What are the exclusive benefits to private banking?

There is a lot of benefits to investing in certain investment options such as banks. However, some financial institutes also offer certain investment options, such as private banking. However, private banking is not available for everyone. It is a suite of special services offered to rich people or in bank jargon high net worth individuals. What is regarded as an HWNI is said to be over 1.5 crores in assets? As you would expect, there a multitude of advantages to private banking they include the following:

1. Privacy

This is perhaps the biggest advantage of private banking. As the word suggests, private banking would imply privacy. A major disadvantage of anonymous dealings is that many illegal dealings also take place. Also, such deals take place that competitors cannot offer, and thus, it is even more important to keep the transaction private.

2. One-on-one service

One-on-one service is another critical benefit of private banking. Private banking allows a customer to go directly to a banker without going through the customer relations staff first. This is especially important when wealth management or investment decisions of high importance need to be made. Therefore, unique solutions to the client’s situation can be thought out.

3. Discounted services

It may seem unfair but if you opt for private banking you can get discounted services as well. Among the discounted services, tax preparation and planning, traveler’s checks and corporate checking are included. It has even been said that services such as real estate management can be addressed. All of these services are processed without any hassles for the customer because of the fact that they are highly prioritized as well.

4. Very high returns

This is the biggest advantage of the private banking setup. It leads to an average rate of return on investments of 7 to 13 percent. However, it can be as high as 30 percent annually. However, it is crucial to note that the main reason for this is the fact that only private bankers have access to high-return investment opportunities. The biggest example of these is hedge funds.

However, it is also worth noting that private banking also has a lot of disadvantages, including the facts that recruiting and training staff for this type of banking is very difficult and expensive. Secondly, there are regulatory restrictions and finally, it also takes a lot of time and effort and money to explain the analyses to the client. However, the advantages do outweigh the disadvantages, therefore making it one of the ideal investment options.

What are the ideal financial options for NRIs settled abroad?

If you are an NRI, India actually has a lot more good investment options compared to what you think. Not only that, you get fruitful returns on the investment you make. However, you do need one of the NRI accounts, namely, the NRE, NRO or FCNR bank account. Here are what you can do with these accounts and the advantages and disadvantages of each.

1. National Pension Scheme (NPS)

This is when a principal is invested after which an annuity is claimed by the investor. It can be availed by any NRI in between the ages of 18 and 60. Funds can be transferred from an NRO or NRE account. However, this cannot be done from an FCNR account. Also, whenever an NRI gives up his citizenship, he loses his NPS account.

2. Fixed deposits

An FCNR or NRE account is preferable as compared to an NRO account when it comes to fixed deposits. This is because the NRE and FCNR account are tax-free in India, whereas an NRO account cannot be repatriated and is taxable at its source. Also, ever since the RBI was linked to LIBOR, NRE fixed deposits can get up to an 8.5% return whereas with an NRO you can only get up to 7.75%.

3. CDs

A CD is a certificate of deposit. They are basically a liquid form of a time deposit. However, NRIs can only subscribe to CDs on a repatriable basis. This means that it can be moved from one country to another. The rate of return on these are also higher than a fixed deposit.

4. Bonds

These are not just bonds but bonds which cannot be redeemed in India. They are usually used by a company or the government when long-term investment is the goal. The coupon rate for March 2015 is between 9.48% and 10.75%. However, banks do lock your principal amount for quite some time.

5. Mutual funds

These can be either debt mutual funds or equity mutual funds.  Debt mutual funds are when investments are done in fixed income securities. Among these, money market instruments, treasury bills, and corporate bonds are included. Equity funds are the other type of mutual fund. However, it has been highly recommended by financial experts to use hybrid funds for mid-term investments.

Mutual funds, bonds, CDs, fixed deposits and the national pension scheme are just some of the ways that NRIs settled abroad can avail the financial markets in India. However, it all depends on your financial requirements and what you plan to do with it in the future.

Mobile banking: A rising trend

Mobile banking is strictly defined as any banking done on your mobile phone. Even though conventional mobile phones were previously used for mobile banking, since the introduction of smartphones, mobile banking has taken off to a larger level.

What is offered?
Mobile banking offers a wide variety of services. It includes services that allow you to pay bills, transfer funds and check your account balance just through your mobile phone. Mobile banking not only helps you do your work but also helps keep it safe. This is done by giving you notifications of transactions as well
as giving you the ability to turn card accounts on or off. It also helps you keep track of all your transactions whenever required.

Where might this go?
Many ask where might this go? Technology has progressed so much that so many major inventions have now become obsolete right from the typewriter to the telephone. However, is this the fate of the automatic teller machine as well? One major thing that a mobile phone cannot do is print cash. Therefore, it seems very likely that automatic teller machines will be around for the time being as well. However, credit cards may not be as lucky because nearly all the functions of a credit card can be served by a mobile phone.

