Mutual fund managers believe that debt funds are set to excel in 2019. According to data from the Association of Mutual Funds in India, more than 50% of debt fund assets that come from retail investors is increasing steadily.

Debt funds are types of mutual funds that invest in fixed-interest securities — for example – treasury bills, corporate bonds, government securities and other money-market instruments. Typically, the portfolio manager or asset management company charges a total expense ratio to manage your investment portfolio.

Now that you know what are debt funds, let us understand what makes them a good investment option in 2019.

Why invest in debt funds in 2019?

In 2018, the debt market faced tremendous volatility, just like the equity market. The primary factors responsible for this fluctuation were a rise in crude oil prices, yields going up, rising interest rates, tightening liquidity and currency depreciation among other macroeconomic factors. However, despite the volatility, debt mutual fund categories outperformed many equity mutual fund categories in the last one year and even topped the charts.

Among debt fund categories, the liquid fund category performed the best with a return of 6.89% in one year. Long-duration funds held the second spot with a yield of 6.84%. This was followed by gilt funds and short-duration funds in the third and fourth spot with returns of 6.56% and 6.00% respectively.

Last year’s uncertainties are now reversing. Oil prices have come down by almost 30-35%, and the currency has stabilized. Open Market Operations [OMOs] have reinforced liquidity back into the market, and more such continuous OMOs from the Reserve Bank of India will ensure that government securities remain stable and robust.

Benefits of investing in debt mutual funds in 2019

Following are the top advantages of investing in debt mutual funds

High liquidity

Debt funds are often compared to other traditional forms of investment, such as fixed deposits [FDs] because of similar investment terms and earning income over time. However, FDs have a mandatory lock-in period. If you wish to withdraw your money, they take a long time to process the withdrawal request. On the other hand, debt funds offer better liquidity, especially liquid funds, and can be cashed out more quickly.

Tax efficiency

The benefit of indexation keeps increasing with every passing year after you have held your debt funds for three years. This ultimately results in the investor paying less tax. Also, debt mutual fund schemes do not attract TDS. Whereas, alternative investment options such as FD attract 10.3% TDS if the interest income exceeds Rs. 10,000 in a single year.

Flexibility

Debt fund schemes provide great flexibility and can be easily transferred to equity schemes or any other scheme of your choice.

Higher returns

When compared to other investment options, debt funds are less exposed to market volatility and thus, less risky. They fare better in terms of returns when compared to a savings bank accounts or FDs. For example, the average rate of return on FDs is between 6% and 8%, whereas debt funds can fetch as high as 9.38% over a 3-year horizon.

Ways to invest in debt funds

There are two ways you can invest in debt funds – lump sum or Systematic Investment Planning [SIP]. While lumpsum investing is when you have a large corpus fund ready to invest, SIPs can be used when you wish to invest regularly in small amounts. Both these options have their own merits.

Conclusion

If you wish to invest in mutual funds, remember that debt mutual funds are integral for your overall portfolio returns in the long run. Based on your investment horizon and risk appetite, you will be able to strike the ideal mix of assets to reap maximum returns on your investment.

Monsoon is a time to cheer, plan long drives with your partner/friends and enjoy the pleasant, earthy smell of soil. But is it the same with your car? No.

With water logging issues, no proper drainage system and massive traffic chaos on road, your car certainly doesn’t enjoy a good time hitting the roads in the monsoon season. So, before the rainy season arrives, and gives your car major driving challenges, you must know how to take care of your car in the monsoon. Obviously, the most important thing is to have a car insurance, as you cannot predict what the rains might bring for your car.

But, apart from this, there are other essentials that you need to know –

1. An Umbrella Is a Must

Whether it is raining or not, you must carry an umbrella in your car, so that whenever it rains, and you need to get out of your car, you can just open the umbrella and avoid getting soaked in rain. Apart from just protecting you, the umbrella protects the car seat too. When you are completely soaked up in rain and you sit on your car seat, you actually leave moisture, which gets absorbed by the seat. Eventually, it begins to smell bad.

