tax-free. Investing gives you an uncertain return that has to beat that rate after tax to be worth it. If your loan is at 9% and you assume 12%, the gap is thinner than it looks once tax and a bad decade are allowed for. The calculator shows both so you can see the size of the bet rather than be told it is free money.
Where does the 12% come from?
It is the figure most Indian SIP calculators default to for equity over long periods. It is a historical average, not a promise, and it is a slider here precisely so you can see what happens at 8% or 10%. Try it — the SIP needed roughly doubles between 12% and 8%.
What about tax?
It is not deducted here. Long-term capital gains on equity funds are taxed when you sell, so the corpus you keep is smaller than the target shown. That makes the comparison against prepaying — which has no tax on the saving — better than it already looks. We will work the after-tax numbers with you properly.
Can I do this on a personal loan?
You can run the arithmetic, and it will usually tell you not to. Personal loan rates are high enough that prepaying almost always beats an assumed market return, and the tenure is short enough that compounding has little time to work.
Turn the number into a plan
A calculator gets you to a figure. Getting there needs a product, and that is the part we do.