You must have often contemplated on how you could have saved a little more money so as to meet all your dream goals without worrying about finances. Just like you, most of us are battling dilemmas between saving a substantive amount of our earnings looking at the bigger picture, and spending the same on irrelevant, whimsical temptations. It indeed is a tough choice especially when you have money lying loose in your wallet!

To avoid falling prey to unnecessary temptations, having a savings account is imperative. It is one of the most trusted hacks to keeping your money where it truly deserves to stay and grow. Saving substantial amounts of money in your savings account, only after conducting a comparative analysis of the best savings account interest rates is a foolproof idea to intensify your financial base. Here’s what you should do!

Zero out the day’s savings

In order to go through this process, you will first have to get detailed knowledge about your savings account and the way it will work towards your financial goal. The money that has remained with you in your savings account as well as the amount that you still own in person must have their last digits subtracted from them respectively. This has to be done in order to get a zero in the end. Take the zeroed out cash to put inside your additional savings account or even a piggy bank to make a sum of that elsewhere contributing to savings for a different cause.

Increase the zero-out process

In case your tertiary financial goal is bigger and needs to be attained faster, it is necessary that you increase the bait. This is to say in such a situation you must zero out not the last one but the last two digits from your day’s savings into the other account, which will enable you to reach your goals faster. In addition to this, such a well maintained account will also account for more savings account interest rate at the end of a year. This is always an additional bonus that you can enjoy.

Save what’s left before payday

It is important for you as a finance owner to realize the importance of being mature with your money. The first step towards doing it is to understand that the money left with you before payday arrives is not your award, which you can spend recklessly. It rather is a great opportunity to spend tactfully before new money enters your account. This process accounts for an additional amount of savings that you had not counted in your growth plan.

Advantages of this process

Apart from the different savings account interest rate that you are going to enjoy as a result of saving your money in different accounts by means of such unique hacks, there are also certain other advantages of following this process. The foremost being, you are always informed about how much money you own every morning, in addition to the money always being a round figure. These tendencies also stop you from wasting your twos and threes on unimportant things for you are aware that they are going to be put into a better cause. The genius hack comes with such simple rules and always ensures greater savings in your multiple savings accounts.

If it is about saving up and cutting down on extra expenses, the only legitimate way out is a savings account. No matter what, there is no shortcut to inculcating strict and regular saving habits.

As soon as you become a parent, you start planning to get the best for your child. From diapers to their higher education, you think about each and everything that secures your little one.

Financial investments too find their place in your head. You start looking for options that can fulfill all your goals, especially the higher education of your child. Interestingly, over the time financial investments have improved and customized themselves as per the growing demands of the customers.

Now, there are plenty of investment plans that can secure your child’s future and fund higher education. One such plan is Unit Linked Insurance Plan. In this article, you will get to comprehend this investment plan better and how it can help you in accumulating funds for your child’s higher education. Read on!

What are ULIPs?

If you are not much aware of the financial tools for investment, you might want to know what exactly is a ULIP plan. As mentioned above, ULIP stands for Unit Linked Insurance Plan which brings together the features of both insurance and investment.

For a ULIP plan, you will have to pay premium either monthly or annually. While the small amount of that premium goes into your insurance, the other part is invested into various options based on equity or debt to match your long-term goals. The goals can range from children’s education, marriage or your retirement plans.

How Can ULIPs Help Secure Your Child’s Future?

Here are some benefits that ULIPs offer to secure your child’s future:

Life Cover

This is the first and basic benefit that ULIP plans offer. As mentioned before, ULIPs are coupled with life insurance. This means that they will provide financial security to your family in the event of your untimely and unfortunate demise. Your beneficiary, i.e., your family will receive both the sum assured and fund value that your investments will gather.

At the time of buying the ULIP plan, it is essential that you must understand the future needs of your child’s education along with the inflation rate. This will help you choose the right target which can fulfill all the needs of your child’s education when the time comes.

Flexibility of Portfolio

There is no doubt that by introducing the investment benefit ULIPs become doubly advantageous. But what is more interesting about this investment feature is that you can decide where you would like to invest your money.

