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Wednesday 30 November 2016

Is India Ready For Another Gujarat 2001?

On November 13, 2016, while most Indians were busy exchanging their old notes at the banks, in another part of the world, New Zealand was rocked by an earthquake of magnitude of about 7.5 on Richter scale. About 232 aftershocks of the event were recorded in the country by GeoNet, leaving thousands of people stranded near the epicenter.

It brought back haunting memories of what happened in Gujarat back in 2001 and once again raised the question: Are we ready for such disasters?

What Happened in Gujarat?

While the whole nation prepared to celebrate its 52nd Republic Day, Gujarat was shaken awake to one of the worst disasters in the history of India. On the morning of January 26, 2001, an earthquake of magnitude of around 7.9 hit this western state at 8:46 am.

It was a result of the Indian plate pushing towards the Eurasian plate in the North. Although the quake lasted for only two minutes, it claimed over 18,000 lives and 167,000 people were left injured.

The Destruction Caused

  • Out of the 25 districts of the state, 21 were completely destroyed.
  • Kutch was the most affected area and reported around 17,000 deaths.
  • 7,065 children and 9,110 women were reported dead.
  • Around 348 orphans and 826 widows were registered. While some were protected with life or term insurance, many were left financially crippled.
  • The collective economic loss was around Rs. 99 billion.
  • Out of those who were injured, a vast majority was left handicapped.
  • Around 8,000 villages were affected and more than 3,000 health facilities were destroyed.
  • Over 12 million houses were damaged, leaving thousands of people homeless.

The Response

It took years for Gujarat to recover from the disaster. The Gujarat Model of Development was formed to help the health, educational and industrial sectors reach new heights. About 300 international and 150 local NGOs were involved in providing assistance. Financially too, millions of dollars were used to make things normal again. Immediate relief of Rs. 500 crores was announced by the NCCF.

What transpired in New Zealand has once again underlined the importance of better future planning. Today, Gujarat stands strong but policies like term insurance and life insurance are the need of the hour to protect the financial future of your family.

To get these services is easier than it was ever before. Many banks these days also provide instant loans that can be used in times of crisis as well.

Tuesday 29 November 2016

Liquidity Crunch? The Solution Lies Here

When Prime Minister Modi gave a 40-minute speech on November 9, 2016, announcing the demonetization of Rs. 500 and Rs. 1000 banknotes, the 1.3 billion people of India were taken totally unawares!

There was panic and chaos among the people, since almost 80 percent of the monetary base was wiped out in one fell swoop. What could once guarantee the most upscale clothes and lavish meals, was merely a useless piece of paper now.

While the positive effects can take time to materialize, in the short term, most people are having to bear the brunt of this drastic move. This is especially true for small and medium sized businesses that function largely on liquid cash.

If your business is also suffering due to a liquidity crunch, it is time to consider solutions like bill discounting. Here is what you should know about this solution.


Why is Liquidity So Important?

Now let's talk about the importance of liquidity. Businesses thrive on capital. Without adequate financial support, they are unable to meet their everyday requirements for smooth functioning and revenue generation.

For instance, in order to ensure uninterrupted business functions, business owners need to pay their employees salaries on time, electricity and telephone bills need to be paid, loans need to be cleared, raw materials need to be procured, office stationery needs to be replenished, and so on. While bills and salaries can be transferred directly from the bank, paying vendors and suppliers might be an issue at the present moment.

So, what is the Solution?

Imagine this scenario – you have rendered services to one of your clients and received bills of exchange worth Rs.50, 00,000. But the payment is pending for nearly 3 months, and you require funds right now for your day to day business requirements. You know that it is useless chasing a client for bill payment at a time when they too are facing the same liquidity crunch as you. So what will be your immediate step to tackle this issue be?

One option is to apply for a loan. However, this means that you not only have to fulfill all the eligibility criteria, you also have to find a way to repay the loan amount along with the interest rate. Why burden your business with more liabilities? It is time to reduce liabilities with options like bill discounting.

This facility enables you to trade your receivable in exchange for cash. Also known as invoice discounting, the financial institution takes over your pending invoices, pays you what is due minus the fee, and thereafter the headache of getting money out of the client lies with the NBFC or bank.

The same holds true if you need to pay pending bills. In this case, you could apply for trade finance and tackle your liquidity crunch with ease. 

