What are the vital products you need to have before investing?

When it comes to investing, you will require stringent discipline to match your goals, and also have a strong intent to match your requirements. You will find plenty of recommendations from the RBI, several banks, investment and service providers.

However, the eligibility to invest in the first place and the efficiency which the investments are made and managed will depend on the following factors:

Bank account: Most investment products will require payments and receipts that will need to be routed through a banking system. In most cases, cash as a form of payment is often regulated. However, the cash amounts are often accepted to certain limits. Other products such as mutual funds do not accept checks that are issued from outside accounts. In other words, any capital market transactions made are only routed through the investor’s bank account.  Any dividend, interest, maturity redemption checks are made out to the investor’s name, wherein which a bank account will be required to process it. Additionally, the direct transfer of funds or even modes such as the NEFT and RTGS systems allow a transfer of funds from the account of the remitter to a recipient only.

Permanent account number: This alphanumeric identity needs to be furnished and produced at the time of commencing any financial transaction. Whether it is opening a bank account or a demat account, making or redeeming any investments or deposits and many more activities, you will be required to furnish the PAN number. However, you may not have to provide this number, if your transactions are below a prescribed value for certain products. In the event a PAN is not available, you will need to make a declaration in Form No.60 under the Income Tax Rules 1962, wherein which particulars of the transactions and proof of your identity and address will be required.

KYC norms: Under the PML Act 2002, you would be required to provide your identity details in order to make financial transactions. This is done under the Know Your Customer (KYC) norms. With this, banks, depository, participants and other similar institutes and financial intermediaries will conduct this compliance process, the first time an investor makes a transaction. If the KYC procedure has already complied with any capital market intermediary, the acknowledgement can be used to invest in others.

Demat account: Any securities that have been purchased or going to be sold will be held in a dematerialized or electronic form, known as the demat form. Certain investments such as shares, debentures and government securities will mandatorily require you to open a demat account. Other investment products such as mutual funds and small saving schemes can also be held in this account. Investors can open a demat account with any depository participant that is associated with the NSDL or the Central Depository Services Ltd (CDSL).

Safe internet banking: Factors to keep in mind

Today’s progress in economy and technology has made banking easy. Through internet banking, you can now access the basic functions anytime and anywhere you would want. They are even accessible through your fingertips via your mobile phone.

While there are several benefits to this form of internet and mobile banking, the flip side of this coin also shows up. There are certain risks involved with this form of banking, which has remained a huge concern for users. In order to ensure that you enjoy secure and safe banking transaction, here a few factors you can follow:

Always use genuine anti – virus software: Very often it is your system that gets compromised through phishing, malware and virus software. This is also applicable for mobile banking.In order to protect your computer or mobile from such factors, you need to use a genuine anti – virus software. While you do get trail versions online, a completely anti – virus software will help detect and remove spyware that can allow outsiders to access sensitive information.

Avoid using any public Wi – Fi: One of the biggest threat of internet banking with a  public wi – fi network is that the hacker can sit between the end user and the hotspot and trace all the data with ease. With this easy access, the hacker can easily introduce malware or viruses into your device. So if you must use the Wi – Fi for any internet usage, avoid using it to access your bank details or make any payments. As a precaution, you can set up a VPN software on your computer to create a secure a tunnel between the computer and the internet.

Check for the latest update on your operating system: Whether you are using a computer, laptop or any mobile based device, you should ensure that your operating system is well updated with the latest security patches and updates. As far as possible, avoid using cracked OS’s or jail breaking or rooting your phone. You should also look to limit or restrict access from programs or apps that are being installed, to only what they really require.

Change your password regularly/keep a strong one:While this may sound clichéd and avoidable, it is important that you keep your account safe while maintaining confidentiality. The facts goes without saying you must not share these details with anyone. No bank will ask for your confidential information. Additionally, when you are changing your passwords, choose strong or long passwords. If you must, create different passwords for log – in and your transactions.

Subscribe for mobile notifications: It may seem like a nuisance to get constant alerts, but it will actually work to your benefit, especially if you get an instant notification if any suspicious transaction occurs. Whether the transaction exceeds the specific limit or within it, you will be aware of how much funds is remaining in your account. Additionally, you will also get alerts if there are any unsuccessful login attempts to your net-banking account.

What are the types of insurance available in India?

In your life, you will face unexpected risks, which can affect not only your, but also your loved ones. So how can you face these risks and yet stay protected? This is where an insurance policy will help keep and your loved ones protected. But with so many types of insurance policies available, how does one opt for the right one to get the optimum protection?

Given below are the different types of policies currently available that you can opt for:

General Insurance

• Personal Insurance: This is one of the most popular and generic types of insurance policies available. It covers several requirements such as health and coverage against death or injury by accident. Under this category, you can also cover your family members in an individual policy such as medical insurance, accidental insurance, property insurance as well as vehicle insurance.

