EMI vs SIP Calculator
See whether a loan's interest or the same EMI invested monthly builds more.
Investing the EMI grows ₹28.46L — ₹18.06L more than the ₹10.40L the loan costs in interest.
- EMIs invested
- SIP value
- Principal
- ₹20.00L
- Interest
- ₹10.40L
Year by year10 yrs
| Year | EMIs invested | Est. returns | SIP value |
|---|---|---|---|
| Y1 | ₹3.04L | ₹20.50K | ₹3.25L |
| Y2 | ₹6.08L | ₹82.17K | ₹6.90L |
| Y3 | ₹9.12L | ₹1.90L | ₹11.02L |
| Y4 | ₹12.16L | ₹3.51L | ₹15.67L |
| Y5 | ₹15.20L | ₹5.70L | ₹20.90L |
| Y6 | ₹18.24L | ₹8.55L | ₹26.79L |
| Y7 | ₹21.28L | ₹12.16L | ₹33.44L |
| Y8 | ₹24.32L | ₹16.60L | ₹40.92L |
| Y9 | ₹27.36L | ₹22.00L | ₹49.36L |
| Y10 | ₹30.40L | ₹28.46L | ₹58.86L |
Compares a reducing-balance loan at 9% with investing the same EMI monthly at an assumed 12%. It ignores what the loan buys (a house, a car) and the tax treatment of either side — a loan's interest deduction or the SIP's capital-gains tax can move the answer.
Independent · No commissions · No fund-house data — how the numbers are computed
How it works
The same monthly amount can service a loan or build a corpus, and this calculator shows both outcomes for one EMI. It computes the reducing-balance EMI for the loan you describe, then invests exactly that EMI every month for the loan's tenure at the return you assume, and sets the SIP's growth against the loan's total interest. The net benefit is the growth the SIP earns minus the interest the loan costs; a year-by-year table shows how the SIP side accumulates.
At the defaults — ₹20 lakh at 9% over 10 years, 12% on the SIP — the EMI is about ₹25,300, the loan costs ₹10.4 lakh in interest, and the same EMI as a SIP grows to ₹58.8 lakh, a ₹28.4 lakh gain. The comparison is deliberately narrow: it is the cost of borrowing against the opportunity cost of not investing, at an assumed return. It does not value what the loan buys, which is usually the point of the loan.
Where it is most useful is the prepayment question — whether spare cash should clear a 9% loan or go into a 12% SIP. Arithmetically the higher rate wins, but the loan's 9% is certain and the SIP's 12% is a guess; tax changes both sides (home-loan interest is deductible under the old regime, equity gains are taxed on redemption); and clearing a loan has a value in reduced obligation that no return figure captures.
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1); SIP_value = EMI × ((1 + g)^n − 1) / g × (1 + g)P is the loan principal, r the monthly loan rate, g the monthly SIP return, n the tenure in months. Net benefit is SIP_value − EMI × n − total interest.
Frequently asked questions
Does this mean I should invest instead of repaying my loan?
Not by itself. The calculator compares a certain cost (loan interest) with an uncertain gain (an assumed SIP return) and ignores tax, the asset the loan buys, and the value of being debt-free. It is a way to see the size of the trade-off, which is larger than most people expect, rather than a decision rule. A loan at a rate close to or above the expected return is usually worth clearing first.
Why is the SIP amount equal to the EMI?
Because that is the question the page answers: what the same cash flow does on each side. Holding the monthly amount constant is what makes the interest cost and the investment gain comparable — the difference between the two results is entirely the rate of return, not the amount committed.
Is the loan's interest the same as its total cost?
Interest is the cost of borrowing; total payment is principal plus interest, which the donut shows. The comparison uses interest alone because the principal is money the borrower had the use of — the honest cost of a loan is what is paid above what was received.
What return should I assume for the SIP?
The assumption should match the asset and the tenure. A loan of 10 years or more pairs naturally with an equity assumption in the low teens; a 3-year car loan does not, because equity over 3 years is as likely to lose as to earn 12%, and a debt-fund assumption of 6–7% is more appropriate — at which point a 9% loan wins and the page says so.