The EMI-SIP Dilemma

Ratin / 01 Oct 2026 / Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund

Should I use an EMI to fund my current purchases and invest the amount I save through a SIP instead?

I believe my current salary is low considering my responsibilities, but I also understand the benefits of long-term compounding through investing. Should I use an EMI to fund my current purchases and invest the amount I save through a SIP instead? - Vaibhav Damle [EasyDNNnews:PaidContentStart]

Editor Responds : Using an EMI to fund purchases while investing the equivalent amount through a SIP may appear attractive because it allows you to start investing without delaying consumption. However, the decision depends on the cost of the loan, your cash flow and the nature of the purchase.

If the EMI carries a high interest rate, borrowing to invest is generally less attractive because the investment return is uncertain, while the loan cost is fixed. If the purchase is essential and the EMI is affordable at a low interest rate, you may consider continuing your SIP alongside it. The key is to avoid compromising financial stability for the benefit of compounding.

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