2. Pay Clear Attention To Tyres

Before the rainy season comes in its full swing, you must check the condition of the car tyres. Experts say that the tread depth should be good enough to avoid them from skidding in the rainy season. In addition to this, keep an eye of the tyre inflation as this will make sure that you enjoy a comfortable drive.

3. Ensure Optimum Brake Operation

Whenever necessary, you must clean and replace the brake pads, especially in the rainy season. Check the brake fluid levels and brake lines. Checking the brake lines will ensure that there is no water or air ingress and that the brake operation is optimum.

4. Keep Your Windshield Clean

Windshield gets very dirty in the rainy season, but thankfully there are wipers that clean windscreen very easily. But, before you do that, you need to be very careful. A wiper with dirt on it should not be used to clean the windscreen, as this might leave scratches on the windscreen. Therefore, you must use a cloth to wipe out the dirt, later you can use the wipers to clean the glass.

5. Keep a Medical Kit

Last but certainly not the least, you must not forget to keep a medical kit in your car. As already stated above, you cannot predict what’s there in store for you in the rainy season, so equip yourself with a medical kit for help in an emergency.

With these basic tips in mind, you can protect your car from any unforeseen damage in the rainy season. In case, you do not have a car insurance policy, do get it right away, as this is the major part of protection for your beloved car. Have a happy and safe monsoon!!

A few days after applying for a used car loan, Rakesh was in for a rude shock. His application for the second-hand car loan had been rejected. On further investigation, he was informed that he did not meet all the eligibility criteria and hence the rejection.

Rakesh is not the exception to the rule. Many loan applicants face similar rejection while applying for a loan. If you have suffered a similar fate or are planning to submit an air-tight loan application for a used car loan, here is a list of 4 common reasons why secondhand car loan applications are rejected.

1. Incorrect Information

The information you provide to the used car loan provider is extremely vital. All the information will be used by lenders to assess your creditworthiness. For example, the address and phone number you have provided will be checked for validity. If a small mistake happens, even unknowingly, the second-hand loan application can be cancelled.

Solution – Go through your loan application forms carefully. Verify every detail. Make sure everything is 100% correct. Confident?

2. Lack of a stable income

Used car loans are disbursed based on many factors. One of the important parameters is borrower’s ability to repay. Stable income is a good indicator of repayment ability. Lack of a stable job or a new job may be a negative. Self-employed people are also allowed to take second-hand car loans if they have a running business, amongst other norms. You can be salaried or self-employed, but do not forget to check the used car loan eligibility norms.

Solution – It is important to know the eligibility norms before applying. So, give them a read and arrange documents to support your used car loan eligibility. If you have less than two years’ work experience with a minimum of 6 months with current employer, wait before applying.

3. Poor credit record

If you already availed too many loans, your used car loan eligibility may be impacted. Too much debt is a consideration when a lender investigates a potential borrower like you. If you have signs of poor management of current debt, your used car loan application can be rejected straightaway. It is important to understand before you ask for a new loan, whether you can service the existing loan. If it is difficult, do not immediately buy the second-hand car. Wait for a few months to let the situation improve.

Solution – It is important not to take too much debt. If you have too much of it already, there is no quick fix. You must build a track record of timely repayments and a clean slate to impress second car loan lenders.

4. Large loan request

There is a limit to how much you can borrow based on your income. If you ask for more loan than you can manage, the financial institution can reject your used car loan application. Tata Capital provides second car loan for amounts up to Rs 50 lakh.

Solution – Take funds according to your current income situation. Just because you are getting a Mercedes or Audi at throwaway price compared to a new car does not mean you will get the loan. If you are confused, speak with experts to fine-tune your requirements and help you get closer to your dream car. There may be flexible EMI options that can help you.

