When you are in your twenty’s, you get perpetual recitations on money saving and management
This indeed is a great thing, because an advise like this is always treasure worthy.
However apart from managing finances and saving money, it is also crucial to master the art of spending right.
Let’s discuss about where you should be spending your money.
Health is something that should be kept on top priority. You might not want to think about health when you are young, but health insurance is one of the things 20-somethings should spend their money on. While being a student you maybe covered under your parent’s health plan. However beyond that stage, you need to invest in order to be better prepared when an emergency strikes.
Medical bills are scary, especially when they get piled up. So it is imperative to sort out these finances in order to escape the last moment distraught.
From personal experience, one trip to the emergency room can cost thousands of dollars, which can easily deplete your savings account.
Even if you can’t afford the best coverage, some coverage is better than none.
There are various life insurance policies to opt for in india.
Life insurance is relatively cheap if you’re a young adult with no major health problems.
If you’re single with no dependents, you may feel life insurance is unnecessary at this point in your life.
However, a policy can pay off your debts.
Plus, the death benefit can cover your funeral and burial, taking the financial burden off your family.
You should monitor credit report once in a year. This helps in keeping a check on your credit scores.
Even if you do not have a credit history or a long credit history, it is imperative to stay on top of your report.
Erroneous credit has many implications on future loan requests and applications.
You can evaluate your credit once on CIBIL by paying Rs 550. Then there are different plans that you can take to monitor your account at regular intervals.
Building a retirement account
Retirement is a far-fetched idea. Thinking about retirement is one of your least priorities.
However money grows exponentially if you start investing at the right time. This would create a very comfortable and at ease retirement phase for you.
For retirement plans check our blog http://earlysalary.com/planning-for-retirement/
Investing in property
Most of you twenty-something’s would not think of buying a home. A rented space is what you need at this stage.
However with approaching stability and firm finances, thinking of investing in property is a great step indeed. This helps in safeguarding your future
You can build equity, and when you’re ready to sell your starter home, you can put the proceeds down on a nicer place..
Investing in reliable and cost-effective vehicles
It is a sensible decision when you choose to buy a vehicle that is both reliable and cost-effective.
You need to avoid buying new used cars, or stop dealing with numerous repairs that drain your pocket. A wiser decision is to purchase a newer model car that requires optimum maintenance. You can pay off the loan for the car gradually.
Money can be employed in various ways. But the best ways are something that you need to seek out. This helps in planning your present and future in a much better fashion.
The Indian banking sector has its roots in the 18th century, and has evolved in a variety of ways since then
Post-Independence, The Reserve Bank of India, India’s central banking authority, was established in April 1935, but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).]In 1949, the Banking Regulation Act was enacted, which empowered the Reserve Bank of India (RBI) to regulate, control, and inspect the banks in India.The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.
During the Nationalisation in 1960’s, Inspite of the offerings, authorities and regulations of the Reserve Bank of India, banks in India except the State Bank of India (SBI), remained owned and operated by private persons.
By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy.
Second Round of nationalisation of six more commercial banks ensued in 1980. This gave more control to the Indian Government, and it regulated 91% of the banking business in India.
In the year 1993, Government merged New Bank of India and Punjab National Bank rendering reduction in nationalized banks from twenty to nineteen.
Liberaisation in the early 1990’s lead to licensing few private banks. These financial instruments came to be known as New Generation tech-savvy banks that included ICICI Bank, HDFC bank, Oriental bank of commerce, Axis bank etc.
This led to a surge in the growth of economical conditions of India, fuelled by government, private and foreign banks.
The next stage for the Indian banking has been set up, with proposed relaxation of norms for foreign direct investment.
The new policy shook the Banking sector in India completely and led to a retail boom. Also with the advent of Information technology in this era, online banking and ATM’s became popular and grew substantially in the coming years
The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks. All banks included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Cooperative Banks.Scheduled Commercial Banks in India are categorised into five different groups according to their ownership and/or nature of operation:
• State Bank of India and its Associates
• Nationalised Banks
• Private Sector Banks
• Foreign Banks
• Regional Rural Banks.
