SBI MaxGain

[Debabrata Ghosh]

Dear All,

 

Today I was going through following calculation just out of curiosity and managed following result

 

Assumptions:

 

Loan Amount: 54,73,000

Tenure: 25 years/300 months

Interest rate: 10.75%

Additional Investment per month on Maxgain: Rs. 10000

Interest rate for investing the Rs. 10000 elsewhere (RD/FD/Debt instruments)

 

 

Situation I (calculated on the basis of actual loan repayment period)

 

By investing Rs. 10000 every month, my loan tenure would be reduced to 172 months

 

Deposit on Maxgain Ac: Rs. 17,10,000

 

Future value of investment (RD) of @ Rs. 10000 per month @8.5%  for 172 months is Rs. 33,65,400 (approx). Calculated on future value formula basis.

 

Value of above investment after TDS is Rs. 23,43,600

 

We will get tax benefit for interest paid in both cases so I have not considered it.

 

Total benefit is Rs. 23,43,600. Rs. 23,43,600 which is greater than Rs. 17,10,000

 

Situation II (calculated on the basis of approved loan repayment period)

Deposit on Maxgain Ac: Rs. 17,10,000

 

Savings on account of non payment of EMI for 128 months (300-172)= Rs. 67,40,000 (approx)

 

Total Gain= Rs. 17,10,000 + Rs. 67,40,000 = Rs. 84,50,000

Future value of investment (RD) of @ Rs. 10000 per month @8.5%  for 300 months is Rs. 1,04,00000 (approx). Calculated on future value formula basis.

 

Value of above investment after TDS is Rs. 72,38,200 (approx)

 

Tax benefit missed for 128 months (11 years approx) is @ Rs.45000 per annum (30% of Rs. 150000 interest payment)= 45000x11= Rs. 4,95,000 

 

Total benefit is Rs. 72,38,200 + Rs. 4,95,000 = Rs. 77,43,200 which is lesser than Rs. 84,50,000

 

This is just an illustrative calculation by me and your comments are welcome. Please keep in mind that this has nothing to do with SBI loan and just for our own understanding. I am attaching my maxgain sheet for better understanding of values. The values for other investments are calculated by using FV formula in excel and standard tax rules.

 

PS: If we do the above calculation for Rs. 20000 per month investment or deposit in maxgain, then even in Situation II, investment turns out to be beneficial. I can understand that you might say we may deposit more in some months and less in some. Also there is flexibility of liquidity. But again I repeat this is just an illustration with specific assumptions.

 

Best regards,

--

Debabrata Ghosh

Phone-91-9891906053