Your deadline to make tax-saving investments for the financial year 2018-19 is over. If you have missed out on making some beneficial tax-saving investments during the previous financial year, you must pay adequate attention to tax planning for the financial year 2019-20. Tax planning should be done at the start of the financial year and it should be implemented throughout the year. By postponing tax- saving investments, you are making bad financial decisions. Hence, you must start looking for attractive tax-saving options at the earliest.

Save tax under Section 80C

Section 80C of the Income Tax Act, 1961 offers a huge tax benefit with a deduction limit of INR 1.5 lakh. In order to avail of this deduction, you can invest in different tax-saving options like Public Provident Fund [PPF], Employee Provident Fund, National Pension Scheme, Equity-Linked Savings Scheme [ELSS], life insurance, and expenses on home loan principal and children’s tuition fees. If you want to know how to save tax, you need to be aware of these tax-saving options.

Once you are aware of the limit and the investment options available to you, you can recall each eligible expense and investment, which you have made in the past. If the investment is eligible for the claim, you will be able to arrive at the deduction benefit, which is yet to be exhausted. Alternatively, you can plan all the investments keeping Section 80C in mind. Distribute the investments into different products to enhance your portfolio.

Factors involved in tax-saving investments

Listed below are a few important factors that you need to consider when you look at tax-saving investment options.

1. Liquidity

As an important criterion for many taxpayers, liquidity plays a crucial role in your investment decision. You need to ensure that you do not choose an investment option simply to avail of the benefit of tax deduction. You need to understand the role of every investment in your financial plan and consider the liquidity it offers.

2. Risk

One of the most important tax-saving tips is to make an investment, which is in alignment with your risk appetite. Investments in instruments such as Unit-Linked Insurance Plans [ULIPs] and ELSS are considered riskier as compared to PPF or National Savings Certificate [NSC]. Hence, check your risk appetite before making any investment decisions.

3. Returns

Do not make an investment decision thinking how much tax can be saved under 80C. Instead, try to look for investment options that generate maximum returns for you. PPF, NSC, and tax-saving FDs will generate minimum returns at low risk. The returns will be fixed. However, options like ULIP or ELSS will give you better returns but the risk associated with the same will be slightly higher.

Make investment decisions keeping your long-term goals in mind. A good portfolio will give you high returns, help save tax, and provide you with high liquidity. Start planning beforehand to make the most out of the available tax-saving instruments.

Technology has now become a tool that can be used by everyone to access equal opportunities. It has made it possible for everyone to conveniently complete their day-to-day requirements. It has brought the entire world together and the service industries are benefiting from it too. The use of technology in the insurance industry has made it simpler for customers to connect with insurance companies. The insurers can serve their customers better as technology makes the entire process faster and more accurate. The digitalization of the insurance industry has transformed it into a more secure place for the people.

Buying a life insurance policy has become quite easy with the help of technology. There was a time when it was quite time-consuming to apply for a policy. There was a lot of paperwork required and you needed the help of the insurance agents to make sure that you do not make any errors in the application. From human error to lack of clarity, everything was challenging when it came to buying an insurance plan. Those days are behind us. With the use of technology, insurance companies are now able to reach out to more customers and make the policies available to them.

This has led to more and more customers buying insurance online. It has not only made the process simpler but technology also saves a lot of time. The existing customers and potential buyers now understand the importance of technology in the insurance industry.

The processes required to complete buying and claim settlement in the insurance industry used to be tedious. The regulations regarding the policies were completely different too. The use of technology has made it possible for the customers to use the online portals of the insurance companies and complete the processes without the help of any third party. Another thing that insurance technology has simplified is the process of comparing insurance policies. Previously, you needed the help of experts to determine which insurance company can meet your needs. Today, it is possible for you to simply find information regarding different policies online and make your own decision.

