As and when your business requirements change, you might feel the need to switch to a business current account which offers better services. Furthermore, these days, flexible RBI policies and online banking have made the whole process of switching current accounts only a matter of 7 days! However, this does not mean that switching to a current account is your only best option. Keep the below facts in mind before deciding to switch your current account.

Which type of account will be perfect?

Before switching your account you must jot down the points based on which the choice has to be made. For example, do you often use the overdraft facility or are you in need of free home services [like picking up cheques or providing cheque books at home or office.] General current accounts are best for businesses that are looking to curb their overspending and manage their finances directly, while international current accounts are ideal for entrepreneurs who spend more time in foreign countries.

Evaluate the pros and cons

If you are selecting a new bank to switch the business current account, a comparison is must. The new account should match your financial needs and lifestyle; so before you shop, compare. Some checkpoints which will help you conduct a thorough comparison are:

• Interest rate
• Overdraft rates
• Standing charges
• Account features
• Terms & conditions
• Introductory offers
• Facility of online or mobile banking.

Why is the change needed?

Sometimes an instance of misunderstanding or error from the bank’s end makes us frustrated followed by which we want an immediate shift. However, this should not be the right approach in switching accounts. The changed account may not be better than what you are getting at present.

So it is best to take sometime, cool down and then take the decision. Or are you thinking to change the credit union because you are moving from one country to another. Then the good news is you need not change at all! There are several credit unions that have their branches all around the world, helping you get the best benefits sticking to the same current account you have for years now. Moreover, there is a facility of online current account these days, due to which there is very less, need to switch.

Have you gathered enough data?

Now, finally when you decide to switch the current account be sure to have all the data of the existing account with you. This is because when the change is made the complete old data might not be available. Besides the transaction history the data you must take a print before dissolving the existing current account are

• Official documents which might help you get loans in future.
• Prints or snapshots of important cheques.
• History of e port transactions for at least the present financial year.

Are you leaving behind confidential data?

Changing business current account is not a minor task. You might be leaving behind customers’ data; the account might be linked with the primary bank account or the payroll of your organization. Also, as a loyal customer you might get several additional benefits and reward points which will not be available soon in the new account.

So think before you switch! Banking is now at fingertips but a constructive thinking process is must before you switch your business current account.

The one thing that most people aspire to do is being able to own their own home. It’s on nearly every individual’s bucket list, and not a single day goes by without people thinking about the kind of space they’d like to call their own. The increasing cost of real estate has forced individuals to opt for a home loan to be able to afford their dream home. While applying for a loan isn’t too difficult, what most individuals struggle with is figuring out the kind of EMIs they’d need to pay every month to pay off the loan. This is where a home loan calculator comes into the picture.

A home loan calculator helps you assess the Equated Monthly Instalments [EMIs] that need to be paid to the lending company each month until the loan is fully repaid. This EMI amount is calculated on the basis of the home loan amount, interest rate and tenure.

Before we show you how they work, here below are ten important things to know about them:

1. A home loan EMI calculator is an easy-to-use tool that allows you to instantly get an estimate of your EMIs.
2. The formula used for this is:

EMI = [P . R . (1+R) ^n] / [(1+R)^ n-1]

Where, P denotes principle amount, R indicates the rate of  interest charged every month, and N is the tenure of the home loan.

3. The EMI calculator also helps calculate your loan eligibility, and lets you know how much finance you can apply for as your loan amount.
4. Besides providing some personal details, you will need to feed in a few standard details such as the property value, the amount you wish to avail, and the repayment period.
5. You can find these calculators on the websites of all financial institutions and banks.
6. Advanced EMI calculators also consider local and state taxes, insurance, and your running loan EMI, if any.
7. Typically, all the information that needs to be entered in the calculator can be easily found in the loan agreement details.
8. The calculator also shows you your amortization schedule. This includes your monthly EMI with a break-up of the principal amount paid out and the interest attached. Further, the schedule indicates what the outstanding balance will be after paying each month’s EMI.
9. Usually, an EMI is calculated on a fixed interest rate. However, in the case of a floating rate, the EMI amount would fluctuate based on prevailing market conditions.
10. Using the home loan EMI calculator, you can simplify the financial data and get results instantly.

