Why planning your insurance early is essential?

Why financial planning is important?

Planning in advance for anything leaves you with a less margin for error on any errand or responsibility. Similarly, planning your insurance at an early age reaps you more benefits later in your life. We often find ourselves so caught up with our expenses today that most of us procrastinate and leave ‘saving for retirement’ as a responsibility for tomorrow. However, with experience we come to learn the importance of planning things out earlier and the advantages that it bears.

Today’s economic challenges have compelled adults to instill financial knowledge in children from an early age. This equips children to face financial challenges later in life. One important aspect of financial planning involves insurance planning. Insurance plans are important as they cover our retirement expenditure.

Opting for an early insurance

To logically analyze the importance of planning your insurance cover at an early age, let’s consider an example. For instance, a person aged 40 can buy a life insurance policy through which he receives Rs.50, 00,000 as insurance cover on retirement, provided he pays a premium of Rs.50, 000 annually till the time he is 60 years old. However, he can also start paying the premium or buy the plan after 10 years wherein his premium would be Rs.1, 00,000 per annum (from the time he turns 50 till he turns 60). Most of us would be enticed to choose the latter option and buy it at the age of 50. Considering that even he did the same, the person devalued the cash he used to pay the premium. This is because the money collected is accrued with tax-deferred cash which benefits the policyholder by increasing his cash value over time.

Increased cash value puts you in a stronger financial position. As such if you decide to procrastinate and pay later because you’d end up paying the same amount, then you deprive yourself of benefits which you could make use of. One such benefit would include the availability of loans. Each premium payment builds your cash value and over a long period makes you financially stronger. This for example, makes you accessible to private loans, home loans, automobile loans, etc. which you might not be granted if you delay your premium payments.
Today, institutions offer a wide array of insurance policies. Compare and choose the one that best suits your requirements and circumstances.

Why is a travel card an ideal tool for frequent travelers?

What is a travel card?

A type of debit card which allows you to install money in one or more foreign currencies is called a Travel Card. This is because, the common practice is to load foreign currency while travelling. This provides a user friendly and secure method of payment for all purposes when travelling to another country. Widely accepted, it can be used in ATMs to withdraw cash, i.e. - it can be used to pay for accommodation, travel bookings, restaurant meals and other attractions.

Convenience of a travel card

Currency Swings

Over the past decade, most tourist destinations if not all have discerned that tourists prefer using travel cards over cheques and currency notes, which is comparatively unsafe. Besides convenience, a major instrument that convinced travelers to opt for these cards was that one could pre-load foreign currency while favorable rates of exchange are prevalent. This proves beneficial because it allows the cardholder to load money when exchange rates are favorable along with the assurance that its value would remain the same later. Ergo, if you are dependent on currency notes and traveler cheques you might plan your vacation taking into account, the prevailing exchange rates which might suit your budget. However, with these rates being varying in nature they might be unfavorable during the time of excursion. In such a scenario, a travel card proves beneficial while other arrangements of carrying currency would render a decreased value.

Moving towards a digital economy

Leading the global economy towards cashless and digital transactions, a travel money card was introduced to make life easy for frequent travelers. Furthermore, getting a travel card is a hassle free process. You can apply for such a card via mobile applications or on websites and get it delivered to your doorstep. You could visit a forex office and get one on the spot as well. Loading cash on your card is again a simple procedure, as it can be done with the use of internet and mobile or a computer even while traveling. Providing users with the ease of access to load funds earlier (at a favorable exchange rate), along with wide acceptance has made it replace paper currencies as the frontrunner among foreign currency tools.

A handful of Indian entities provide travel cards, though more and more are aiming to penetrate the market. One can compare one with another and then decide on the card that offers the greatest benefits in regards to your expenses.

Why your kids deserve a debit card today

Why give a debit card to a kid?

Your experiences as a child shapes you as an adult. The things you learn and interpret, develop your character and personality. That is why it is important for children to grow up independently although under a parent’s tutelage. This allows them to learn from their mistakes. Similarly, handling their finances, enables them to take better charge of their finances after growing up.