In the bank group-wise classification, IDBI Bank Ltd. is included in Nationalised Banks.
In 2010, Banking sector had seasoned well in terms of product development,supply and reach. Reach to remotely rural areas still pose challenges to the government
In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region.
By 2013 the Indian Banking Industry employed 1,175,149 employees and had a total of 109,811 branches in India and 171 branches abroad and manages an aggregate deposit of₹67,504.54 and bank credit of ₹52,604.59. The net profit of the banks operating in India was ₹1,027.51 against a turnover of ₹9,148.59 for the financial year 2012-13
15 July 2015, 16.92 crore accounts were opened, with around ₹20,288.37 crore were deposited under the scheme which also has an option for opening new bank accounts with zero balance
Size of the Market: Currently the banking ecosystem in India consists of 26 public sector banks, 25 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks.
Public Sector banks occupy 80 percent of the market, thereby showing dominance over the private lending banks.
The mobile banking transactions in December 2015 incremented four times annually.
According to RBI(Reserve Bank of india), the banking sector is well capitalised and administered. The financial and economic conditions are balanced. Credit, Market and liquidity risk suggest that Indian banks are generally resilient and have stood strong against global plunge well.
Let’s highlight some key developments in the banking sector
• Canada Pension Plan Investment Board (CPPIB), an investment management company, has bought a large stake in Kotak Mahindra Bank Ltd from Japan-based Sumitomo Mitsui Banking Corporation.
• India’s first small finance bank called the Capital Small Finance Bank has started its operations by launching 10 branch offices in Punjab, and aims to increase the number of branches to 29 in the current FY 2016-17.
• FreeCharge, the wallet company owned by online retailer Snapdeal, has partnered with Yes Bank and MasterCard to launch FreeCharge Go, a virtual card that allows users to pay for goods and services at online shops and offline retailers.
• Exim Bank of India and the Government of Andhra Pradesh has signed a Memorandum of Understanding (MoU) to promote exports in the state.
• The Reserve Bank of India (RBI) has granted in-principle licences to 10 applicants to open small finance banks, which will help expanding access to financial services in rural and semi-urban areas.
• IDFC Bank has become the latest new bank to start operations with 23 branches, including 15 branches in rural areas of Madhya Pradesh.
• The RBI has given in-principle approval to 11 applicants to establish payment banks. These banks can accept deposits and remittances, but are not allowed to extend any loans.
• The RBI has allowed third-party white label automated teller machines (ATM) to accept international cards, including international prepaid cards, and said white label ATMs can now tie up with any commercial bank for cash supply.
• The RBI has allowed Indian alternative investment funds (AIFs), to invest abroad, in order to increase the investment opportunities for these funds.
• RBL Bank informed that it would be the anchor investor in Trifecta Capital’s Venture Debt Fund, the first alternative investment fund (AIF) in India with a commitment of Rs 50 crore (US$ 7.34 million). This move provides RBL Bank the opportunity to support the emerging venture debt market in India.
• Bandhan Financial Services raised Rs 1,600 crore (US$ 234.8 million) from two international institutional investors to help convert its microfinance business into a full service bank. Bandhan, one of the two entities to get a banking licence along with IDFC, launched its banking operations in August 2015. Government Initiatives
The government and the regulator have undertaken several measures to strengthen the Indian banking sector.
• The Reserve Bank of India (RBI) has issued guidelines for priority sector lending certificates (PSLCs), according to which banks can issue four different kinds of PSLCs—those for the shortfall in agriculture lending, lending to small and marginal farmers, lending to micro enterprises and for overall lending targets – to meet their priority sector lending targets.
• The Reserve Bank of India (RBI) has allowed additional reserves to be part of tier-1 or core capital of banks, such as revaluation reserves linked to property holdings, foreign currency translation reserves and deferred tax assets, which is expected to shore up the capital of state-run banks and privately owned banks by up to Rs 35,000 crore (US$ 5.14 billion) and Rs 5,000 crore (US$ 734 million) respectively.