However, this can only happen if you carefully monitor your plan and notice if the progress can meet your future requirements. In case the investments are not suiting your long-term plans or are facing downfall due to market conditions, you can shift them between equity, debt and balanced fund options. For instance, if there are some issues in the stock market, you can opt to transfer your investment to debt and gain promising returns.

In a nutshell, the flexibility of the investment portfolio can help you accumulate enough funds for your child’s education.

Greater Returns with Less Risk

If you have started planning for your child’s future earlier and have long-term goals, ULIPs are ideal for you. The reason behind this is the volatility of the stock market. As ULIPs are linked to the stock market, its fluctuations can result in poor returns for short-term goals. However, the situation changes when you opt for a long-term investment. Your investment can digest the market risks and offer higher returns to you. This is also the reason that ULIPs are quite popular when it comes to achieving long-term goals like financing your child’s higher education.

Partial Withdrawals

At times, you would wish to withdraw a portion of your investments to finance your child’s education. ULIPs offer you this benefit but only after the specified lock-in period [5-years].

Various financial institutions have different terms and conditions for this. For instance, if you are buying Future Generali Big Dreams Plan, you can instruct the insurer in writing to withdraw partial funds after the lock-in period of 5 years. You can make unlimited free partial withdrawals under this plan. For more information, you can visit the official website.

Summary

Securing your child’s future is directly related to offering them quality education. Therefore, it is essential that you have enough funds to fulfill these needs. ULIPs prove to be the right companion for you in this journey of wealth creation. No matter what your child wants to be, a ULIP plan will ensure that his/her dreams do not remain just dreams but become a glorious reality.

Home loans can help your dream of owning a home come true. With stiff competition prevailing in the home loan market, Banks and private finance institutions employ various marketing techniques to rope in a borrower.

Yet, there are some key factors that decide your prospects of getting a home loan sanctioned which are outlined below:

Availability of all the requisite documents

There are many essential documents demanded by home loan lenders [strictly by PSU Banks] when a home buyer approaches a lender for a home loan. These broadly  include PAN details, Aadhaar details, income proofs and documents pertaining to IT returns. Make sure that you produce all of them as they not only ease the process of getting a loan but also enhance the scope to get a good home loan interest rate.

CIBIL score

CIBIL stands for Credit Information Bureau (India) Limited. It generates a score [CIBIL score] which is a 3 digit number ranging between 300-900 by evaluating your credit history and creditworthiness. The closer your score is to 900, the stronger your credit profile to get a home loan. You can estimate your CIBIL score online, free.

Your housing project must be RERA registered

The Real Estate Act makes it mandatory for commercial and residential real estate projects to register with the Real Estate Regulatory Authority [RERA]. It provides greater transparency in project marketing and execution. It is important to note that no home buyer will get a home loan if the builder is not registered with RERA. The RERA Act is fully operational in the states of Maharashtra, Gujarat, Madhya Pradesh, Punjab and Rajasthan.

Occupation of the borrower

Housing loan institutions prefer borrowers who are Government employees as they have a stable job and are more unlikely to default while repaying their home loan. Thereafter, lenders while calculating the eligibility of the borrower through the home loan eligibility calculator, prefer doctors and people working with blue chip companies. Furthermore, lenders also check the the history of employers paying salaries/dues to its employees.

Age of the borrower

Age is another criterion that lenders consider before giving a loan. People in the age group of 30-50 years are preferred more as they have a good number of working years left to repay the loan amount.

These are some of the factors you need to keep in mind if you are a home loan aspirant. Remember to calculate your monthly installments using the home loan emi calculator. Also, when you have all the requisites for a home loan working in your favor, you get to choose from a wide gamut of lenders. That leads you closer to fulfilling your dream of owning a home without a hassle.

A Unit-Linked Insurance Plan [ULIP] is an investment product that offers an insurance cover and an investment opportunity. You can ensure that your wealth grows while being insured for your life. A certain amount from your policy will be invested in funds and the balance will provide a life insurance cover for you. Depending on the movement of the market, the value of your plan will vary. You can choose from various plans as per your investment purpose and financial goals. ULIP has a tax advantage and comes with a minimum lock-in period of five years. This means that you cannot opt out of this policy during the minimum lock-in period. Even partial withdrawals are not allowed. If you want to discontinue from the plan, you will have to face the consequences.

