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Here’s Why SIPs Are A Great Idea!

We’re all taught how to dream big from day one. Be it your dream house, owning that Porsche or going on that bucket-list trip, we’ve been encouraged to aspire.
While everyone teaches us to dream big, no one shows us HOW to reach these goals.

On some days, we’re confident of ourselves and our dreams. On other days, we feel like we’re working hard for nothing. How does one stay motivated?

Here’s some food for thought : If investing was taught to us as a subject in school, can you imagine how revolutionary the economy would have been, with individuals who were confident of their money management skills?

Aspects like how to have an analytical mindset, how to take calculated risks, how to invest the right way, what are the financial risks involved, how to have more than one stream of income, how to calculate risks v/s returns and more, would have transformed us from individuals to successful investors, do you agree?

At a time like this when we’re left feeling overwhelmed and confused, what we need is an investment strategy that will see us through on a rainy day. Speaking of which, have you considered SIPs?

What are SIPs? How can they help you achieve your goals? How can they help you stay financially independent? Here’s a quick 101:

What are SIPs?
A systematic Investment Plan is an investment tool through which you can invest in Mutual Funds. While in several other investment tools, the individual has to pay a large sum of money at once, SIPs use a systematic method of investing a fixed sum of money over a period of time.
The time of investment could be monthly, quarterly, semi-annually etc.
This gives us the advantage of making many deposits over time without the burden of investing a lump sum at once.

What are the benefits of investing in SIPs?

1.Compounding.
When you invest in a SIP, you can enjoy a compounding return on your investments. It has substantial practical implications as and when an individual invests in SIPs regularly, the returns they have earned also gets reinvested. Over time this creates a snowball effect which helps an individual get more returns from the investment over a long time. In essence, if you begin investing in SIPs at a young age, the more benefits you can enjoy!

2. Low initial investment.
Through SIPs, you can invest in Mutual Funds with a monthly cost as low as ₹500, making it very affordable while not hampering daily needs. You could also increase the amount of investment if you have a raise in income. Meaning you can start with an amount as low as ₹500 – ₹1000 and then gradually increase the amount of investment through which you can reach your dreams at a faster rate.

3. SIPs are super convenient.
So many of us do not have the time, knowledge and tools required to study the market and do extensive market research. You will have to choose a good fund and let the platform you’ve chosen do its job of automating the payments. It will save a lot of time and effort, making it more convenient.

4. Rupee cost averaging.
When you invest in a SIP, the funds are purchased according to the market rates. It means that you can buy fewer units of the fund when the market is high and buy more units of the fund when the market is low, averaging the cost of the units in the long run. This makes investing steady and helps keep your investment away from market volatility.

Simple tools like SIPs are helping people invest small funds over a long period of time, taking it easy on their bank balances while turning dreams into reality. SIPs will definitely help you achieve your goals making it suitable for your investment needs.

Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.

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5 Money Questions To Ask Yourself

The pandemic has made us realize how important it is to be prepared to meet a crisis. While we try to make ends meet during this time of uncertainty, we’re constantly left wondering whether we’re financially equipped to fight a situation. 

It’s true that the pandemic has made people take their finances seriously. Knowing where you stand in the financial abyss, you need to be ready for what you are going to be facing in the future. 

There are several different ways one can check their financial health and be ahead of the crisis.  To start with, here are a few questions to ask yourself to see how financially sound you are.

  1. What is your income source and frequency? 

The first question you need to ask yourself is about the money you are earning. It may be your salary, a return on investment or any form of profit earned from your business. All of these are considered as your incomes.  These incomes will determine how much you can spend. You also need to ask yourself how often your investments are giving returns, and how frequently you are getting a salary. It is important to ask this question in order to determine a pattern of income which can help you use the money wisely.