Now, to put things into perspective, let’s cite a simple example on how the home loan calculator works:

Assuming that your principal is Rs. 30 lakh, rate of interest is 9% per annum (9/12=0.75 per month), and tenure is 180 months,

Your EMI = ((300000*.75 /100*(1+.75 /100) ^180/((1+.75 /100)^180-1))) = Rs 30,428

Nowadays, purchasing your dream home has been made easier thanks to the home loan facility. To better plan your finances and your EMI outgo, it would be wise to use a home loan EMI calculator before signing on the dotted line. With the right figures on hand, you can plan a home loan package that works best for you.

On Anant Chaturdashi, every town and city in the country reverberates with the chants of ‘Ganapati Bappa Morya’. Lord Ganesh, the remover of obstacles is taken on a beautiful parade before being immersed in water. Moreover as you immerse your [eco-friendly] Ganesh into the water, remember that He takes away only your ill-luck and not your dreams and goals. On this auspicious day, let’s discuss why investing in mutual funds is a great way to finance your future goals.

Here are the benefits of investing in mutual funds.

Investing in mutual funds is safe

The Securities Exchange Board of India [SEBI] regulates mutual funds in India. It monitors the fund houses and ensures that they are safe for investors. However, there is still a small possibility that a mutual fund scheme can shut down. In such cases, the fund pays you a sum based on your current Net Asset Value [NAV]. This means, your money is safe, and you will receive it. But it is important to know that mutual funds come with a varying degree of risk. So, if capital protection is a significant concern, you can consider investing in debt mutual funds or liquid funds.

Easy way to diversify your portfolio

One of the first lessons in investment is, ‘Don’t put all your eggs in one basket’. Your investment portfolio should be well diversified to minimize your risk exposure in the market. For example, if you are looking to invest in individual securities, carefully select a dozen stocks [or more] to balance the risk and return equation of your portfolio cautiously. It can be a long and tedious process [especially if you are a new investor]. On the other hand, you can simply invest in an index fund that tracks the Sensex or the Nifty 50. This way, you can gain exposure to the 50 best stocks in the market through a single fund.

Professional management

If you are working at a regular job, you may not have the time or expertise to analyze stocks or study market movements. In that case, mutual fund investments are a good choice for you because a professional fund manager manages your investments. The fund manager must ensure that your fund earns the required returns in a specified duration.

Invest in small amounts

Many people delay their investment journey because of the belief that a large amount of money is needed to invest. This widely believed myth needs to be dispelled, because mutual funds allow you to invest with limited amounts. Fund houses allow investors to begin investing through Systematic Investment Plans [SIPs] with as little as Rs. 1,000 per month. In some cases, the investment threshold is even lower at just Rs. 500. So if wealth creation is your goal, all you need is to select a fund and invest right away. You can increase the investment amount as your income rises over the years.

Transparency

Before you invest in a mutual fund, go through all the required information about the fund such as the fund’s past performance, list of the fund’s holdings, fund manager’s performance history and so on. In addition, you can also check the list of charges you have to pay. There are no hidden charges attached to a fund. This is why investing in mutual funds is smooth and transparent.

Conclusion

As an individual, you may have many goals you wish to achieve in your life. Whether they are short-term goals or long-term goals, mutual funds can help you attain your goals. Hence, on this Anant Chaturdashi, invoke the blessings of Lord Ganesh and start investing in mutual funds to create wealth and enjoy a great future.

Each individual wishes to be financially strong. In order to achieve such a goal, it is necessary to make smart saving and investing decisions.

Quite often, individuals are led to believe certain things that are not true. False pre-conceived notions about saving and investing may hurt your finances in the long run. Following are six myths and the truth about them that you may keep in mind while planning your personal finances.

1. Only rich people invest

This is completely a myth. Any individual may save a portion of their earnings and may further invest it. There are numerous investment schemes that allow small investments such as Systematic Investment Plans [SIPs]. Based on your finances, you may begin with a small amount and work your way up by making higher investments over a period of time.

2. Cash is king

In this era of digitalization, cash transactions are being replaced by plastic money. You may opt for a debit card or a credit card to make your purchases. You may also use your bank cards to book tickets, make online purchases, to shop at physical stores, and for other purposes. Using plastic money eliminates the risk of theft or loss of cash. Besides, it is a secure and convenient payment method.

3. Budgeting is not important

Believing in this myth can result in serious consequences on your finances. It is necessary to determine your cash inflow and outflow. By doing so, you may be able to identify whether your income is sufficient to meet your expenses. If not, you may either consider getting an additional source of income or may cut down on unnecessary expenses.