Tuesday 26 July 2016

10 hatchbacks that you should look up if you like small cars

With pollution levels and fuel prices hitting unprecedented heights in India, it is little wonder that car drivers have been clamouring for low fuel guzzling engines without compromising on overall driving quality and performance. Since they asked, car manufacturers delivered: The following are the top 10 fuel efficient cars in India, in no particular order:


  1. Maruti Ciaz SHVS diesel hybrid 28.09 kpl: This one’s a mild hybrid variant of the diesel Ciaz, and it is powered by gentler technology to improve on the car’s fuel efficiency. But this is not a little performer: it pushes speeds up to 26.2kpl.

  2. Honda Jazz diesel 27.3kpl: It will remind you of the Celerio in terms of fuel efficiency, and though it powers to a high speed with its 1.5 litre diesel engine, it results in low fuel bills. Plus, it is roomy enough for you and your passengers and stylishly designed.

  3. Tata Tiago diesel 27.28kpl: It is one of the most efficient cars in the country, as regards mileage, fuel and speed delivery. It also helps that this car has a large cabin and boot space, notwithstanding its high price.

  4. Ford Figo Aspire diesel 25.83kpl: This compact sedan packs in quite a punch with its looks, output and most importantly, its fuel efficiency. The Figo range has added a boot to this car, so there’s more storage space as well.

  5. Honda Amaze diesel 25.8kpl: Despite its recent facelift and minor innovations under the hood, this car is still not as good looking as others in its class. Still, it offers good interior design and fuel specs.

  6. Maruti Baleno diesel 27.39kpl: This is one of Maruti’s new premium hatchbacks, offering great good looks, a comely attitude on the roads and excellent fuel efficiency. What’s not to like?

  7. Honda City diesel 26kpl: India’s most popular sedan is still one of its low fuel guzzlers. With low fuel bills, you will love to take this car out for a spin often.

  8. Maruti Swift Dzire diesel 26.59kpl: Car connoisseurs swear by this car’s fuel output, terming it the most fuel efficient car in its class. And this, despite its impressive size.

  9. Ford Figo diesel 25.83kpl: The 1.5 litre diesel engine powers your drive to low fuel consumption and efficient pickup. Plus, it is one of the safest and most well designed hatchbacks in the country.

  10. Maruti Celerio diesel 27.6kpl: Its small 800cc engine packs in quite a punch when you drive it, combined with its lighter kerb weight (about 900kg) makes this car an extremely low fuel guzzler.

Tuesday 5 July 2016

Best Cashback Offers for the Best Products

Who doesn’t like freebies, right? This is exactly the sentiment that a lot of services are trying to capture with their various deals and discounts. And when it come people in India, the first thing that we check before buying any product is the type of discounts available on that particular product.

A thorough market study is done by the consumer before buying anything. They will check multiple brands online and offline to see which will be the most beneficial one, giving us our money's worth. The real reason why we love discounts or cashback offers or any type of benefit for that matter is the satisfaction it gives us that we are getting the maximum value out of the money we are spending. The better the scheme, the more the customer traffic.

DBS’ digibank, along with being your banking partner, also offers a lot of discounts and offers on anything that you can think of. Let's take a look at few of the benefits that digibank offers its customers.

Eatables

Who doesn't like a free soft drink or a free cupcake with their pizza? What more could you ask for if you are getting a share of the money back from the bills you have paid for the delicious food you are eating? Cashback offers from digibank offer up to 10% off on all the leading food joints, including Dominos, McDonalds, Pizza Hut and more. Apart from these, you also get discounts on ordering anything from Zomato, Food Panda, etc.



It's not just packed or processed food, you can also purchase fresh groceries from Big Basket, Grofers, and Reliance Fresh Direct to avail the same benefits.

Movies

After food, it is films that we Indians are most fond of. Digibank respects this love for the motion pictures and offers discounts while booking tickets online. You get up to 30% off on the ticket booking portal, BookMyShow, whenever you buy at least 2 tickets. Considering the fact that you get faster tickets and preferred seats online, on top of getting the best discount, it sounds like a pretty good deal.


Flight Tickets

Want to travel around the world? Why not do it at a lesser price? Traveling can be expensive, considering the cost of flight tickets, hotel charges, etc. But what if you get up to Rs 3,800 back?  This can all happen with the digibank app, which also allows you to make bookings instantly thanks to the mobile app.




