Should I take loan and invest in mutual funds

I am planning to invest to 12 lakhs in mutual fund with SWP. I will take loan of Rs. 12 Lakhs for 10 year and invest in MF. I will pay 12000 per month as a loan EMI. Since I will go for Rs. 6,000 SWP each month so I have to pay only Rs. 6,000 from my pocket and rest will be paid by SWP. I will invest in following three mutual fund - 1) Sundram Select Midcap Growth - Rs. 4 Lakhs, 2) DSP BlackRock Microcap - Rs. 4 Lakhs, 3) Motila Oswal Most Focused 25 - Rs. 4 Lakhs. If history repeated for all above mutual fund then I am expecting around 1.5 Crores from my 12 Lakhs investment in 12 years. Presently I am paying 7000 per month for monthly SIP from last 4 year but not getting good return, I am getting return about 14-18% per annum on SIP. So I have plant to take loan and invest lump sum amount in One Go. Please suggest whether its good to take loan for mutual fund. Since I am 30 years old and I am risk taking investor. Can I take loan for this. Please suggest whether I have to take loan or continue with my existing Rs. 7,000 per month SIP. Reason for taking loan is only to invest good lump sum amount in one go so that I can get good return. I have seen lump sum amount invested in mutual fund have very good return instead of taking SIP?

Dec 15, 2016 by Sumit Bisla, Faridabad | Mutual Fund

It is never advisable to invest in mutual funds by taking a personal loan. In fact, if you take a personal loan, you will see that in the terms and conditions, it is clearly mentioned that the loan amount can no be invested in any securities or in any kind of speculative instruments or products.

Please stick to the existing SIP of Rs. 7,000 and continue for the long term. If you have investible surplus in future then try to increase this SIP amount and align with one of your future goals.

Your idea that, lump sum investments give better return is again wrong. if someone was lucky to have invested a lump sum at the bottom of the market then what you are saying might be correct. But, how do you know which is the bottom point of the market? That is why we choose the SIP mode of investing as it benefits from rupee cost averaging, long term power of compounding and also that an amount as small as Rs. 500 can be invested through SIP mode.

If you have a future goal in your mind or you just want to create wealth in the long term, take help of this calculator and know how much you need to save through monthly SIP to reach that goal https://www.advisorkhoj.com/tools-and-calculators...

Hope the above helps. Thanks for writing to Advisorkhoj!!

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