4. Having a saving account is not necessary

Having a saving account helps in building a solid financial future. There are numerous reasons to have such an account such as easy access, the growth of money, a disciplined habit of saving, and low fees, among others. Moreover, you may dip into your account in case you need liquid cash. You may also access funds in your savings account for emergency purposes such as unexpected hospitalization, job loss, or vehicle breakdown, among others. You may choose the most suited account from a plethora of options offered by banks.

5. Small purchases are fine

Though you may believe that small purchases will not harm your finances, the same is not true. Making purchases more than you are able to afford will burn a huge hole in your pocket. Instead, you may set a budget and stick to the set amount. This will help reduce unnecessary spending and help you spend wisely.

The road to financial freedom begins with making wise money decisions. You may dispel any money myths that you have and enjoy a strong financial future.

Ganesh Chaturthi is one of the most awaited and vivacious festivals in India. This festival is dedicated to the beloved god of prosperity- Lord Ganesha. Ganesh Chaturthi is celebrated throughout the world – from Mauritius, Canada, to the US – wherever you find large Indian population. The colorful and vibrant celebration of this festive is filled with passion and devotion. Loud music, chants, and folk dance represent the onset of this festival.

Ganesh Chaturthi is a 10-day festival and marks the birthday of Lord Ganesha. Since originated in Maharashtra, the festival is celebrated on a large scale by the people of Maharashtra. Also, it is quite popular among Hindus residing in other parts of the country.

The advent of Lord Ganesha is said to remove obstacles and bring a splendid fortune. Therefore, it is believed to worship Ganesha before starting any important task. On the first day of the festival, people carry the idol of Ganesh at home. They worship him with great devotion for the next ten days. Also, they invite friends and family to visit Ganpati at their place and take his blessings. It is believed that placing an idol of Ganesh at home during the celebration is the way of welcoming him and his blessings at home. After the cheerful 10-day celebration, Lord Ganesha’s idol is submerged in Holy River or sea portraying his abode to heaven.

Since a lot of people will be visiting your house, make sure your home is covered from damages caused due to unforeseen events. It is advisable to buy house insurance as the policy not only provides you with peace of mind but also covers you financially in the events of mishaps. Unlike motor insurance, house owners insurance is not compulsory, yet it holds an equal significance in one’s life. This is because, unlike your car or bike, your house is an appreciating asset; and any loss or damage to this will mean a big hole in your pocket. All the more, the emotional pain of reconstructing a house or reinstalling its contents is painful, difficult and tedious. However, insurance companies offer several plans under ‘house insurance’ such as content insurance, landlords’ insurance, tenants’ insurance, structure insurance, etc.

A regular house insurance plan covers for loss and damage caused to your valuables due to a fire accident, theft, allied perils, and burglary. There are several reasons why you should have a house insurance policy

Protection against damage caused to your valuable assets and personal belongings – A house insurance policy offers coverage against damage of contents kept inside the insured house, including various valuable, expensive, and essential belongings like jewellery, furniture and electrical goods.

Coverage against natural and human-made calamities – A home insurance policy protects your house against damages caused due to natural disasters, such as floods, lightning, storms, earthquakes, typhoons, etc. Also, the plan covers your home from man-made hazards and anti-social activities, alike. These are acts such as thefts, strikes, riots, other activities caused out of malicious intent, etc. Also, it financially enables you to recover from the loss and rebuild your home.

It is never too late to make the right decision. We all know that precaution is better than cure. And by buying a house and content insurance, you might just save yourself from an unexpected loss.

SIP is an acronym for Systematic Investment Plan which is essentially a process that involves investing a certain amount that remains fixed regularly in a scheme akin to those in mutual funds. Imagine the process of paying monthly installments against a loan that you have taken – only you will be paying these installments in case of a SIP Investment, in a mutual fund. Let’s dig deeper!

