I am a software professional, working with a US-based organization. A few years back, when I was 35, I availed a home loan of INR 30 lakhs for 9.6% interest rate. I used the loan amount to buy a home and kept paying the EMIs, regularly.
After a few months, one of my friends, who has been my financial planner too, alerted about the refinance option for a home loan with 8.5% interest rate. But, initially, I was lazy and reluctant to rush for mere 1% difference in interest. I was not ready to make multiple bank visits, submit loads of papers to avail the refinance option, that too to save ONLY INR 3,000 on EMIs every month.
However, after repeated follow-ups, my friend came to meet me in person and explained how this ‘simple EMI decision’ could impact big-time in my retired life. I then realized the power of small money decisions.
A SIP of INR 3,000 every month (that same amount I save from refinanced home loan) for a 20-year investment period helps me earn INR 30,00,000, assuming 12% annual returns.
When this corpus of INR 30,00,000 is added to my expected mutual fund retirement saving of INR 2 crore, the combined corpus could help me survive for more 10 years during my sunset phase of life.
The below graphs clearly explains how the 2 crore retirement corpus runs out in 25 years, with an annual expenditure of INR 14 lakhs. And how 2.3 crore corpus helps me survive more than 35 years with the same annual expenditure.
Hence, it is important for everyone of us to understand how small money decisions make a huge impact in the long run. Every financial decision is crucial, be it small or big. And a thorough financial planning would help us realize our priorities and the value of making right investments to meet our dedicated goals.
Approach financial experts online at ArthaYantra and get your financial plan in place. Correct your previous money mistakes through expert guidance and make choices that suit your needs!