  1. How much do you spend?

While many people spend their income on their needs and wants, one has to ask how much they can spend on a specific goal. You need to plan how you spend your funds so that you have stability even if a sudden expense occurs.  The best way to be safe from such risks is to spend according to a predetermined plan that you have set up for yourself. If you follow the money management rule, it will effectively help you determine your income and make efficient use of it. 

  1. How much debt do you have to pay?

The word debt can cause uneasy feelings and create anxiety. Debt management is an important part of being financially and mentally healthy as too much of a loan can put you under a lot of stress. So check how much you owe and plan to reduce its burden as soon as you can. Remember, being debt free is a great stress reliever and will help you grow financially stronger. 

  1. Do I have funds for emergencies?

The core aspect of a financial plan is putting cash away for emergencies. Uncertainty will leave you with no choice but to drown in debt. To avoid this, you can start saving money for emergencies. You can start small and be consistent. You could also consider insurance for your family, which is a smaller expense. 

  1. Are your risks covered? (Insurance)

Being insured is one of the best ways to be safe from the uncertainty that life brings. Returns may vary for each investment. While being insured is an additional expense from your pocket, it will help you in times of emergencies like pandemics, economic recessions, inflation or any other form of a problem you face with your income stream. 

These are the few crucial questions that will help you know where you stand as far as money management is concerned. It’s important to have the right financial plan to get through circumstances stress-free, and with minimum damage to your lifestyle. Do you think you are financially healthy? Leaving you with this food for thought for the time being. 

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Smash The Patriarchy: Here’s Why Indian Women Are Buying More Homes.

Owning a home is perhaps one of the biggest accomplishments for anyone. Apart from creating an asset under your name and building a safety net for yourself, there are several reasons why it’s important to own a home, especially in today’s times. Interestingly, studies suggest that more and more Indian women are now opening up to buying their own homes, stepping away from the shadows of their fathers and husbands. In fact, owning a home is one of their top preferences when it comes to correctly investing their money. This amazing and welcome change has resulted in home loan providers designing exceptional benefits and opportunities for women. What are they? Read on to find out! 

Lower Interest Rate 

Women enjoy the privilege of paying a lower interest rate on home loans. A home loan is a big deal, and an exception to the interest rate can be a huge support. The interest rate is lower by 0.05 to 0.1%, making it relatively easier to pay the EMI and repay the entire amount within time.  

Lower Stamp Duty Charges

Stamp duty is a compulsory tax that the state government imposes on the property during its sale or transfer. While every state may have a tax rate that varies from each other, status of the property, type of property, usage of the property, location of the property etc. are all interconnected to the stamp duty charges. Majority of the states in India offer an allowance on stamp duty if the property is registered in the name of a woman, whether it is a sole proprietorship or a joint proprietorship. 

The difference in the rates usually scales from 1% to 2%, and this can make an enormous difference in the property price. 

Tax Benefits

Women also enjoy tax benefits on their home loan repayments. 

The maximum tax deduction is Rs 1.5 lakh on the principal and Rs 2 lakh on the interest repayment under section 80C and under Section 24. 

If a husband and wife are co-owners of the property and have different streams of income, the deductions on the home loan tax for the couple would sum up to Rs. 3 Lakhs on the principal amount and Rs. 4 Lakhs on payment of interest under the same. 

Access Large Amounts With Longer Repayment Tenors 

Arranging funds to buy a house is not a piece of cake. It may take years and sometimes, a decade’s savings to build one. But because of schemes like these, women can build their dream house effortlessly. 

One can access home loan amounts right from Rs. 30 Lakh to Rs. 3.5 Crores to build or buy a home. Further, home loans for women are offered for tenures of up to 30 years and till the age of 70. 

Schemes like PMAY (Pradhan Mantri Awas Yojana) 

Under the ‘Housing for All’ scheme, those with an annual income of not more than Rs.18 lakh can apply for it. Giving a higher preference to women, the PMAY makes co – ownership mandatory offering a subsidy to women up to Rs. 2.67 Lakh and this has taken a massive rise in the number of women applying for home loans in India. 