How to start A SIP

• One of the mandates you must be aware of is the fact that the SEBI has deemed it necessary to have an initial process wherein getting to know each of the customers will play an important role in investing in mutual funds. You will, therefore, be required to go into the website and fill out a basic form in addition to submitting some of your documents. Once verification of your documents uploaded online is finished, your process of KYC will have been completed.
• Making an informed choice about the kind of SIP investment, or portfolio of SIPs you should go for will also benefit you infinitely. This is to say that it is best to identify a mutual fund that is in keeping with the age at which you are, and your financial as well as investment requirements. In case you find yourself confused between the options of mutual funds that are best suitable for you, it will be advisable for you to speak to finance experts who will take into consideration, with greater detail, the growth plans that you can securely go for.
• After you have successfully identified the most suitable SIP investment plan for you, you will be required to decide and put together the amount. It is advisable to make a portfolio of the mutual funds that you have in mind and come up with a single transaction which will start SIP inside all of these mutual funds. Once the first installment goes out, the second time onwards, it goes into auto investment mode and it is possible for you to check your growth in the dashboard provided.

Types of SIPs that you can invest in

It is important that you are aware of the fact that there are three types of SIPs that you can invest in and they are weekly, monthly and quarterly. In a country like India where salaries are usually afforded on a monthly basis, it is wise to go for the monthly scheme given that it will be added to the list of your utility bills which also come monthly. Additionally, there are also the following kinds of SIPs based on the changes you can make to it over the period of investment

• Top up SIP that allows you to increase the installment amount of a particular mutual fund that has the potential to do well.
• Flexible SIP wherein you can increase or decrease the installment that you pay depending on your cash flow at regular intervals.
• Perpetual SIP that enables you to not enter an end date for your investment at the time of opening the account, so that you can continue it till or withdraw when your financial goals have been achieved.
• Trigger SIP which will require you to have expertise in making speculations about the financial market.

It must be understood that SIP investment schemes makes it possible for you to accumulate a substantial amount of wealth in the long term scenario. So make sure you tread responsibly while building your financial portfolio through SIPs.

Depositing additional funds are always welcomed by any bank, but, you as a customer are always muddled whether to store it in a Savings Account or a Fixed Deposit [FD] account. A head-on comparison between the two will reveal that the interest rates are higher on the FD side, which successfully culminates into a good Return On Investment [ROI].

You may also opt for mutual funds or shares; however, these are risky. A safer option that provides decent returns includes fixed deposits [FDs].

Here are six reasons to open FDs

1. Safer financial products

Compared to shares or mutual fund schemes, FDs are safer. Furthermore, such deposits are rated by credit rating agencies like Credit Rating Information Services of India Limited [CRISIL]. Such ratings ensure your funds are safe and there is no risk of losing your capital.

2. Higher interest rate

Compared to a bank savings account, the FD interest rates are higher. In addition, financial institutions offer a greater rate for senior citizens when they open an FD. Therefore, you will be able to earn more on your capital.

3. Lower amount

You may invest as low as INR 5,000 while opening an FD. In addition, you may choose a cumulative or non-cumulative option. When you choose cumulative FD, the interest is paid on maturity. On the contrary, non-cumulative FDs provide regular interest payments and are beneficial to earn periodic income.

4. Flexible investment

When you open an FD, you must choose the duration of the deposit. At the end of this period, you will receive your capital along with the interest. Moreover, most financial institutions allow you to withdraw your funds prior to the end of the deposit period. However, according to the Reserve Bank of India [RBI] rules, you are not allowed to withdraw your money within three months of opening the FD. In the case of premature withdrawal, the effective fixed deposit rates may reduce because you do not hold the FD until maturity.

5. Option to avail of loan

You may avail of a loan facility against your FDs. Financial institutions offer up to 75% of the deposit amount as a loan after three months of opening the FD. The interest rate on such loans is affordable, thereby ensuring you do not face any difficulties in repaying the borrowed amount.

6. Tax savings

Some FDs provide tax benefits. Usually, when you opt for a tax saving deposit, you will have to hold the FD for at least five years. You are unable to withdraw the money before the end of this period. Furthermore, loans are also not available on tax saving deposits. When you opt for these deposits, the capital invested up to INR 1.5 lakh is exempt from income tax under Section 80C of the Income Tax [IT] Act, 1961.

Several banks and Non-Banking Financial Companies [NBFCs] offer such time deposits. It is advisable you check the interest rates offered by different financial institutions to maximize your returns. FDs have been popular among Indians who want to invest their money in a safe financial instrument. Such deposits are regulated by strict laws and offer assurance to investors like you. Investing in FDs is advisable if you want to increase your income through another source.