• Scheduled commercial banks can grant non-fund based facilities including partial credit enhancement (PEC), to those customers, who do not avail any fund based facility from any bank in India.
• Ministry of Finance has planned to inject Rs 5,000 crore (US$ 734 million) in eight public sector banks in order to boost their capital,
• To reduce the burden of loan repayment on farmers, a provision of Rs 15,000 crore (US$ 2.2 billion) has been made in the Union Budget 2016-17 towards interest subvention.
• Under Pradhan Mantri Jan Dhan Yojna (PMJDY), 217 million accounts! have been opened and 174.6 million RuPay debit cards have been issued. These new accounts have mustered deposits worth almost Rs 37,000crore (US$ 5.53 billion).
• The Government of India is looking to set up a special fund, as a part of National Investment and Infrastructure Fund (NIIF), to deal with stressed assets of banks. The special fund will potentially take over assets which are viable but don’t have additional fresh equity from promoters coming in to complete the project.
• The Reserve Bank of India (RBI) plans to soon come out with guidelines, such as common risk-based know-your-customer (KYC) norms, to reinforce protection for consumers, especially since a large number of Indians have now been financially included post the government’s massive drive to open a bank account for each household.
• To provide relief to the state electricity distribution companies, Government of India has proposed to their lenders that 75 per cent of their loans be converted to state government bonds in two phases by March 2017. This will help several banks, especially public sector banks, to offload credit to state electricity distribution companies from their loan book, thereby improving their asset quality.
• Government of India aims to extend insurance, pension and credit facilities to those excluded from these benefits under the PradhanMantri Jan DhanYojana (PMJDY).
• To facilitate an easy access to finance by Micro and Small Enterprises (MSEs), the Government/RBI has launched Credit Guarantee Fund Scheme to provide guarantee cover for collateral free credit facilities extended to MSEs upto Rs 1 Crore (US$ 0.15 million). Moreover, Micro Units Development & Refinance Agency (MUDRA) Ltd. was also established to refinance all Micro-finance Institutions (MFIs), which are in the business of lending to micro / small business entities engaged in manufacturing, trading and services activities upto Rs 10 lakh (US$ 0.015 million).
Future prospects:- The financial segment is undergoing several changes with many initiatives coming in. Country’s economic growth is likely to boom with positive business collaborations, consumer satisfaction and a balanced inflation.
Some situations demand the need for that extra cash. The hammer of Emergencies can strike us anytime, and can cause a financial imbalance.
The very situations can put us in an embarrassing spot where in we have to resort to sources for borrowing personal loans.
One such source is our work place. Salary advance is the solution that we think of falling back onto. However getting an advance from our employer is not often an easy task.
There are various factors that impede our decision to ask for money from employer. We will list down some below
1. Work Environment: The work culture, and organisational policies are influential in determining the granting of salary advance. Some organisations post their salary day guidelines on their website. Some do not. In such cases seeking permission from the HR head or your boss may seem like an unachievable task. Explaining the need is an even more cumbersome task. You would have to figure out the perfect time to visit your boss, so that your request is not over looked.
These situations might push your bosses to look deep into your private finance management, which is not a great thing.
2. Paperwork: Layers of paperwork deter our will to ask for a salary advance. We dread taking a loan, because we do not want to surmounted by innumerable documents.
While some smaller organisations might agree for a loan with a handshake, others might ask you to deep dive into piles of documentation.
The documented agreement could talk about a repayment date. This could be your next salary date or a pre-decided period within which you need to repay the loan.
The paperwork could also include a clause that permits your employer to debit the repayment amount from your future paycheck. Some employers may even charge a few bucks to cover the paperwork.
3. Official agreements are binding: Borrowing from your employer is very different from borrowing from family or friends. You cannot have the attitude of “ I will pay whenever I can”. There is a fixed date, and failure to repay might be consequential in a bad way.