There are a lot more offers and discounts to be explored. Why not explore it yourself and be among those who actually get the most out of their money! 

Monday 13 June 2016

Leading Companies Providing Financial Services In India

Finance corporations in India are playing an important role in taking care of the financing needs of both businesses and individuals alike. These companies are giving a solid boost to our economy too. They deal with a variety of needs, including the best investment options, credit, savings and priority lending. Here is a list of companies providing the best financial services in India.

Top Financial Companies in India

1.      Housing Development Finance Corporation: This is one of the leading providers of home loans in India. Their services include loans taken for home improvement, construction, extension, rural finance, etc. They have a huge presence in India, apart from branches in Saudi Arabia, Kuwait, Singapore and Qatar. Their customer base includes both residents and non-residents of India.
·         Market capitalization: Rs 193,994.85 cr
·         Share value at BSE: Rs 1227.5
·         Share value at NSE: Rs 1228.25 (as of May 26, 2016)
·         Net Profit: Rs 5990.14 cr (as of March 2015)

2.      Bajaj Finserve: This company focuses on maintaining the most diverse investment portfolio. Bajaj Finserv aims to help its customers to smartly invest money to improve their lifestyle, meet everyday expenses and be financially secure. They offer curated loans and financing options for salaried professionals and self-employed people.

·         Market Capitalization: Rs 28,484.53 cr
·         Share value at BSE: Rs 1790.0
·         Share value at NSE: Rs 1792.15 (as of May 26, 2016)
·         Net Profit: Rs 125.93 cr (as of March 2015)

3.      LIC Housing Finance: The aim of this financial company is to provide long term finance to people for their housing needs. They have a good network in India and also cater to NRIs in the Gulf countries. Financial solutions include loans against securities, along with project and property loans.

·         Market Capitalization: Rs 23,114 cr
·         Share value at BSE: Rs 457.95
·         Share value at NSE: Rs 457.40 (as of May 26, 2016)
·         Net Profit: Rs 1386.19 cr

4.      Larsen and Turbo Finance Holding: This organisation offers financial solutions for the infrastructure, corporate and retail sectors. With a strong presence in a majority of the states in the country, their clients include multinational companies, SMEs and individuals.

·         Market Capitalization: Rs 12,934.20 cr
·         Share Value at BSE: Rs 73.75
·         Share Value at NSE: Rs 73.75 (as of May 26, 2016)
·         Net Profit: Rs 261.63 cr

5.      Aditya Birla Nuvo: This giant business conglomerate provides among the best financial services in India. The organisation is divided into various services, including finance, which comprises several categories like asset management, insurance, capital market, etc. They have a strong foothold in India and aim to provide the best investment options to customers.

·         Market Capitalization: Rs. 13,543.18 cr
·         Share value at BSE: Rs 1040
·         Share value at NSE: Rs 1035.90 (as of May 26, 2016)
·         Net Profit: Rs 527.69 cr (as of March 2015)

Friday 29 April 2016

Investing for the First Time? Here are Some Tips for Beginners

According to an article in The Hindustan Times in early 2015, there has finally been a predominant trend of household savings in India being funneled towards financial assets instead of physical ones, like gold and property. Experts believe that this is indeed smart money management, since physical assets are no longer providing handsome returns. If you are starting off with investing, the focus should be on mutual fund investments perhaps. We look at some guidelines to follow for first time investors.


Starting off with Investments: Here are Some Options to Consider



Some top investment choices for beginners include:

  1. StocksWhen choosing stocks for investment purposes, beginners should consider seasoned one that have been stable for a period of time. Primarily, these stocks would be the ones belonging to the more established companies, dealing in goods of everyday needs, the demand for which would be sustained despite the economic scenario. For instance, stocks of companies dealing in food items, cleaning agents or personal care items must be considered. These stocks have the ability to rise fast. Therefore, you need to buy when their prices drop and consider selling when prices seem to have peaked. This can help you make profits and provide a boost to your investment plans.
  2. Certificates of DepositFinancial planning in India is incomplete without these risk free investment instruments. Certificates of Deposit entail no risks; however, the returns are fairly low. Besides, there are no quick gains here. You will need to keep your money with the bank for a period of 6 months or more. The bank pays you back with interest, which is not generally very high. If you want to be a seasoned investor with CDs, you can choose three certificates with 1, 2 and 3 year maturity periods, respectively. This way, you can periodically cash out on your investments.
  3. Mutual FundsThese funds are ideal for beginners because they are managed by seasoned investment specialists. An experienced fund manager often succeeds in generating handsome returns for all investors who might have pumped in cash into a fund. Also, mutual fund investments can be started with a very nominal amount and hence easy to manage for beginners.