Now, if you decide to discontinue the plan and stop paying premiums so that your policy ends, or if you make a decision to surrender the policy, you will not receive the returns on investment. When this happens, the policy will move into a discontinuance fund and it will remain there until the end of your lock-in period. You need to understand how the discontinuance fund functions before you make a decision to discontinue the plan.

What is a discontinuance fund?

In case of a regular policy, you make the payment of premiums during the policy term. Hence, you will have to pay premiums on time and ensure that these payments are done throughout the entire policy tenure. In this case, you might get a 30-day grace period in case you miss a payment. You can make your payment within these 30 days to avoid any penalty or a lapse of your policy.

The insurance company will inform you about the same through a letter within a period of 15 days, by mentioning about the 30 day-window, so that you can continue the policy. Even during the grace period, the policy will remain active. By the end of the grace period, your policy will move into a discontinuance fund, as you have not paid the premium during the lock-in period. However, your money will not sit idle in the fund; you will receive a minimum 4% interest rate on the same.

What are discontinuance charges?

If you decide to exit from the policy, you will have to face the exit penalty. Hence, before you make a decision to move your money into the discontinuance fund, there will be ULIP charges associated with the same. There will be an exit penalty in this case. However, there is a limit on the different types of penalties. If yours is a regular premium policy and the premium amount is below INR 25,000, amount of discontinuance penalty will be 20% of the amount of premium or the value of the fund. However, this amount is subject to a cap of INR 3,000. In case the premium exceeds INR 25,000, then the charge is 6% of fund value or annual premium, which has a maximum cap of INR 6,000.

Depending on when you exit the policy, the charge will vary. In case you exit at the end of the second year, the charge will be slightly lower. If you surrender at the end of the fourth year, it will be the lowest. Hence, the charge for exiting the policy in the first year will be the maximum. If you exit in the fourth year, the charge will be 5% of the value of the fund or annual premium, which has a cap of INR 1,000 for policies where the annual premium is less than INR 25,000. In case the amount of annual premium is more than INR 25,000, the charge will be 2% of the annual premium or fund value, with a maximum cap of INR 2,000. In case you decide to exit the fund in the last year, you face no penalty charges.

Apart from this charge, the money parked in this fund will pay another charge known as the fund management charge. There is a cap on the same. It is 0.50% at present. Now that the policy has lapsed, there will be no cost associated with insurance; however, the insurance company will have to provide a two-year window in order to restart your ULIP policy. If by any chance, you decide to revive the policy, the discontinuance charge will be added back but your fund management charge will not be reversed. Lastly, when you revive the policy, you will be required to make payment of the revival charges on the same.

Consider the charges before discontinuing the policy

If you are not happy with the ULIP returns and are willing to surrender the policy in order to discontinue the same, you need to consider the charges associated. At times, the charges can be quite high and will bring down any returns generated over the tenure of the policy. The exit or penalty charges need to be understood well in advance before you sign up for the policy.

You also need to understand ULIP NAV before you make the decision. NAV is the ‘net asset value’ of the plan, which will change according to the changes in the market. Hence, if the market is at a high, the NAV will be high. It is advisable to consider the NAV and the portfolio value before moving into the discontinuance fund. You will still earn a minimum 4% return on the same but you need to have an in-depth knowledge of the penalties and charges when making a decision to surrender the policy.

Given the number of investment products available in the market, many consumers get confused due to the lack of clarity on the same. While every product serves different purposes and is suitable for different users, it is important to understand what it offers. There are different types of investment that fit the needs of different investors. A life insurance policy is essential for individuals of all ages. An endowment policy is an important part of a life insurance policy and requires a thorough understanding. It is a policy, which agrees to pay a specific amount either at the time of maturity of the policy or on the death of the policyholder, whichever takes place earlier. It is a life insurance policy, which gives you a combination of an insurance cover and a savings plan. You need to save consistently for a specific period and enjoy higher returns on the policy.

The tenure of the policy varies from one plan to another and the benefits are tax-free. You have the right to sell or surrender the policy before the end of the tenure but it might not fetch you a high amount. Hence, it is best to sell the policy after a specific period to get a higher amount from the same.