4. Your image perception by others: – Before you borrow, you are also enveloped by thoughts like “ What If I am unable to repay? What will my colleagues think of me” “Am I putting my reputation at stake by borrowing ?” “Will I strain my relationship with my boss?”All of these thoughts pester you even if you are borrowing for the first time. Also if this is a lifestyle issue, then resorting to your employer is a big no-no.
5. Acceptability : The higher you go up the corporate ladder, the probability of you getting a loan will be lower.
Instead of going through the hassle of asking for a loan from your employer, use EarlySalary. EarlySalary is a one stop solution to all your cash worries. You do not have to think twice before asking us for money. Procedure for online application is very easy. The money transfer is an instant process, there is no paperwork and hesitation involved.
EarlySalary offers personal loans at a very low rate in the quickest possible way.
EarlySalary is a win-win solution for both the employees and the employers. The employers too would not have to bear any financial constraint. They would escape the paperwork involved.
EarlySalary renders a happy employee and employer situation.
The combination of Startups and Finance has lighted the thought bubble of Techies.
This has prodded them to move forward to build a space that blends both.
Basically Fintech organisations use technology to help users avail financial services effortlessly and on the go.
Fintech encompasses all technology-based companies operating in insurance, payment, loans, asset management etc.
Fintech is taking the technological space by a storm. With the introduction of these startups, the technical space the distance between technology and money has been bridged.
With the emerging industry of Fintech, there is an increased accessibility to the finance, along with an elevated awareness amongst the users of finance and technology. These firms offer instant, constant and efficient financial services to the users. They also serve as a competition to the conventional banks that exist.
The aim to integrate technology so that various systems in place interact has lead to the seamless processing of information and data transfer. This leads to better decision making processes(for cash, loans, credits etc) and also diminishes the cost.
With the emergence of multitudes of NBFC( Non-banking financial companies), Payment banks , mobile wallet companies etc have rendered a surge in the Fintech sector.
There are various verticals for Fintech
There are numerous startups that have ventured in the services of lending . These startups surpass the conventional financial institutions by offering alternative credit models, and also enhance the accessibility of users to money and money matters. Basically users can gain access to capital much faster and at a cheaper rates through these.
• Fintech has also entered Remittance. Remittance otherwise is a lengthy process with unending steps to achieve the goal. This holds true for both outward and inward transfer of funds. Also the costs associated are extravagant in nature
• They also provide both private and businesses to accept payments over the platforms of web and mobile. These Fintech startups intend on integrating payment processing into mobile and web apps without putting in extra efforts to maintain the merchant accounts. Steps are taken to ensure that there is no fraudulence that happens. The transfers have to be made directly into the bank account that is linked to the payee.
• Yet another bracket of Fintech companies exist that help individuals save manage and invest money. These Fintech companies essentially help in Personal Finance and retail Investment services. Also they help the individuals make better financial choices. Be it them wanting money or them wanting to save it.
• The infrastructural pertaining to old-age financial institutions are also be solved by these new Fintech organisations. There supremacy in technology and efficiency in finance is becoming popular amongst the people. They have enormously improved access to financial data and analytics is much easier and quicker now to get through to.
• Another intriguing Fintech Platform is providing access to crowdfunding . crowdfunding helps organisations in nascent stage to raise money and develop in the right direction.
• These companies initial focus lay on the core of finance, risk management and the incrementing revenues. However now it has expanded to user-friendliness and customer experience.
Fintech has not only disrupted traditional banking institutions, but has also made banking much easier for individuals. EarlySalary is one such organisation in the Fintech world. We at EarlySalary provide loans upto a lakh in minutes through your smartphone. And it is a very simple process! Just login through your Facebook account, fill in a few details and get instant cash. So wanna get some cash?
Shares share an important space in the different media of investment such as bonds, cash and property.
Let’s start by defining shares.
Shares are basically miniature snippets of a company. By owning a share, you own a tiny segment of the company, and also a proportion of the company’s value
Research shows that shares have proven to be amazing long-term investments in the financial arena. They usually surpass government bonds, corporate bonds etc.