Now, insurance companies offer tools to calculate premiums online. These tools are easy-to-use by anyone. So, you can check how much you need to pay in order to get the covers you need. This way, you do not have to pay for anything that you do not need and make your policy more affordable. Buying life insurance is important, and the online availability of the policies comes with all these great advantages. If you notice the current trends regarding the use of technology then you can easily understand the effects of technology in insurance and how far-reaching will it become in the near future.

Use the benefits of the online insurance industry and make sure to maximize your profits. Utilize every facility that comes with technology and invest in the right insurance policies.

If you are looking forward to buying your own house, a home loan can be a great financial aid. Instead of liquidating your entire savings, opting for a home loan is always a better choice. Financial institutions can help you realize your dream of buying your own house by offering easy monthly installments and convenient repayment tenure. However, before you settle for a home loan, ensure that you are well-aware about its intricacies.

One of the key factors while opting for a home loan is the interest rate. Therefore, choosing the right interest rate is crucial to avoid any financial stress during the loan tenure. However, most individuals face a lot of dilemma when it comes to choosing between fixed and floating home loan interest rates. Below is a guide that will help you have a better understanding of fixed and floating interest rates.

Fixed Vs Floating – What to choose?

Both fixed and floating interest rate have their pros and cons and borrowers should make a choice depending upon their convenience. A fixed interest rate on a loan ensures that the equated monthly installments or EMIs remain constant throughout the tenure of the loan. On the contrary, in case of floating interest rates, the EMIs would fluctuate as per the market dynamics, that is, when interest rates increase or decrease.

Fixed interest rates – Advantages & Disadvantages

Home loans come with a long tenure. Opting for a fixed interest rate will provide you a clear idea about your monthly installments. You can have a better understanding of your loan repayment by opting for a fixed interest rate.

On the other hand, it is observed that the fixed-interest-rate loans are anywhere between 1 to 2.5% higher than floating-interest-rate loans depending on the financial institution you opt for. Moreover, most banks offer fixed interest rates for a limited duration, thereby subjecting the borrower to floating market rates once the fixed rate period is over.

Floating interest rates: Advantages & Disadvantages

Floating interest rate won’t be a feasible option if you have a fixed monthly budget, as it does not give a clear idea about the monthly installments. However, floating interest rates have gained popularity in recent times as they are usually lower than fixed interest rates. A lot of financial institutions are now attracting Home Loan applicants using floating interest rates as low as 8.35%.

Leading NBFCs like Finserv Markets, offer a transparent floating interest rate on home loans. Moreover, applying for a home loan with Finserv Markets is a hassle-free process. Minimal documentation, fast and user-friendly online process and flexible repayment options are some of the major benefits of opting for a home loan with Finserv Markets. Additionally, you can also customize your loans so that it suits your needs in the best possible way. Lastly, Under the Pradhan Mantri Awas Yojna, first-time applicants get the added benefit of reduced EMI’s and interest rates.

So what are you waiting for? Take your first step towards purchasing your dream home now.

Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!

Have you been compromising on your wedding preparations due to lack of funds? Then, why not look out for certain alternatives that can prove to be a saving grace?

For this, you can use a personal loan, also known as personal loan for wedding expenses instantly.

This financing service can be borrowed for dealing with your wedding related expenses anytime. A Wedding loan can cover every expense including, venue, food, decorations and more. Therefore, it makes it an ideal option.

Here are a few things that you should read about in advance before borrowing a wedding loan.

1. Processing Charges

When you apply for a financing service, you need to pay a processing fee for your application to be considered. However, these charges are different for every financing institute. Hence, getting in touch with the agency and knowing about the processing charges is highly recommended. It will help you save yourself from sudden expenses related to your wedding loan.

2. Repayment Facility

Although there are various repayment methods available when it comes to a wedding loan, gathering information about it is still important. It will help you choose a repayment method that best suits your preferences. If you want to find out more about the repayment facility available with your selected financing agency, then all you need to do is get in touch with lenders.