Different types of endowment investment plans

It is important to understand the different types of policies available for you. When it comes to endowment policies, listed below are five different types you need to be aware of.

1. Non-profit endowment policy

In this particular policy, there is a lump sum amount, which is promised to be paid to you at the time of maturity of the policy or death, whichever happens earlier.

2. Traditional endowment plan with profits

This is a variant of life insurance policy, where you will receive an assured amount of money at the end of the policy term or at the time of your death. However, there is a clause, which is important here. The maturity amount will rise, as you get regular bonuses, which are guaranteed. There are also certain cases where a non-guaranteed bonus is applicable. It is known as a terminal bonus and the same is paid when the tenure of the policy ends. For people who are buying the policy with a specific objective like generating regular income or making a loan repayment, this option is the best.

3. Low-cost endowment policy

In this policy, you get a mix of the traditional plan with the profit endowment feature. Here, the expected growth rate matches with the amount of mortgage and a reduction in the term will ensure that the mortgage amount will be paid out as the minimum amount in case of death of the insured.

Now, if the amount assured has risen to a specific rate, this particular amount will enable you to make the payment of an outstanding loan. If there is a decline in bonus rate, there will be no surety that the amount of return generated will be enough to make up for the outstanding amount on the mortgage. This policy will give a guaranteed level of the death benefit, which will be enough to make the payment of an outstanding loan.

4. Unit-linked endowment policy

With this policy, no particular amount is committed at the maturity. The tenure of the policy and the mortgage tenure are equal and the premium amount will be used to purchase units from a policy as mentioned by the policyholder. The same units are then canceled to buy a life cover. The maturity amount of this particular plan will depend on how the purchased units perform. Hence, there is no guarantee that the maturity amount will be high enough for you to make the loan repayment. Now, in the case of the death of the policyholder, there is a guaranteed amount, which is equal to the outstanding loan amount.

5. Traded endowment policy

You can also call it a second-hand endowment policy. In this plan, policy, the buyer will purchase the policy at a price, which is higher than the surrender value offered by the insurance company because the policy will fetch a higher amount at the time of maturity. At the time of purchase, the rights and benefits will be transferred to the buyer, and in case of death of the policyholder, the buyer will get complete benefit from the policy without any claim from the beneficiaries of the deceased.

Endowment plan is considered the best investment option in India but you need to compare the plans before making a buying decision. Keep your financial goals in mind and consider the amount you may need in the future. Based on the same, you will be able to decide the premium amount and the tenure of the policy. Endowment policies allow you to make an investment with high returns. When you choose an endowment plan, you can secure yourself manage to meet the various financial needs like education and buying a house.

Mutual Funds are the buzzword when it comes to investing in the stock market. The popular advertising campaign, ‘Mutual Funds Sahi Hai’ has fueled a lot of interest for mutual funds but not many people know what a mutual fund is and how it works. Investing in mutual funds is easy, and with minimum investments being Rs. 500, it is the most convenient way to invest in the stock market and gain from the increases there.

Here is a handy guide for those looking to understand the basics about mutual funds.

What is mutual fund?

A mutual fund is a collective fund where people pool their resources together. Different investors invest money in a fund. The fund takes the money so collected and invests it in different assets. The growth of these assets is represented as a growth in the value of a mutual fund.

For example, an equity mutual fund invests a majority of its funds in different types of equity shares. A debt mutual fund, on the other hand, invests in different debt instruments. Hybrid mutual funds invest partly in equities and partly in debt instruments.

The increase in the value of assets that the fund invests in is translated into an increased Net Asset Value [NAV] or price of the mutual fund. For example, if an investor invests in an equity mutual fund at the price of Rs. 50 per unit and the price increases to Rs. 52 in a few months. The investor has gained Rs. 2 per unit of the mutual fund.

A mutual fund could prove less risky than investing directly in the stock market, especially for beginners.

You can get investment advice from Kotak Securities to help you make the right choice. Now that you have an idea about what is mutual fund, you can make the right investment decision.

How can you invest in mutual funds?