There are risks associated, but in the longer term, you get rewarded with benefits.
You can choose to purchase shares, or you can invest in mutual funds. Funds essentially buy a set of shares that are monitored and administered by a fund manager.
And when you own a share, then you are a shareholder for that company. This can mean that you have certain rights over the decision making in the company.
So essentially if you have a share with a company, then over the years, the investment value of it increases with the company’s progress and profit making.
Also, there are certain shares that allow you to reap the benefits together with the company. Meaning the profit gets shared with you as dividends.
Owning a share in big and small establishments
In case of fully established and renowned organisations, you get profits as dividends, however the progress is a not a very fast process.
These dividends can be a regular source of income for you, and you can even invest it for further monetary gains.
The income that you procure from dividends is taxed at a certain rate.
For smaller organisations, there are usually no dividends. However the growth is better there.
Also if you wish to sell the shares for that company, it doesn’t come easy. It is hard to find buyers, because of the lesser credibility of the company.
Analysing the growth of the company and predicting it accurately is also critical to us.
Big organisations like Infosys have a lot of happy employees owing to their shares in the company. Here the drivers, plumbers, attendants are all millionaires.
In today’s date, around 100 individuals in Infosys are billionaires, and around 2000 of them are millionaires. The management has a habit of rewarding it’s employees over the years for their dedication and hard work. With the progressing organisation the value of shares, and the benefits for shareholders (including the drivers, attendants etc) increased manifolds.
Risks associated with shares
The economic conditions of the company and it’s surroundings determine the boom or downfall of shares. If the share value decreases then the importance of your investment also fades away.
Holding shares in just one organisation is also very risky. You should spread the risk by owning shares in multiple organisations. Diversity is significant here. What if you own shares in only one company, and it drastically witnesses a degradation in it’s value, then you are at the risk of losing all your money.
Also diversifying helps in better returns with more stability.
Buying and selling of shares
If you intend on purchasing or selling of shares, then it is advisable to consult a traditional stockbroker. You can also consult an online broker or a financial adviser. A financial advisor can guide you well on what to buy and what to sell.
We hope you analyse well before investing in a share. Happy Investing!
Tax rules vary from individuals with a salary to the ones having other/additional sources of income. They need to declare their salary income either offline or online to file their income tax returns.
Let’s first discuss allowance before proceeding ahead to Tax free allowances. Allowance is a moentary benefit provided by the employer to the employee that is over and above the base/regular salary. These benefits were introduced to cover the expenses that the individuals bore while at service. Some of the allowances are taxable, some partly taxable, and some of them are free from taxation.
There are various allowances on which benefits can be availed by salaried individuals on tax. These allowances are exempted under section 10(14) We will list them below:-
Special allowances under section 10(14)1 are
(i) Allowance granted to meet cost of travel on tour or on transfer.
(ii) Allowance granted on tour or journey in connection with transfer to meet the daily charges incurred by the employee.
(iii) Allowance granted to meet conveyance expenses incurred in performance of duty, provided no free conveyance is provided.
(iv) Allowance granted to meet expenses incurred on a helper engaged for performance of official duty.
(v) Academic, research or training allowance granted in educational or research institutions.
(vi) Allowance granted to meet expenditure on purchase/ maintenance of uniform for performance of official duty.
Under Section 10(14)(ii), the following allowances have been prescribed as exempt
Type of Allowance
(i) Special Compensatory Allowance for hilly areas or high altitude allowance or climate allowance.
Rs.800 common for various areas of North East, Hilly areas of UP, HP. & J&K and Rs. 7000 per month for Siachen area of J&K and Rs.300 common for all places at a height of 1000 mts or more other than the above places.
(ii) Border area allowance or remote area allowance or a difficult area allowance or disturbed area allowance.
Various amounts ranging from Rs.200 per month to Rs.1300 per month are exempt for various areas specified in Rule 2BB.
(iii) Tribal area/Schedule area/Agency area allowance available in MP, Assam, UP., Karnataka, West Bengal, Bihar,Orissa, Tamilnadu, Tripura.
