Loan vs Redemption Comparison Calculator - Compare LAMF and Mutual Fund Redemption

Mutual fund redemption is the process of selling your mutual fund units back to the fund house at the prevailing NAV in exchange for cash. While it provides liquidity, redemption comes with hidden costs:

• Capital Gains Tax: LTCG above ₹1.25 lakh is taxed at 12.5%, and STCG at 20% for equity funds.
• Loss of Compounding: The redeemed amount permanently exits your portfolio and ceases to generate returns.
• Exit Load: Some schemes charge up to 1% if redeemed within one year.

Goal Disruption: Taking your money out too early can disrupt important long-term goals like saving for retirement or education.

A Loan Against Mutual Funds (LAMF) is a secured loan where you pledge your mutual fund units as collateral to borrow money. Your mutual fund investments remain in your portfolio and continue to earn returns. You pay only the monthly interest on the borrowed amount, and the principal can be repaid at any time within the loan tenure.

At smallcase, LAMF is available at an interest rate starting at 9.99% per annum with a default tenure of 36 months. There are no foreclosure charges, no credit score dependency, and during this tenure, you can make early repayment or foreclose the loan at any time!

1. Enter your portfolio amount and expected CAGR.
2. Enter the amount you need and the duration.
3. Review the auto-computed redemption details (tax, capital gains) and loan details (interest rate, tenure). Adjust any values if needed.
4. Compare the final portfolio value under both scenarios in the comparison section.
5. Click “Download Comparison PDF” to save the report.

The Loan vs Redemption Comparison Calculator is an online tool that compares two scenarios side by side: redeeming your mutual fund investments versus taking a loan against them.

You enter four inputs: your portfolio amount, expected CAGR, the amount of money you need, and the duration for which you need it. The calculator then auto-computes the redemption costs (capital gains, LTCG/STCG tax) and loan costs (fees & interest at the applicable rate) for the same period.

The result is a clear comparison showing the final portfolio value under both options, which one is better, and by exactly how much. You can download the full comparison as a PDF.

The Loan vs Redemption Comparison Calculator is a valuable tool for any mutual fund investor facing a liquidity decision. By comparing the final portfolio value under both scenarios, the calculator makes it easy to see which option preserves more wealth over time. The right choice depends on your specific circumstances, including the size of your gains, your ability to pay monthly interest, and whether the need is temporary or permanent.

The results provided by this calculator are for illustrative purposes only and are based on the inputs provided by the user, including the portfolio amount, expected CAGR, amount needed, and duration.

The calculator assumes a constant rate of return (CAGR) and a constant interest rate for the loan. It does not account for market fluctuations, changes in NAV, or variations in interest rates during the loan tenure. The tax calculations are based on prevailing tax rates at the time of development and may not reflect the latest tax regulations.

smallcase makes no representations or warranties regarding the accuracy of the calculator’s results. This calculator and the results generated are not intended as a solicitation for any loan or investment product. Users are encouraged to consult with a qualified financial advisor before making any borrowing or investment decisions.