There are two ways to invest in a mutual fund:

• Systematic Investment Plan [SIP]
• Lumpsum investment

In a Systematic Investment Plan, a certain decided amount is invested every month in the mutual fund. The benefit of investing regularly is that the cost gets averaged over a longer period of time. More units are purchased when the price is low and less units when the price is high. Thus, the results are averaged out and this could result in a lower cost per unit and higher gains.

A lumpsum investment is when a one time investment is made in the particular mutual fund. You could also benefit from lumpsum investment as mutual funds are known to fetch you substantial returns. Returns that have the potential to beat inflation better than most other investment avenues.

If you are wondering what is mutual fund investment, you now know the types. You can accordingly make an investment decision.

How mutual funds work

As discussed earlier, mutual funds India gather resources from a pool of investors. These resources are invested in different assets. Depending on the type of mutual fund, the income earned by the fund on its assets is either

• Distributed to the investors as dividend income [Income plans of mutual funds]
• Reinvested in the mutual fund to grow the investment [Growth plans of mutual funds]

Mutual funds work on the principle that collective funds can grow more than individual investments. Since mutual funds are professionally managed, the investment decisions are researched, leading to a higher chance of growth for the investors.

Mutual funds also offer the investors liquidity. It is easy to sell these fund units at any time and exit from the scheme. Since these funds can be converted to cash at any point of time, they are preferred investments.

Investing in mutual funds is very convenient. Open your demat account today with brokerage firms such as Kotak Securities and invest in a mutual fund and watch your money grow. Mutual funds India are ‘sahi hain’ indeed.

Progress in the medical field has enhanced the survival rates of people diagnosed with critical illnesses such as strokes, cancer, and heart diseases. But, we also know that the recovery might come at a significant financial expense. It could be a devastating condition for anyone – especially for business owners and breadwinners of the family as they might have to pay for the treatment while ensuring their family/business also functions smoothly.

A large segment of the population believes that investing is a health insurance policy is enough to tackle all their medical expenses. However, bearing in mind, the rise in the number of life-threatening diseases these days, a simple health insurance policy is just not enough anymore. Treatment of a critical illness can add an unnecessary financial strain on your monthly expenses. At this moment of time, a dangerous illness policy comes into play.

A critical illness insurance policy acts as a financial cushion that helps in fighting the financial complications one may face while treating a critical illness. Also, it helps you to pay huge medical bills as well as daily expenses, without digging deeper into your hard-earned savings. In short, a critical illness policy supports you and ensures you do not have to borrow money from anyone in times of a medical crisis.

There’s a great chance of getting diagnosed by critical illnesses at old age. As your retirement approaches, it’s just savings and pension amount that will help you come out of the grave problem. A critical illness policy can save you from getting broke in the hours of need. Here’s a list of advantages, you will enjoy if you buy a critical illness policy at an early stage

No Depletion of Savings

Suppose, you got diagnosed by a critical illness, and you don’t have a CI policy to take care of your medical expenses. In this case, it is likely that your saving will get depleted as you will be utilizing them to meet your daily expenses while getting the critical illness treatment. These savings may be intended for your children’s marriage or education etc.

A simple delay in taking the right steps can change your entire life. For example, your daughter is graduating in the next three months, and you are supposed to send her abroad for her further studies. The savings you set aside for her studies may get used up during your recovery from the critical illness. This event can disturb your financial plans and can land you up in trouble.

Funds for Any Purpose

The best part about critical illness policy is that the claim is submitted on the basis of a simple diagnosis report of the doctor or the hospital. The claim, if approved, is not dependent on any conditions of hospitalization in listed hospitals or presentation of hospital invoices, etc. The insured can make use of the said sum in any way he deems fit. The sum amount may help you to pay your home loan EMI’s and allow you to uphold the same lifestyle that you were enjoying if you’d have received a regular monthly salary.

Tax Benefits

Every premium you pay towards the critical illness policy is tax deductible under Section 80D of the Income Tax Act.

Income/Pension Replacement

The income/pension that you used to draw could be replaced by the lump sum pay-out from a critical illness policy. This will help you with your utility bill payments, children’s marriage, EMI’s and other expenses. Critical illness insurance policy ensures that you have a financial back-up.