Rs.200 per month.
(iv) Any allowance granted to an employee working in any transport system to meet his personal expenditure during
duty performed in the course of running of such transport from one place to another place.
70% of such allowance upto a maximum of Rs.6000 per month.
(v) Children education allowance.
Rs.100 per month per child upto a maximum 2 children.
(vi) Allowance granted to meet hostel expenditure on employee’s child.
Rs.300 per month per child upto a maximum two children.
(vii) Compensatory field area allowance available in various areas of Arunachal Pradesh, Manipur Sikkim,Nagaland, H.P., U.P. & J&K.
Rs.2600 per month.
(viii) Compensatory modified field area allowance available in specified areas of Punjab, Rajsthan, Haryana, U.P., J&K,HP., West Bengal & North East.
Rs.1000 per month.
(ix) Counter insurgency allowance to members of Armed Forces.
Rs.3900 Per month.
(x) Transport Allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of residence & duty.
Rs.800 per month.
(xi) Transport allowance granted to physically disabled employee for the purpose of commuting between place of duty and residence.
Rs.1600 per month.
(xii) Underground allowancegranted to an employeeworking in under groundmines.
Rs.800 per month.
(xiii) Special allowance in thenature of high altitudeallowance granted to members of the armed forces.
In our financial space, we come to a state, where we have sufficient funds, and we wish to invest a chunk of it for future plans and goals.
Two very popularly used media for investment are Fixed deposits and Mutual Funds. We will distinguish between the two after we define them properly.
Here we deposit money in a bank for a specific period of time that ranges from 7 days to 10 years. The amount invested earns an interest based on the tenure of deposition. It can be as high as 9% per annum(varies according to the banks and it’s schemes). After the tenure ends, the money is returned to us topped with the interest earned.
Mutual funds can be best described as a place where funds are consolidated by numerous investors. The fund accumulated is invested in one or many asset classes like equity, debt, liquid assets etc.
It carries the tag mutual because all the perils, awards, gains and losses in the invested sum are shared by all the investors in accordance to their contributions.
In case of Fixed deposits, the rate of interests are pre-determined and remain intact during the entire tenure of investment. The rates of interest vary for mutual funds as per the market conditions. In case of an uphill in the market scenario, the benefits of mutual funds surpass those of fixed deposits, as the returns are higher. While a downhill situation in the market renders fixed deposits as the winners in terms of the returns that are offered.
In case of Fixed deposits, the tenure is fixed, and they offer medium and low liquidity options until you complete the entire tenure of deposit. Mutual Funds offer liquidity to the investors but with certain sets of terms and conditions.
There would be some penalty associated with pre-mature withdrawal of our fixed deposits, hence we would lose a chunk of our expected return. For mutual funds, after the minimum holding period is over the liquidity rate is high. However if we immediately withdraw after we invest that is within a year, then we are liable to pay an exit load cost of 1 percent.
Fixed deposits are for investors with low risk appetite. However mutual funds are for people with high-risk appetite.
There are certain costs associated with the mutual funds that we invest in, however fixed deposits do not levy any expense on the investor. The expense incurred depends on the kind of mutual fund that we choose. Liquid funds may have a low expense of up to 1% p.a., debt mutual funds may have anywhere between 0.5% p.a. to 2.25% p.a., and the expense of equity mutual funds may be up to 3% p.a. This expense is adjusted in your returns
We would all love to receive more amount of money post the tax returns from our investment
In case of mutual funds, you need not pay any long term capital gain tax on your investment in equity mutual funds
However for a short term gain, we need to pay taxes at 15 percent. The gains in long term investment in debt mutual funds are taxed at 20 percent with indexation and 10 percent without indexation. For liquid mutual funds, the tax is as per the tax slab.
Regardless of the tenure in fixed deposits, the interest that is earned in totality is taxable according to the tax slabs.
We have drawn a line of differentiation between Fixed deposits and Mutual funds. Hope this helps you out better with investment plans. Happy investing.
