A simple way to determine whether you are heading in the direction of wealth accumulation or away from it. Simply compare your EMI to your investment outflow and determine which is greater.
If your investments exceed your EMI, you will become wealthy.
If your EMI exceeds your investment, you will remain underfunded.
Please keep in mind:
* The investment rate must be higher than the EMI rate.
* Because your EMI is paid on a monthly basis, consider investing on a monthly basis as well.
* It is safe to assume investments in SIP.
Many people are more at ease when they choose EMI for their home, car, education, or personal loan. Not only that, but they are also comfortable running EMI for one to two decades, if not longer.
At the same time, they are extremely uneasy with SIP if returns are not obtained within the first 3 - 5 - 7 years. After about three years, they feel comfortable stopping the SIP or withdrawing a portion of the profit.
People are perfectly happy paying interest than earning interest.
Do you know which camp you belong to?
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