Insurance plans are important tools that are required for the financial security of your loved ones in case an unexpected incident were to happen, such as a fatal car accident. Traditional plans, like endowment policies, provide insurance benefits to your beneficiaries if you were to lose your life during the policy term.

You may have been warned against using insurance as an investment tool. However, there is no harm if your insurance policy is able to deliver returns along with life cover. This can prove highly beneficial. Such plans are widely available today.

What are Unit Linked Insurance Plans [ULIPs]?

You may have heard about such plans but often wonder what is ULIP exactly? ULIP is a unique insurance plan that offers the dual benefit of life coverage and returns. A certain amount of the premium you pay is used towards insurance coverage. The balance is invested in different financial products, such as debt or equity, to deliver returns on your investment.

Because most people do not clearly understand what is ULIP plan, there are several myths associated with this insurance product. Following are five such myths that need to be busted right away.

1. High-cost products

Do you, like most people, think that the costs associated with these insurance plans are too high? Well, this is a misconception. It may be overcome through an understanding of the structure of a ULIP plan. The premium that you pay for your policy is invested in your chosen financial products after the deduction of certain charges, such as fund management and life cover.

In September 1, 2010, the Insurance Regulatory and Development Authority of India [IRDAI] capped such charges to ensure the costs of procuring these plans are reduced. If you remain invested in a ULIP for at least ten years, the insurance company may levy a maximum charge if 2.25% during this period. Most insurance companies also offer excellent benefits and discounts if you choose to purchase the policy online.

2. Risk of returns

Because a portion of the insurance premium is invested in financial instruments, the returns are market-driven. This poses a certain risk. However, the truth is that the life cover you acquire remains constant during the entire policy period. Moreover, you may have the option of choosing from different types of funds to invest in. You may choose the financial product where your money will be invested at the time of purchasing the plan.

Based on your risk appetite, you may choose to invest in equities, debt, or balanced funds, which are a mixed of equity and debt. Additionally, you may switch between one instrument and the other based on your financial goals.

The life cover does not decrease in case the financial products do not perform well. In case of your death during the policy tenure, your beneficiaries are eligible to receive the policy benefits. The insurance company will either pay the fund value or the total life cover, whichever is higher.

3. Low returns

The return on your investment in a ULIP depends on the performance of the chosen financial instrument. However, when you choose the right funds and make logical and timely switches between products, you may be able to enjoy higher returns.

A ULIP delivers significantly higher returns when you stay invested for a longer period of time. Therefore, most experts recommend using these plans to achieve long-term financial objectives, such as purchasing a luxury vehicle or buying your dream home.

Insurance companies also offer loyalty additions when you stay invested long-term. This helps to increase your accumulated corpus. It also increases the effective return on your investment. Moreover, these insurance plans are eligible for tax benefits under the Income Tax Act, 1961. Only an amount of up to INR 1.5 lakh paid as the premium on a ULIP may be deducted from your taxable income under section 80C of the IT Act. Moreover, the maturity benefits are also tax-exempt under section 10 [10D].

4. Exit is difficult

When you choose to purchase a ULIP, it is important to have a medium to long-term investment intention. ULIPs have a lock-in period of five years, which means you cannot exit your investment during this time. At the end of the lock-in period, you may surrender your policy. If you choose to exercise this option, there will be no exit load charges levied if you withdraw the entire amount before the maturity date.

However, it is not advisable to surrender your policy before it matures. To maximize the returns on your investment, it is important remain invested for the long-term. This is because the power of compounding may need to come into play. As a result, the returns earned during the investment term are also able to earn profits. This enables you to build a sizeable corpus.

5. Investing surplus funds is not possible

Another common misconception is that once you purchase a ULIP policy, you cannot increase your investment. However, in reality, you may easily top-up your existing ULIP premium amount in case you have an investible surplus. During the policy duration, you may top-up your investment without any limitations and as many times as you desire.

ULIPs are an excellent option that can help you invest in equities and reap the benefits of burgeoning equity markets. Recently, ULIPs have delivered excellent returns, which make these more attractive for investment purposes. Based on the type of fund you have invested in, it is possible that you may earn higher returns on your investments.

The flexibility of easily switching between equity and debt funds, and vice versa, makes a ULIP a smart investment decision. It allows you to meet your life goals while at the same time protect your loved ones in the case of an unfortunate event. If you haven’t already considered investing in a ULIP, this is the right time to do so. Browse the various options available without delay and procure one today.