We are aware of how vast and effective Social Media has become. In fact we owe our ability to be aware about what is going on to social media.
Social media has ceased to be just a platform for interacting and socialising. It is much more now.
Traditional verification to evaluate our monetary potential fails at times. Smart organisations have therefore found out these smarter ways to assess our abilities to pay back.
Credit agencies now assess your financial caliber on the basis of your social media existence and life.
For Lending platforms,having a good character value is critically important to them, because that is what allows them to have faith on our repaying ability.
There are many things that the credit agencies/bureaus look at before lowering or upping our credit score. Let’s jot down some primary elements that are considered by the credit agencies to grant or not grant loans.
1. Our lifestyles and daily routines can be well investigated through social media platforms like Facebook, Linkedin and Twitter.
2. They might look at whether we are into alcohol or drugs or at slightest of possibilities that can affect our ability to continue your job.
These results can potentially reduce our credit score
3. A pattern is cemented around our social behaviour on the basis of our activities and behaviour on social media. This is used to trace the ability in us to repay.
4. Our creditworthiness is judged through our two c’s on social media, they are: – contacts that we have and the contents that we post.
5. There are certain keywords encircled by the credit agencies. The profiles with words like wasted, trashed, smashed etc are scrutinised or put under the black list.
They might be potential defaulters in the eyes of the credit givers.
Posts that talk about Casinos, or the posts with ALL CAPS or that contain bad English are again looked at.
6. Our circle of friends is also encircled and pin pointed at in case of any doubts. So if there is anything off the road there, we might land up in their caution radar.
Most of the credit agencies utilise the social media for people who do not have a credit score, or have a very newly built credit history. This is also for people who have just migrated.
Also it is fair on the part of credit agencies to get acquainted with the borrower properly so that lending is a risk-free process for them.
We need to safeguard our creditworthiness by being cautious about what we post on our social media accounts. Also we need to discuss within our family and educate others about the potential decrease in the creditworthiness in case of a bad social media score
We encounter many situations wherein we have to rely on loans. And where there is a loan there is a debt that follows.
We often become perplexed and overwhelmed after seeing the debt pile. This is often due to mismanagement. All that is required is a sense of systematic financial arrangement that will allow you to be on time with repayments or even be an early payer.
We will list down some ways through which you can pay off your debts in a much faster way.
1. Go for Bi-weekly Payments. You can choose to pay the lender every two weeks instead of the regular monthly repayment
Paying your loan early will save your money that amounts due to the interest. This will also decrease the overall term of the loan.
With the surplus money, you can do so much with your life. You can invest it, or you can save it for retirement or you can pay off other debts.
However you need to consider this with your lender first. There should be no penalties associated with an early payment.
2. You can speed up the repayment procedure with each salary hike you get.
You can do that by incrementing the EMI account with every hike in your income. Even a moderate increase in the income saves a great deal of interest. For example If you get an increase of 7 to 8 percent then you can easily increase the EMI amount by a 4-5 percent. This little increase in the EMI can lead to the completion of loan repayment at a much faster rate thus saving a lot of interest and time.
3. Choose the path of Refinance when you have many loans in your basket. Taking a loan against your existing asset again helps in waving off other debts in place, and also helps in reducing the overall interest rates that are spread over multiple debts. We will explain how.
Refinancing basically is paying off your existing loan, and going forward with a new one, while using the same property as collateral or security. You can utilise refinancing for reducing the term of a longer mortgage, or for a switch from a fixed-rate to an adjustable-rate mortgage.
4. You can convert the credit card dues to EMI’s. Credit cards are otherwise convenient, but they also give you a hard time, if you spend without thinking.
If the credit card bills become insanely high, then it is time for you to ask your credit card issuing company to convert your due payments into EMI’s. Many of the credit card companies allow the customers to pay off in 6-12 EMI’s. However if the amount is large, then it might even get extended to 24 months.
5. You can resort to rounding up of the payments. Here you will have to spend a little extra money. But this leads to saving your money in the long term on the interest rate, and also shortening your loan period.