Above all, you will need an expert investment advisor for help and support. Choose an investment company that understands your needs as a beginner and provides suitable suggestions for building on your investments. The idea is to move from strength to strength and gain confidence as you gain grip on the investments. Your personal interests as well as your comfort levels should be given foremost importance when providing suggestions.


Above all, investments should begin with smart money management. You should start saving early and give yourself more time to build a corpus. Only then can investments reap the best rewards. 

Thursday 28 April 2016

How to Choose the Correct Mutual Fund for My Needs?

The asset base of equity mutual funds (MFs) surged 13 percent to Rs 3.45 lakh crore at the end of March 2016, compared to Rs 3.05 lakh crore in March 2015, says an article published in The Economic Times in April 2016. Mutual fund investment is considered to be an effective tool for building a significant corpus, whether for the purpose of wealth creation, retirement planning or savings. Being professionally managed, it is ideal for individuals who do not have the time and knowledge to assess the market day-in and day-out. When you invest in an MF, most of your investment decisions are taken by experienced portfolio managers.

Steps to Choosing the Right MF

There are various types of mutual funds in India, including equity, debt and hybrid. Each scheme invests in different types of security. They have a specific objective and carry different levels of risk. You should familiarize yourself with the different types and the risks each one carries before parking your money in any one of them. Here are a few steps to choosing the right money management tool:

 Identify Your Goal – You must identify the objective with which you are investing your money. You can consult a financial advisor, who will assess your expected rate of return, your current financial condition, and risk appetite and investment time horizon to determine the amount of money you must invest and the type of scheme you should opt for.

Choose a Scheme – While choosing a scheme, you need to assess its past performance for the short, medium and long term of 6 months, 3 years and 5 to 10 years, respectively. You must also calculate the risk-adjusted returns of the scheme, comparing the returns offered by the scheme with that offered by securities carrying zero risk, such as government treasury bills. Also, choose a scheme that has consistently surpassed benchmark indices. You can also refer to the ranking provided by various research portals.

Know the Fees – Annual charges and fees for mutual funds in India might include advisory fees, transaction costs and annual management charges. Make sure that you are not exorbitantly charged.

Assess the Fund Manager – Go through the fund manager’s qualification, his past performance and investment style. He should be consistent in his investment style and adhere to the objective of the scheme.


To know more about money management though mutual fund investment, you can consult your financial advisor.

Wednesday 20 April 2016

5 Things to know if you are looking to Invest in Property

The Indian real estate market is expected to touch US$180 billion by 2020. The housing sector alone contributes 5-6% to the country's GDP, says a report published by the Indian Brand Equity Foundation in January 2016. The real estate sector is considered to be one of the most lucrative options when it comes to building a corpus. Ideally, you should buy property when the markets are down and sell when the markets are at their peak. However, to make the most of your investments, you must stay invested for about 7 to 10 years, if you plan to buy and hold. Other than directly investing in property, you can park your surplus money in this sector through REITs and real estate funds in India. The former is a fund that is traded in the stock market, while the latter is a mutual fund that only invests in the real estate sector.



Things You Must Do

Whether you are buying your first property or are a veteran, the rules of investing remain the same. Given below are some property investment tips that could prove useful when you consider investing in this sector.




  1. Get Rid of Your Credit Card and Personal Loan Debts: Both these types of debt come with higher interest rates than mortgage loans. They can significantly decrease your borrowing capacity. Decrease your credit card limit or if you don’t use your credit card, you might as well get them closed.
     
  2. Choose an Established Developer: You might be lured into buying a house by a new developer in town because of its low price. Don’t be fooled by low prices, go for an established developer, who has an impressive track record of successful projects in the city. Also, look at whether the previous projects were completed on time or not.

  3. Check All Documents: Go through all important documents yourself, such as the title deed, clearance given by government authorities, approval of the building plan, environmental clearances and commencement certificate. If you are buying property that is being resold, make sure that it is not mortgaged via a bank loan and does not have any property tax due.

