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Should I prepay my home loan first or start investing my savings in funds?

Dhirendra Kumar gives a very clear and practical reply to this commonly-faced quandary

Answer transcript: No. You shouldn't prepay your home loan and must continue your SIP. We support home loan as it is a good loan with an asset backing, you also save on rent if it is the home that you live in. The rationale is that it's a long-term loan and you pay a reasonably low rate of interest along with the advantage of a tax break. The additional money that you have which you want to prepay should be invested in long-term equity mutual funds. The returns will be far superior to what you would have otherwise saved by prepaying your loan.

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