6. Most importantly, bring in a wave of change in your lifestyle too. It is important for you to strike a balance between what you spend and what you save. Do not run into recurring debts. Also keep in mind that paying off debts after the due date affects your creditworthiness. So it is advisable to pay on time, and not fall prey to debt traps.
So do not run away from repayments. Investing in the healthy habit of paying on time will help you out to steer clear of debts and will also help you to live in financial stability.
“Retirement” .Do we need to think about it at all? If no, then perhaps now is the time to stop giving a cold shoulder to it.
Being ignorant does not help carve a secure future.
Though we are young and quite able at this stage in our lives. But do we think of times when “un” gets added to our ability.
Reality covering us from all four sides has changed now. We cannot wait till the RIGHT age.
Money control and Money management is imperative and so is wise investment.
We would want to jot down some essential tips that would assist you better with financial planning.
Compounding it is!
One of the strongest instruments in the financial world is compounding.
So how do we go about the process?
Start investing early, even if it is Rs10,000 a month, go for it. Putting in a small amount is okay, what is critical here is the interest that compounds with the passing time.
Also,Save your bucks! Saving is always a great idea to keep. Saving not only for retirement but for other purposes aids at various stages of our lives. The sooner you start saving , the more time your money has to bloom. Pooling in some money for retirement should be your utmost priority. Financial Goal setting is important, however sticking to those goals, and not wavering is even more critical.
It is time to go digital!
Start using an e-wallet!
This has advantages of cash back and it is safer
The flexibility, security and the usability of the wallets have cemented faith in the people using them.
You can put an amount as tiny as Rs 10 to Rs10,000.
Convenience blended with rewards incites people to use it again and again.
Sail the boat of Direct mutual funds!
Investing in direct plans of mutual funds renders higher returns. The difference in returns is more pronounced in case of equity funds. In debt funds the the returns are moderate in amount. And the returns are the lowest in liquid funds out of the three.
Swap Fixed Deposits with Debt Funds!!
Safety and Fixed deposits go hand in hand. However when it comes to tax benefits, they are not very efficient. A better path to tread on is Short-term debts, that has the combined credit risk almost equal to FD’s. Though there is not a vast difference on the interest rates generated on short-term debt funds, however the actual return on these is much if they are held for a span of more than three years
Brick a building of buferable cash!
The economic conditions waver like the wind. For example, a hike in prices in the US can subsequently leads to a market fall in India!
Having some cash as buffer, will be handy in such situations. This money can be used to buy at cheap rates and sell at higher rates.
Be wary of Debts/Mortgages!
Being freed of mortgages or any lingering mortgages is a fantastic step towards retirement planning. You do not want to get nightmares of debts when you are greying.
Also lets chart out a plan for someone who is close to us and has just entered his/her retirement phase
We will go step by step.
1. Firstly we need to calculate their monthly expenses and needs
2. We then come to her various sources of income
3. Changing their status in the bank is a wise option. Transfer their corpus to a senior citizen savings account. That gets better interest.
4. Get their 15H form signed and deposited at the Bank so TDS in not deduced at source on her FDs. This also reduces agony of chasing for Tax refund.
5. Go for opening a Mutual Fund Folio. Do you know once you have done a KYC with one Mutual fund, it is valid for all investment across all Mutual funds.
6. Divide their portfolio into Four segments
6. 1 Monthly income (if pension is not there or less) – In Fixed Income Mutual funds go for a standing instruction to transfer a fixed sum to their saving account monthly.
6.2 Diversify Equity Mutual funds for long-term steady income
6.3 Invest 10% of the corpus in Blue chip companies
6.4 Build an Emergency fund
7. Activate confirmation emails and SMS on your and their phones
8. Make sure their health insurance plan is secured.
9. Ensure all assets have nominees as per their wish.
10. Make their will
Retirement is the a faraway destination, but we need to cement a path from now to reach there in a financially healthier state.
We hope that our recommendations will help you in deciding clearly and taking informed steps.