  4. Shop Around for a Loan: You might be a loyal customer and go to one bank for all your financial needs. However, it is a good idea to shop around for a bank loan while buying property.

  5. Calculate Extra Cost: Apart from the cost of the house, insurance, maintenance, registration and stamp duty, additional costs may arise at any time. Make sure to calculate these extra costs and keep sufficient cash flow at least for one year from the time of possession.

To invest in real estate funds in India, you can consult your financial advisor. They will be able to advise you on the amount of money you should invest, taking various factors into consideration.

Monday 4 April 2016

ABFSG – A Premier Financial Services Company

Aditya Birla Financial Services Group, or ABFSG, is one of India’s premier financial services companies. ABFSG is a part of Aditya Birla Nuvo Limited (ABNL), a USD 4.4 billion conglomerate with multiple manufacturing and services businesses. It offers an umbrella of banking, financial advisory services and asset management services. ABFSG ranks in the top five fund managers of India (excluding Life Insurance Corporation, or LIC), with assets under management of INR 1.8 trillion as on 30th September, 2015. ABFSG stands out in customer experience, as it is a one-stop shop for the entire range of banking, financial and insurance solutions. ABFSG has twelve lines of business spread across seven entities.

Aditya Birla (AB) Finance Ltd (ABFL)


ABFL is a leading Indian non-banking financial company (NBFC). The company offers loans against securities, loans against property, lease rental discounting and loans for purchasing commercial properties. The company also offers corporate finance solutions for large caps, mid-caps and SME, or small and medium enterprises. They also offer Debt Capital Markets and Syndication Services to help investment grade companies raise debt and equity capital.










AB Housing Finance Ltd (ABHFL)


ABHFL provides loans for buying a home, making home improvements, or for home construction. It also offers the service of balance transfer of a loan from another bank, with an option of topping it up if required by the client.

AB Insurance Brokers Ltd (ABIBL)


ABIBL is a leading composite general insurance intermediary. It specializes in insurance broking and risk management solutions for individuals and corporates. It also offers reinsurance solutions to insurance companies across the globe.

AB Money


AB Money is a single brand offering the services of AB Money Mart Ltd (ABMML), AB Money Ltd (ABML) and AB Customer Services Pvt Ltd (ABCSPL). ABMML sells a range of third-party financial products such as company deposits, mutual funds, alternate investments and wealth management services to high net worth individuals (HNIs). ABML provides equity and derivatives trading through the national stock exchanges. ABCSPL offers a unique platform known as MyUniverse, AC Nielson’s “Product of the Year”, which helps customers to aggregate their bank accounts, investments including gold and real estate, credit cards, loans, incomes, and expenses in a highly secure environment.










AB Capital Advisors Pvt Ltd (ABCAPL)


ABCAPL provides investment management and financial advisory services to domestic and global investors. It currently manages INR 11.79 billion under two funds, the Aditya Birla Private Equity - Fund I and Aditya Birla Private Equity – Sunrise Fund.

Birla Sun Life Insurance (BSLI)


BSLI is a joint venture between the Aditya Birla Group and Sun Life Financial Inc., one of the leading international financial service companies from Canada. BLSI offers a complete range of offerings including term insurance, insurance cum protection plans, wealth plans, plans for children’s education, and health insurance plans.



Birla Sun Life Asset Management Company Ltd (BSLAMCL)


BSLAMCL is a leading asset management company with a wide range of product offerings across equity, debt and balanced as well as structured asset classes. BSLAMCL also offers portfolio management services to HNIs, and real estate investment advisory. 


Wednesday 30 March 2016

Real Estate Investments for Buying a Home with Your Partner

Close to 30 percent of home buyers in urban India are women, say an article published in MakaanIQ.com in January 2016. More and more women today are choosing real estate investments. If you are planning to buy a house, you can consider buying it jointly with your spouse. Buying a house jointly has its own set of advantages. Real estate mutual funds are another way to invest in this sector.