Apart from these, women enjoy numerous profitable add-on offers such as a free holiday, gold coins, vouchers and a lot more that are here to encourage women to step up on the road to women empowerment.

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Things To Know Before Buying A Credit Card

Applying for your first credit card is a huge milestone in your financial journey and can often prove to be a daunting task. Understandably, since there are over a hundred different cards available in the market and very little guidance on how to go about it. 

brown wallet

We believe credit cards are powerful financial tools, if used rationally, that can benefit you in multiple different ways and help build a strong credit history as well. If this is your first time applying for a credit card, let us be your voice of reason and take you through some of the things that you must know before applying for one.

  • Different types of credit cards 

There is a whole list of credit cards that one needs to be aware of before purchase. From beginner level credit cards to travel credit cards, here are some of the credit cards available in India: Basic Credit Cards (given to entry level customers) Secure Credit Cards (for those who have a poor credit history)No Annual Fee Credit Cards (does not levy an annual fee for the usage of the credit card) Low-Interest Credit Cards (those that offer a lower interest rate as compared to the other cards from a similar category) Balance Transfer Credit Cards (low-interest rate for a specified period of time) Rewards Credit Cards (offers some kind of rewards for every rupee you spend with the card) Cashback Credit Cards ( offer a certain percentage of the purchase amount) Travel Credit Cards (offers benefits such as travel insurance, global acceptance, favourable currency conversion rates) Entertainment Credit Cards (provide discounts and offers on entertainment-related spends)Premium Credit Cards (for high income individuals) and much more. 

  • Rate of Interest 

Interest rate is of the main reasons that banks issue credit cards. The interest rate on a credit card is usually higher than that on loans. Credit cards follow the daily compounding interest rate which is based on the Annual Percentage Rate (APR). Based on the type of card you choose you’ll find yourself paying either a fixed or a variable interest rate. 

  • Interest-free period 

An interest-free period is a duration from the date of the transaction to the payment due date, something that is offered by most credit cards. If the full payment is made within this period then there is nothing extra that you have to pay to the bank. However, payment post this interest-free period comes with an applicable interest fee which is usually on the higher side. It’s advisable to make the entire payment within this period to avoid any extra fees. 

  • Fees and charges 

This is probably considered one of the most important elements of a credit card agreement. Fees and charges help you determine how much you will be paying for the card, withdrawing cash from the ATM, or upon failing to make the payments. Some of the important fees to know about : annual fee, late payment fee, over-the-limit fee, cash advance fee, balance transfer fee and foreign transaction fee. These fees again differ based on the card issuer so it is important to have a clear understanding of these before proceeding with the application. 

  • Minimum payment 

As part of the credit card agreement with your bank and the transactions against your card, you will be required to either make the full payment or the minimum payment that has been agreed upon. The minimum payment is calculated against the interest amount with one percent principle or on a certain percentage of your current balance. This calculation differs based on the card issuer and hence it is important to understand how your card issuer is going to calculate it. 

  • Credit limit 

The maximum amount that you are eligible to borrow is known as the credit limit. This credit limit is set by your issuer based on your qualifications and eligibility criteria. Be mindful about not reaching or getting close to the credit limit since it will then affect your credit utilization ratio which in turn can damage your credit score. Credit card issuers generally review your account on a quarterly, half-yearly or annual basis and either increase or decrease your credit limit. 

  • Perks 

A credit card generally brings with it certain rewards like points, cashback offers and other discounts and deals. Most of these perks come as an introductory offer to attract buyers but over time you will end up accumulating points that you can redeem in various forms. Check for the offers that different cards have to offer and analyze which ones are going to be beneficial for you. 

The important things to know do not end with this list but this is the bare minimum that you must know. While selecting a card, you might feel overwhelmed with the different options available but let your spending habits and your real need for a credit card guide you towards choosing the right one for you.  Always remember, everyone’s financial journey is different and what works for someone else might not work for you.