What are its advantages?
Firstly, it is easier to access. This is the best solution and alternative for any payments through physical cash. You do not have to stop on the road and find an ATM nor go to a bank. You most certainly do not have to wait in a queue. It is cheaper as you do not have a transaction fee like in ATMs. Finally, it is probably safer as well because you do not have to carry your credit card everywhere. Additionally, you do not have to put up with the risk of losing a lot of money if you lose your credit or debit card.

What are the disadvantages?
Identity theft is perhaps the biggest reason why people do not want to do mobile banking. Through this feature, individuals are scared that someone will steal their identity and use their account. This may seem like a possibility, especially since mobile hacking is not becoming very rampant. However, as the progression of technology is increasing, so is the protective measures for this feature. Therefore, while there will be a possibility for a hacker to access your information, safety features are being made to reduce the chances of doing so.

Whatever your perspective, there has been a huge boom in this field and you should probably try it out before you decide if it is for you or not.

What are the factors to consider when you are going to send money to India?

Banking institutions are offering plenty of financial options to meet the demands of the foreigners or NRI’s residing in the various part of the world. These options are designed to offer the optimum flexibility and convenience when it comes to sending money to India from abroad.

However, the plethora of choices can prove to be confusing to those who want to remit. How does one select the ideal choice that will suit their needs, while providing them with the best features? Given below are different parameters that can be considered before opting for the ideal choice:

Speed

Amongst the different features, you will need to consider, speed has always been an important feature. The speed of the disbursement of your funds is crucial when it comes to transferring your funds. Most of the regular transfers take around a few days to a week. However, you will need to opt for a service that will provide you with a faster transfer in the occasion you need to send funds urgently. Therefore, when opting for a sender, look for the speed of disbursement they offer and the costing for it. Consider the situation and urgency to determine the best period within which you can transfer the money.

Coverage

The second factor you will need to consider is coverage. Not all banks or financial institutes provide a national wide coverage. Alternatively, if they do, they will charge an additional price for it. However, each of these institutes will have limitations, which require your knowledge to choose the right medium when sending money to India. Additionally, most banks deal with certain limited currencies such as US dollar, Euro, and Pound while a few others entertain the use of foreign currency cheques. Some service providers also offer a foreign currency non-resident account scheme. With this scheme, a remitter can transfer funds in any foreign currency to the local currency.

Service Cost

It is a known fact that service charges on the remittance depend on the mode of transaction and transaction provider. Before choosing the sender, you must consider checking the service costs and charges levied. The standard charges for the SWIFT mode of transaction are between 1 to 2 %. For demand drafts and cheques, the rate is at 2%. However, this can differ with private organizations. These charges are in tune with specialized services, which is offered by the operator.

Convenience

Amongst all the different factors involved in money transfer, convenience is the least considered point. However, when the time comes to remit or receive funds, this factor plays an important role. Not only does the remitter require the convenience to send funds, the receiver must also have the convenience to receive it. Options such as the online internet payment or an offline transaction can be feasible to your needs. You will also need to consider the total amount of the transaction before selecting the mode of payment.

Investment banking for beginners: All you need to know

To put it simply, investment bankers are the middlemen between investors and bankers when it comes to stock. An investment banker performs a number of services that help both the investors and the company in question. This is why they are so important to the financial market. Here are some things they do: 

1. Buy and re-sell stock

This form of investment banking does not follow the traditional manner. These investment banks purchase stock from companies who have just had their IPO (initial public offering). In the next step, these companies sell it in the market at a higher price to what they had previously bought it for. This is a major risk, but due to their expertise, they are usually successful at it. Some of the largest corporations in the world are investment banks including JP Morgan, Morgan Stanley, Deutsche Bank, Barclays, and others. 

2. Providing advice to clients

The clients of an investment banker include corporations, pension funds, hedge funds, the government of its country and other large financial institutions. Investment banks provide advice as to what is the ideal step that should be done. The Chinese wall is a concept where there is a discord between the advisory and trading divisions of the bank. It is crucial that they maintain their independence otherwise they will not be giving appropriate advice to their clients. 

3. Help find investors for debt financing

Debt financing is a way of raising capital for projects through corporate bonds. Corporate bonds are much harder to come about, as compared to government bonds. Therefore, investment bankers are needed to find a client for these corporate bonds. 

4. Financing large projects

Traditional banks are usually much smaller than investment banks. This is due to the fact that they do not undertake projects as big as investment banks do. The only way that large projects get funded besides an IPO and selling stocks is through an investment bank. This is why they are so crucial for the functioning of the economy. 

5. Asset management and brokerage service

Finally, investment banks also help regular investors. This is because they take money from a client and use it to help those clients make more money. This is done in two main ways. The first is that they select stocks. The second is that they secure mutual funds for their clients as well.

As you can see, investment banking is crucial for the economy and this is the reason why becoming an investment banker is such a lucrative proposition.