• Rural Insurance: Rural insurance is an insurance policy that is designed to meet the requirements and needs have rurally based individuals or businesses. Normally, it focuses on coverage’s for life and health and even protection against natural disasters that can have a negative effect on businesses.

• Industrial Insurance: Businesses can opt for financial protection for any of their important projects, construction, contracts and equipment from situations such as fire, theft, damage or loss.

• Commercial Insurance: This insurance is designed to provide financial protection against theft, liability and property damage. This also focuses on injuries suffered by employees or even interruptions in the business.

Life Insurance

• Whole life insurance: Whole life insurance policies normally cover the entire duration of an insured’s life. A yearly premium will be required to be paid so long as the policy lasts.

• Endowment plans: This policy provides a lump sum amount once the policy holder dies or when the policy matures. In this case, there are certain types of policies that provide payment in case of critical illnesses.

• Money back plans The money back plans are used as a form of investment. It is used to produce ideal financial returns in the future for several purposes.
 
• Term life insurance: The term life insurance plans or term assurance plans are available to the insured, for a fixed period of time. Once the period of time comes to an end, the policy owner can opt to withdraw the policy or extend it.

• ULIP’s: United Linked Insurance Plans are policies where the financial worth of a policy reflects on the net asset value of the core investment assets that are related to it. They offer a unique feature, to policyholders, which is both flexible as well as protective.

Other Forms of Insurance

• Home insurance: Home insurance, also known as homeowner’s insurance of hazard insurance is taken to cover private homes against losses and liabilities.

• Travel insurance: Travel insurance policies can be availed to cover both long and short trips. It can also be used within or countries abroad.

How to tell if you are ready to purchase a car with a car loan?

Purchasing a car may seem like an easy feat as driving one, but on the contrary, there is a lot more to be done. Not only will you be required to provide paperwork, but you will also need to be on top of it to secure the high-ticket purchase. So how do you know when to wait, or go for the big purchase?

A car loan is one way you can go about purchasing your car. However, your lender will ensure that you do not cross 45% of your monthly income as payment. This would also include the other monthly liabilities. While this may seem like a small amount, in reality, it is quite big. As compared to other savings such as your monthly obligations, excluding childcare, college savings, and other savings in general, this is a large expenditure to take care of.

So if you find you’re unable to make those ends meet, chances are you may not be ready to buy a car. Given below are some means to keep your loan payments as manageable as possible:

Pay off previous debts: The first step you need to take is to pay off previous debts. You need to check if you have a workable down payment. If you have any debt payments that push your debt over the 45% mark, try to pay them off. Focus on the debts that have the greatest balance. In doing so, not only will it allow you to apply for car loan that is large, but most importantly it will allow you to afford a new mortgage payment.

Keep your monthly debts in check:Whatever current monthly debts you have, it will limit your purchasing power especially if you want to apply for car loan. Therefore, it is crucial that you reduce these debts on a monthly basis. You can make a repayment plan that focuses on repaying each debt within the given tenure. Alternatively, you can focus on repaying each debt one at a time. Once your overall debt to income ratio has increased, you can apply for the loan to purchase a car.

Avoid focusing on high-interest debts:It is not what you owe, but rather what you pay that counts. Lenders look at certain factors when it comes to your application for a car loan. Most lenders focus on the minimum payment that you’re obligated to make on credit payments of whatever interest rate you have. In other words, your 0% home loan can adversely affect your ability to borrow, especially if that payment is a few thousand rupees a month.

All you need to remember is that only you will be making the payment for the loan. So purchase a car if it only makes financial sense for you. While low rates are an attractive reason to purchase a car, you need to exercise financial prudence.

Debunking the top myths associated with personal loan

When it comes to investments, you would always look for options that are risk free, with a promise of high returns while also beating the demands of inflation. However, when it comes to investing a loan such as a personal loan, there will always be a fear that the loan will overwhelm you and your financial requirements, leaving you with an ever bigger debt.

But not to worry, we are here to debunk some of the common misconceptions about the personal loan and how to get the best deal:

Myth #1 – Increase in the interest rate would mean inflated EMI’s

It may seem like a simple math. Whenever a bank revises the base rate, it would only mean an increase in the personal loan interest rates. Of course, it would change your overall monthly budget, especially with your EMI’s. However, this is the biggest myth. In line with the changes of the interest rate, the tenure will normally change. In fact, most banks tend to adjust the tenure with a change in the interest rate, while keeping the EMI value the same. If you want to pinpoint the exact changes in your tenure, you can always use the personal loan calculator to assist you.

Myth #2 – All interest rates offered are the best deal

While the cheapest rate for a product score you a good deal, the same cannot be said for personal loan rates. You will need to dig deeper to ensure that you are getting the best deal that will suit your needs. You will need to check out the valuation charges, processing fee and other additional rates apart from the personal loan interest rates.  The initial glance over the rates may look tempting, but it may not be flexible for your requirements. The best way to avoid such a situation, is to review the personal loan features that will suit your finances and objectives before you zero in on a lender. Don’t forget to compare options before you apply for one.