Things to Consider Before Buying Your Dream Home with Your Partner

When you co-own a house, you not only share the title but also other expenses. Women generally get home loans at a much lower interest rate, since they are considered to be more punctual in repaying bank loans. Stamp duties also tend to be lower for women. In case of joint ownership, both owners can claim tax deductions. Joint tax benefits can amount to Rs 3 lakhs per year under section 80c of the Income Tax Act and Rs 4 lakhs under Section 24. Here is a list of things that you must consider before buying property jointly:



  1. Determine Your Needs and Preferences – You must list down all the criteria on which you will judge a property. Likewise, you may want a home that is near schools and public parks or have easy access to them. Similarly, you must also decide on the size you can afford to buy, whether it has parking facilities, whether there are hospitals nearby and so on.

  2. Ownership – You must decide how the ownership will be divided among the two of you. There are three types of ownership: tenants in common, joint tenancy, tenancy by entirety. In case of tenants in common, there is no specifications about the division of share. Each owner has the right to use the entire property and is deemed to have an equal share. In case of joint tenancy, the property is divided among the owners in equal share. Marriage is one of the clauses for tenancy by entirety. Here, both partners own half of the property each and cannot sell it without the consent of the other.

  3. Total Cost of Buying – Buying a home not only entails its purchase price but all other expenses involved, such as stamp duties, registration fees, down payment and so on. Get a clear idea of all such expenses early on to avoid a rude shock later.

  4. Finances – Before you apply for a home loan, you must go through your credit report. You can apply for a joint loan too. This will increase both the loan amount and your repayment capacity. Generally, banks offer financing for up to a maximum of 80 percent of the purchase value of the property. You must also make arrangements for down payment before you finalise the deal.

If you are not in a position to invest a huge chunk of money at once, you can invest in this sector with minimal funds through real estate mutual funds or real estate investment trusts.

Monday 7 March 2016

SIP Plans – Your Path to a Safe and Financially Secure Future

Did you know that you can calculate your expected rate of return on systematic investment plans (SIPs) through the SIP calculator online? Other calculators also let you calculate the amount you have actually gained till date through an SIP. This helps you plan your future goals better. Mutual fund investment lets you invest in the stock market without directly exposing your assets to market volatility. It is considered to be an appropriate tool to hedge risks and diversify your portfolio. Objective oriented investments can help you build a significant corpus, which can be used as a retirement fund or to fulfil other financial responsibilities, such as a child’s education and marriage. What if I say that you can meet your goals in a much shorter time and by investing a much lesser amount in one go? This is possible through an SIP. 

mutual funds in India


What is SIP?

A Systematic Investment Plan is a disciplined approach towards investing in mutual funds in India. It lets you contribute a certain sum at a pre-set date every month towards a mutual fund. It helps you bring regularity and discipline to your investments. Also, it helps lower the burden by allowing you to invest as little as possible at one time. It is one of the best tools for money management and wealth creation. 

How Does it Work? 

You have to instruct your bank and activate auto debit. A predetermined sum of money is then auto-debited from your bank account every month. This money is then used to buy mutual fund units that you have invested in. The units are then transferred into your demat account. The purchase takes place according to the NAV for that particular day.

How Does it Help Accumulate Wealth?

An SIP can help you maximise the power of compounding. In other words, money gets compounded more number of times over a long horizon of time. You can also benefit from rupee-cost averaging. In such a case, you buy fewer units when the prices are higher and more when the prices are low at the same cost. This lowers the average cost of investment in the long-run while eliminating the need to time the market. SIPs are especially beneficial for long-term investments.

You can exit an SIP as and when you wish to. It invests in open ended schemes, therefore you can withdraw your money as well. You can also increase or decrease the amount you contribute every month. You can also contribute monthly, quarterly, half-yearly and so on. You can extend a plan if you have not been able to achieve the set target. Mutual funds in India may have a minimum limit for investment. Generally, companies set Rs 500 or Rs 1,000 as the minimum limit. 

Tuesday 1 March 2016

Are You Looking to Invest in SIPs? Better Check This Out Before You Do!

