What should you do with your EMI money after repaying your Home loan?

You finally have repaid your loan. Home loan is a big burden for most people and getting it repaid is a reason to celebrate. But with the home loan paid off, your EMIs will also stop. This will increase your savings resulting in more money left every month.

What should you do with your EMI money after repaying your Home loan?

Many people think that now I have paid the loan, I will buy a second flat and will take a home loan, again. Buying your first house for residential use is a good idea. But buying the next one for investment should only be considered if you have that much surplus money & you already have taken care of your other financial goals. So what should you do with that extra money each month? Below are some suggestions.

Embrace good financial habits

The home loan is ended and you have more money to spend that does not mean, you have to go around shopping for unnecessary things, do hoteling, etc. Embrace good Financial habits. Save more, spend less & invest your money.

Make Provision for Emergency Fund

If you don’t have an emergency fund or if it is not big enough, then it’s time to use your remaining extra money to top up your emergency fund. This may seem an unnecessary step but is essential. Emergencies don’t wait for us to accumulate emergency funds! Generally, it is good to have 5-6 months' salary as an emergency fund.

Pay High-Interest Rate debts

In case you have other high-interest debt (a personal loan, car loan, or credit card outstanding), start clearing that off. 

Set SMART Goals

Setting Goals is an important aspect of life. Set SMART goals. Goals should be Specific, time-bound, realistic, measurable, and achievable. Goals can be to save and accumulate Retirement Corpus, make provision for children's higher education, achieve financial freedom early in life, etc. Investment should be linked with your Financial goals. 

Stop Procrastinating

Do not keep postponing investment decisions. Start early to get the benefits of compounding. Time is money.

Invest wisely

If you are a first-time investor. Don't hesitate to take the help of a Financial advisor or Mutual Fund Distributor (for Mutual Fund investment). You should stop scrolling for financial advice online and hire a 'human' financial advisor because the cost of choosing the wrong investment is greater than the advisor's cost (fees/commission). 

Invest in diversified asset classes like Mutual Funds (Large-cap, Midcap, small-cap, Flexi cap, Hybrid, Debt, etc), Stocks, Gold, FD, etc. 

If you don't have time to study before investing or monitor your investment frequently, you can start SIP (Systematic Investment Plan) in a Mutual fund. Ignore the news, YouTube videos, etc. about investment options that will make you rich in a month. Remember it is important to stay in the market for the long term with well-studied investment decisions. Monitor your investment minimum yearly to check if your investment is on track.

Don't get stressed out with these suggestions. Balance your life & be simple. Don't forget to enjoy your life with little things that matter.