3. Interest Rate

The first thing to consider while borrowing a wedding loan is the interest rate that you would have to pay. Personal loan interest rates can be significantly high. As a result, shopping around for the best possible option is a must. For this, you can utilize online research method and visit the websites of different financing firms who offer a personal loan. Besides, you can even try meeting the agencies’ relationship managers in person if you wish.

4. Joint loans

Instead of taking a marriage loan on just your name, you can now consider doing the same jointly. One of the biggest reasons why taking a joint wedding loan is preferred is that the expenses related to repayment can be divided by the couple. It also makes it easy for the couple to deal with their wedding loan EMIs. Besides, it will not put too much financial strain on one person solely. Hence, keeping up with your monthly budget will not be that difficult.

5. Prepayment fee

There can never be enough things to remember while borrowing financing services. However, the last on our list is regarding prepayment fee. In case you decide to repay your wedding loan principal amount in full before time, then make sure that you do not incur any prepayment expenses. Although charging prepayment fee is not recommended by RBI, but there are still multiple agencies that do so. Therefore, getting in touch with your firm and knowing more about the same can come handy.

Bajaj Finserv can give you pre-approved loan offers for their financing services. You can borrow funds for services like personal loans, home loans, and business loans.

The reason why you should utilize these online deals is so that the loan processing time can be cut in half and made completely hassle-free. To unlock your special pre-approved loan offers, all you would need is submit basic details such as your name and mobile number.

What is Small Cap Mutual Funds?

Small cap mutual funds are equity schemes which are required to invest a minimum of 65% of their total assets in the equity of small cap companies. Small cap companies are the 251st company downwards in terms of market capitalization. A company’s market capitalization is the market value of its outstanding shares. Aggressive investors with a high appetite for risk can invest in small cap funds in order to maximize their wealth.

Advantages of investing in small cap funds

• Higher growth potential – Small cap funds typically have the highest growth potential since the underlying companies are young and seek to expand aggressively. These companies have the ability to grow at a greater scale than larger companies.
• Undervalued investments – Usually small cap companies have very little analyst coverage because they are under-reported and undiscovered. As a result, there is a large probability of these companies being undervalued and thus, can be a great investment opportunity.
• Diversification benefits – When considering your overall portfolio, adding small cap funds helps you to balance the risk-return trade-off and diversify, thereby reducing overall risk.
• Merger and acquisition possibility – There is a great likelihood that small cap companies may get acquired by their larger counterparts to grow inorganically and this could cause a significant upside in the share price of smaller companies eventually adding value to small cap funds.
• Low liquidity – Small cap companies tend to be thinly traded and though this is viewed as a drawback by some, it could prove to be advantageous for investors who could foresee the potential of the company. As the company’s earnings and revenue become visible, investors start chasing the shares of such companies and since there are a limited number of shares available publicly, the share price rises rapidly.

Disadvantages of investing in small cap funds

• Risky – In the event of an economic or business downturn, many small cap companies are not able to survive among their more competent larger counterparts and as a result, value of investment in small cap funds can go down drastically. Therefore, they are not a suitable investment for risk-averse investors.
• Highly volatile – Whenever market sentiment turns weak, stocks of small cap companies are punished harshly causing great volatility in their share prices. This can cause small cap schemes to bleed.
• Do not pay dividends – Since most small cap companies are young and need to reinvest their earnings in order to grow their business, they are unable to pay dividends. Thus, you cannot rely on dividend payments as a source of income.

Though Small Cap Mutual Funds have their own set of problems, as pointed out above, the biggest upside of investing in small cap funds is the significant growth potential, which cannot be matched by their larger counterparts. When chosen correctly, small cap funds can improve the performance of your overall portfolio without adding a great degree of risk. Therefore, it is not advisable to avoid investing in them completely as you may miss out on their potential to generate high returns. At the same time, you should exercise due diligence in selecting the right type of mutual fund investment with a proven track record and trustworthy management.