Equity mutual fund schemes have seen an addition of about 43.44 lakhs new SIPs during 2015, a nearly 66% increase on a year-on-year (y-o-y) basis, says an article published in The Economic Times in January 2016. If you are involved in share trading in India, then you must aware of SIPs. Systematic Investment Plans let you make regular contributions towards a mutual fund (MF) instead of a heavy lump-sum amount in a particular year. The biggest advantage of investing through this channel is that you get to start with as less as Rs 500. This has opened up newer investment avenues even for those with less surplus cash.
share trading in India

Investment Mistakes to Avoid

Systematic investment plans are considered to be an effective tool for wealth creation. It comes with the added advantage of compounding and rupee-cost averaging. Although it has huge plus points, investment errors can limit the power of an SIP and ultimately the expected returns. Here are some mistakes that you must avoid while making share market investments through SIPs.
1.      High Amounts of Investing – Lured by the benefits of the plan, you might end up committing to a higher amount as monthly contributions. However, this might prove to be a problem when you are unable to pay the same in future due to increased financial responsibilities. Therefore, you must analyse not only your present financial condition but also future surplus cash flow, responsibilities and goals in order to decide the optimum amount that you can contribute towards this scheme every month. You can increase the said amount anytime you wish to.
2.      Investing for a Short Time – You can best reap the benefits of SIPs only through long-term investing. Durations of even one year could be too short to tide over any volatility in market movements.
3.      The Scheme is Best for Small Investors – Although the scheme lets you contribute towards a mutual fund with as little as Rs 500, that does not imply that it is only for small investors. You can invest in the scheme with Rs 5,000 or any other amount. The basic essence of the scheme is consistency and not volume.
4.      Discontinuing the Scheme in Bearish Markets – You might discontinue your plan driven by market volatility. However, through an SIP, you can benefit even during falling markets. Rupee-cost averaging lets you buy more units at the same price when the prices are low and vice versa. Because investments are made at regular intervals, this decreases the average cost of investment in the long-run.
5.      Choosing Dividend Over Growth – A lot of people may choose to benefit through dividends. However, the longer you leave your money invested and larger you invest, the more you gain. Thanks to compounding.
6.      Not Monitoring the Scheme – Every mutual fund behaves in a different manner, which makes it essential to monitor and act accordingly when it comes to SIPs. You cannot invest and forget and then expect to reap high returns. 

If you have signed up for portfolio management, you can ask your fund manger about investing through SIPs.

Monday 29 February 2016

Start saving for a rainy day the moment you start earning

A person who lands his first job is tremendously excited about finally becoming financially independent. With the monthly salary comes the responsibility of fending for oneself and one’s family. From the time a person draws his first income to the time he retires, he is responsible and accountable for his loved one’s dreams. He realizes that none of his own or his family’s ambitions can be released unless a strict budgeting and savings plan is put in place.

savings plan
savings plan


Our parents often urge us to save small sums of money, even as they give us our weekly pocket money when we are very young. The savings habit is deeply ingrained in our culture – we revere thrift and frown upon ostentatious spending. Though it seems like unnecessary advice at the time, most parents urge their young children to set aside a sum of money from their income for their future. It is sage advice that must be taken to heart – and the savings habit must be inculcated as soon as one starts working.

savings plans in India
savings plans in India


Not adopting a regular savings habit from a young age can have tremendous implications for the future. For one thing, it is a difficult habit to inculcate. It takes perseverance to save money every month in the face of mounting expenses and the needs of a growing family. Secondly, it is even harder to resist the temptation to divert a chunk of savings towards other requirements when the savings corpus becomes a sizeable one. The best way out is to park one’s funds in an investment/insurance/savings plan that will not allow one to periodically withdraw the funds for other uses. At the maturity of the plan, the person receives a large sum of money which he can either reinvest in another plan, or use at the time of maturity.

There are many excellent savings plans in India, which people are taking advantage of to map their financial future. One may set short term or long term financial goals, but only by dint of regular savings can one bring those goals to fruition. In both scenarios, the plan holder gains by regular savings for a certain tenure, and gets a large corpus of money on maturity of the plan.

A person’s goals for the future may encompass short term goals (taking a foreign vacation every two years, for example) or long term plans (such as buying a house by age 35). Either way, a person may invest money regularly in savings plans to build a healthy corpus for the future. Having this fund of money helps keep one’s financial goals on track, and the policy holder need not divert money from his regular expense fund to spend for large expenses such as the ones mentioned above.
Savings plans in India also offer a death benefit, wherein the plan holder’s family may benefit from the corpus in the event of the holder’s unfortunate demise.

