Purchasing a house in 2024 is a dream that a majority of Indians cherish. Owning a house is not easy and is a complicated process that throws up many challenges. The challenges that you will face during your home loan application journey might depend on the bank that you choose and the city where you live. You can, however, reduce the stress of downpayment by planning for it well in advance and investing smartly. Systematic investment plan (SIP) investments can help you systematically save for your upcoming downpayment.
How to invest via SIPs for the downpayment of a house?
This section contains a roadmap for individuals who wish to start an SIP for down payment in 2024. This is a list of steps that can help you make the downpayment of your house easily and on time –
- Make a detailed budget that accounts for your SIP investments: Before starting any mutual fund SIP investment, you must be very clear about your investment objective. You must note down the exact value of the downpayment that you must pay by a certain year. To save more, you must account for all the extra expenses that you make monthly and try to reduce them regularly. Be sure to time your savings journey and attach a year to your investment objective of paying the down payment.
- Open a separate high-yield savings account: Next, you should open a high-interest savings account. Doing so will help you benefit from a steady growth in savings over the next few years. You should also consider opening a high-yield fixed deposit to grow your savings.
- Make strategic mutual fund SIP investments: Choosing the right mutual fund SIP investments is the most important step in this process. Here are the sub-steps that you must follow –
- Choose the right mutual fund category: Given that your investment objective is saving for the downpayment of your future house, you can consider investing in hybrid funds, debt mutual funds, or direct equity funds via SIPs. Investing in debt funds via SIPs can help you benefit from low risk and high liquidity. Equity SIP investments, on the other hand, are considerably volatile, but they help you generate higher returns. Hybrid mutual funds help you benefit from the advantages of debt and equity mutual funds.
- Calculate your mutual fund returns in advance: Use online financial calculators like SIP return calculators to choose the funds that offer most returns within your investment horizon.
- Reassess your investments regularly: You should regularly check if your SIP investments are helping you meet your goal of making the downpayment by a given year. It is also important to be time-bound while making these investments. You can do this by attaching a fixed date or year to your investment goals.
- Check your eligibility for government schemes: Several housing schemes launched by the government can make purchasing a house easy for you. You can check your eligibility for these schemes and apply for them to further make your down payment affordable.
In conclusion, while planning for saving for your down payment, you must choose the right investments, set clear investment objectives, check if you are eligible for government schemes, and use online SIP calculators.
