How Mutual Funds Can Pay Your Home Loan: Viral Strategy Explained

A clever financial strategy shared online has left investors amazed: a user revealed how he managed to buy a house while simultaneously building a massive mutual fund portfolio. The outcome? Owning a house after 20 years and mutual funds worth over Rs 10 crore.

“It’s like having your cake and eating it too.”

How Did He Do It?

The X post detailed that the person did not buy a Rs 10 crore house with a full cash payment. Instead:

• He made a down payment of Rs 2 crore.
• The remaining Rs 8 crore was invested in a mutual fund offering a 12% CAGR.
• He took an Rs 8 crore home loan at 8.5% interest, which meant an EMI of Rs 7 lakh per month.
• Then he set up a Systematic Withdrawal Plan (SWP) of Rs 7,00,000 per month from the mutual fund.

According to the post, the SWP covered every EMI for 20 years. By the end of two decades, the individual owned both the house and a mutual fund portfolio reportedly worth Rs 10.5 crore.

The post emphasized a key principle: “people don’t just need to buy assets, but also letting their assets pay for other assets.”

Does This Strategy Work in Reality?

Not everyone is convinced. Many X users questioned whether the plan is realistic, given the variables involved, especially the assumption of consistent returns.

When asked, Grok, X’s in-built AI bot, highlighted a major flaw:

• At a 12% CAGR, the corpus after 20 years would be Rs 1.3 crore, not Rs 10.5 crore.
• Achieving Rs 10.5 crore would require a sustained 19% CAGR, which is highly unlikely.

Grok warned: “Downturns early could wipe the corpus while loan EMI continues.” It also noted that taxes and fund expenses would reduce net gains.

While the strategy is intriguing and illustrates the power of leveraging investments, it comes with significant risks. Consistent high returns in equities are never guaranteed, making this approach more of a financial experiment than a foolproof plan.