this is a never ending question and does not actually have a ‘correct’ answer.

Let us say you are 34 years of age, have a CTC of Rs. 30L, have a home loan of Rs. 80L, and your wife earns about Rs. 20L and now you have a Rs. 4L surplus. Oh, you have a nice MF portfolio of Rs. 19L and in the current year you got a 29% return on your investment.

Well, frankly it does not matter what you do with your money. Either way you could be right.

Suppose you sell off mf worth Rs. 10L and repay the loan (which is at 8.66%), AND THE MIDCAP fund in which you had invested gives a 2% return in the current year, you would look smart.

If you sell off your MF worth Rs 10L…..and the fund goes up by 12%…you would look..well, not so smart.

So my answer to you is simple.

When are you going to judge my decision?

If it is one year my answer is “I do not know”.

If the answer is say 5 years, my answer would be as follows:

Pay off Rs. 1L of the loan and you will have Rs 3L to invest, go ahead and invest it in the same funds in which you are doing a sip. Yes Franklin Prima also. I am sure that there will be a capital loss in one of the years – from 2018 to 2023. I do not know which year. The current run has been too good to be true.

However the loan amount is too small – it is not even 2 years CTC between the 2 of you. Your wife has taken up a job after having the baby – and you are NOT planning to have another baby. So I am assuming that the cash flow will continue to happen. Your EMI will go on smoothly with no hassles. Both of you are in a nice industry with lotsa potential.

As and when the lock-in of your ESOP goes away (Oct, 2019) you will suddenly find your net worth go up by Rs. 1.2 crores. That will give you more comfort from a liquidity point of view.

At that stage you could sell off your current house, and buy a bigger house.

Consolidate the loan at that stage….do nothing now.

I can ASSURE you that the equity return this year will be lesser than 27% that your funds gave you last year. It could even be less than the interest rate that you are paying on the home loan, but hey I think you should take the gutsy call – you can afford to.