Myth #3 – Borrowers should always opt for a shorter tenure

Most borrowers are under the assumption that a short loan tenure is the best route to avid any repercussions from an increase in any repo rates by the RBI. However, on the contrary, shorter the tenures would also mean higher EMI’s, which puts you in a position to face liquidity issues if you don’t manage your money carefully. Instead, try to save some funds side by side and invest in options that give you a good return at the same time. A diversified investment portfolio will help you pay off your personal loan as opposed to increasing your EMI, by reducing your tenure.

How to prevent your education loan from taking over your life

Over the last few decades, education has become a priority for most of the upcoming youth. Many of these individuals are aiming for education levels that go beyond the standard college degree. Some individuals have even contemplated pursuing degrees and higher educational levels abroad.

However, such educational degrees come at a price, especially if the said degree is an international one. But rather than losing out on such an opportunity, many individuals finance their education through the means of an education loan. However, lack of well-paying jobs, recession and demand for local workforce has often affected loan owners, who are looking for means to repay back the borrowed funds. After all, lack of income leads to lack of repayment. So how can you avoid a potential debt in your life while ensuring that you get an opportunity for the highest education? Here are a few steps you can follow:

Before you borrow

While the best way to avoid a potential debt is to avoid borrowing in the first place. This can be an impossible situation if you are seeking a high international educational degree with the help of education loan in India. So instead, you can ensure that you follow certain steps before you apply for the loan. They include:

Get a complete picture of your education goal: The reason why colleges and higher education might seem expensive, is the fact that half of the students graduate at the end of theterm. Most of these individuals either drop out, flunk out, or even switch their majors. Some even drop out midway because they get a job opportunity, only get stuck on the corporate ladder due to lack of a higher educational degree. To avoid this potential situation, you will need to focus on your education goal. This will help you understand what the potential financial expenditures are, in order to attain the position you want in your targeted industry

Take a year off:  Taking a year between your college and earning your masters or PHD will go a long way to assist you in planning your future. This year can be used to explore alternate career options or earn a down payment for your education loan.

After you borrow

Once you have borrowed funds through the education loan in India,  here are a few factors you can follow:

• Create a post-college budget
If you are going to borrow, you need to be aware of what you owe, how much you owe, and the time it will take to repay the funds. Calculate the monthly cost of your loan payment while you are still studying, so that you are aware of how much of a budget you will need to follow when you start earning to pay off the loan.
• Prioritise your repayment
As you start earning, it is important that you focus on prioritising your repayment. Ensure that you have sufficient funds to save, for your monthly requirements while paying off your loan at the same time. As far as possible, avoid taking on additional debts till you have paid off your loan considerably.

Factors that determine your eligibility for a home loan

When it comes to purchasing a home, there are plenty of options you can consider to finance this purchase. Amongst the several options, the home loan is one of the most popular choices. Not only are there several lenders who offer home loan in India, but they also offer it at different competitive rates.

However, each lender will have different criteria for evaluating a loan application. These criteria determines your eligibility for a loan application. Here are a few factors that almost all lenders will consider:

Disposable income: One of the most important factors that a lender will consider is your disposable income. It is derived by deducting your statutory deductions, regular expenses and existing EMI’s from your overall gross income. Overall, you home loan EMI should be within 40% of your monthly disposable income. If you individual income is low, you can always apply with a co – applicant to increase the overall gross income in order to get the loan amount you require.

Credit history: Your credit score determines your creditworthiness. Lenders consider your credit score as the means to judge your creditworthiness. A low credit score will indicate that you are a risky investment. It also indicates that you may have a current debt value that you need to pay off before applying for another debt, such as the home loan. The appropriate credit score of 750 and above is considered as a good score. However, other lenders may have different scoring patterns and a fixed yardstick for their own version of their acceptable good credit score.

Compliance with legal norms: When it comes to opting for any of the home loan in India, lenders will first verify details of the property which you are taking the loan. They provide loans to facilitate the purchase of properties that have been legally cleared by the local authorities, especially if they possess a clear and valid title. Some lenders even offer special loan packages or rates on properties that have been listed in their approved database of properties.

Occupation stability and continuity: A stable job or income source ensures a continuous and steady income. This income in turn, ensures that the borrowed funds are repaid in a timely fashion. Lenders for certain signs and factors that indicate a stable job or income source. They also consider how long you have been working with your present employer to calculate how steady you are in your employment. Switching too many jobs during your career will create a negative impression. Additionally, lenders give more preference to government employees over professional individuals in private sector companies.

Apart from the above mentioned factors, there are plenty more, that a lender will review. Keeping these factors in mind will go a long way to ensure that not only do you get the ideal loan rates in the market, but also allows you to negotiate for the best rates in the market.