Tuesday 2 February 2016

What to Consider while Investing in Real Estate

Investment in the real estate sector stood at close to Rs 53,000 crore in 2015, a seven year high, according to a report published by The Financial Express in December 2015. The year also saw regulatory changes in the sector, such as increased allowance for FDI and the approval of the Real Estate Bill. The performance of the sector is expected to pick up in 2016, according to another article in The Financial Express in December 2015. Both property and real estate funds in India make good investment sense.

real estate funds in India
real estate funds in India

Tips to Consider

Among the host of investment avenues, real estate is one sector that stands out. Conventionally, investment in this sector was done for capital gains, but with the introduction in REITs (Real Estate Investment Trusts), short term gains have been made possible. Here are some real estate investment tips you can consider.

real estate investment tips
real estate investment tips


·         Know the Property – If you are buying a property directly, then you must enquire about the developer, their previous project completion and sale records. You must also gain knowledge about market rates, legal procedures, and terms and conditions of the contract.

·         Make an Estimate – While calculating the capital appreciation and returns on a property, you must take into account the inflation rate, the maintenance cost, insurance cost, loan repayment, and taxes. It is wise to buy a property only when the return rate exceeds the inflation rate, taking all other factor into consideration.

·         Invest through an Agency – You can avail advisory services of a financial company. This will save you the hassle of ensuring the credibility of the deal. They will not only help you zero in on the right property at a great price but will also help you with the legal procedures and loan procurement.

·         Invest in Real Estate Funds in India – Unlike equities, which are governed by market movements, real estate is a fairly low risk investment and is completely unrelated to other types of assets. It helps you diversify your portfolio and strike a balance. Real estate funds in India invest in real assets and you can benefit immensely from long-term capital appreciation.


·         Invest Through REITs – RIETs have been recently introduced in India and it has made investment in this sector highly approachable and liquid. REITs are the sector’s equivalent to equity funds. They are funds that invest in commercial income generating properties. They commit to the property for about 10 to 15 years or more. Unlike conventional investment in this sector, REITs do not require you to park a huge amount of money at a single time. The rental incomes generated from the commercial properties are distributed amongst the investors. Moreover, you can look forward to appreciation in your earnings in the long-run, with the capital appreciation of the property held by the REIT. You can either invest directly in REITs or through real estate funds in India. 

Friday 29 January 2016

Investment Advisor: How Does an SIP Help in Investment Management

Investments in mid-cap funds via an SIP yielded larger returns than large-cap funds from 2010 to 2015, says an article published in The Economic Times in August 2015. SIP is that tool that lets you diversify your investments over a long period of time. It is a structured route that lets you contribute towards your mutual fund(s) on a regular basis. Much like mutual funds help to hedge stock market risks through portfolio diversification, SIPs help you tide over market volatility. They also help inculcate the habit of saving and bring discipline to your investment. Your investment advisor may advise an SIP if you are a beginner and cannot invest a large sum of money in various schemes or if you are saving for a long-term goal, such as child’s education and marriage or for your retirement corpus.


How Does an SIP Work?

Through this tool, you can contribute towards the mutual fund on a monthly, quarterly, half-yearly basis and so on. Since its launch in India in 1997, a host of plans have come up, including one that lets you invest daily. All you have to do is instruct your bank for auto-debit. A certain sum of money is auto-debited from your bank every month on a pre-set date. This money is now used to buy units of the mutual fund(s), you wish to invest in. The purchase takes place at the net asset value (NAV) for the day. More units of funds are bought each month and transferred to your demat account. This practice lets you buy fewer units when the prices are higher and more units when the prices are low. This lowers the average investment cost per unit in the long-run. This is called rupee cost averaging.


Benefits

SIPs allow you to tide over market volatility through rupee cost averaging. They eliminate the need to time the market. Unlike traditional share market investments, which were done during market peaks, you can invest through an SIP both when the markets are rising and when they are falling. In case of rising markets, you benefit from the high value of your fund units. On the other hand, in case of a falling market, you buy the same units at a lower price. It is ideal for long-term investments, since it helps you maximise the power of compounding and rupee-cost averaging. The more money you invest, the more it gets compounded. Contributions are made in open-ended schemes, therefore you can exit and withdraw your money any time you wish you. You can also increase or decrease the amount you wish to invest anytime, with the right suggestions from your investment advisor.


Returns


An SIP is one of the most appropriate tools for investment management. It helps to build a significant corpus. You can calculate the expected returns from an average monthly contribution over a period of time at a certain interest rate through the SIP calculator available online. You can also check the ranking of a fund online before investing.