Most kids are encouraged on the habit of saving. Piggy banks came into practice to encourage
Children to save for future requirements or for their desired toys. This practice helped them maintain the equilibrium as an adult.

Responsibility and maturity is attained by children at different ages. With maturity kids learn to be more responsible and after becoming responsible adults they tend to handle their money better. To nurture the children of our society into responsible adults we need to instill lessons that make them respect money. A bank account with a debit card can prove to be a step in the right direction. It allows the child to manage his expenses, under the supervision of his/her parents. This means he/she is given a budget and they can spend it however they feel like until they reach the minimum balance in the account. Also, they will educate themselves on how to earn rewards and discounts from the bank, which initiates ‘good financial learning’.

Features of Children’s Debit card

Today there are a variety of savings bank account and debit card options for minors. With banks coming up with diverse debit card plans parents should analyze the way in which they think the child should use the card and accordingly enroll the minor in one plan. For instance, the ‘Kids Advantage Account’, a plan put forth by HDFC is a popular scheme among Indian parents. The debit card allow a withdrawal limit of Rs.2500. It also includes a shopping limit of Rs.10000 with no overdraft on card value. This means the minimum balance has to be maintained, below which the card cannot be accessed. Similarly, there are several plans like this and as such parents could choose from know from various plans that would help your child learn important financial lessons.

Parents also benefit if they start maintaining an atm card for their kids instead of handing out ‘liquid pocket money’. In this manner you are definitely going to teach your child the basics of personal finance at home such as to plan a budget after receiving income, spend on things that are necessary and affordable and try to save as much as possible.

This definitely does not happen overnight, or as a matter of fact over a week or month(s) also. It is a procedure where you sow the seeds years before it bears you fruits. The child at first, will overspend, not keep the minimum balance required, will be denied access to payments and then learn the value of the procedure. It also allows parents the access to their bank statements, to get an idea of where the money is going.

Monitoring their card activities can be important as the parents would get insights on their children. There are one too many types of debit card and selecting the best for your child should be your priority. It is advisable to opt for the card which allows you to set a minimum limit and no access to spending over that. It might place them in unwanted situations, but that is what shall help them learn valuable lessons.

Make the most of your investment with the RD Calculator

What is a recurring deposit?

Recurring deposit is a type of deposit scheme where you deposit a fixed amount of money on a monthly basis. You earn an interest at a fixed rate on the deposit amount, till the deposit matures. Once the maturity period is over, you will receive the amount at maturity which is a sum of the interest and the deposit amount. One may use an rd calculator to compute the amount beforehand.

A recurring deposit calculator takes the following into account –

1. Tenure
The tenure of a recurring deposit usually differs from bank to bank. The minimum and maximum tenure are 6 and 10 months respectively.
2.  Interest
The interest earned on the recurring deposit account is based on the duration and the contribution amount of the recurring deposit.
3. Maturity period
On reaching the maturity period, you will get the sum of the principal amount and the interest earned.

Features of Recurring deposits:
       1. Collateral for loans
You can use your rd as a collateral for applying for a loan.
       2. TDS
Your recurring deposits are eligible for Tax deducted at source or TDS. 10% is deducted if the interest amount on a recurring deposit exceeds Rs 10,000 per annum.
3. Withdrawals before maturity
A penalty is levied if the recurring deposit account is closed before the maturity period is over.
4. Late payments
In some cases, if you miss a monthly payment then a penalty is levied by the bank.

What is a recurring deposit calculator?

A recurring deposit or rd calculator is a tool which can be used to determine the maturity value of a recurring deposit. In a recurring deposit, each month’s deposit earns interest that is different from the other. This is due to the fact that compounding only occurs at the end of the financial quarter and not at the end of a month.

The interest for a recurring deposit is calculated by using the following formula –

Interest on a recurring deposit is calculated on a quarterly basis. The compounding effect takes place only at the end of each quarter. The formula used to calculate recurring deposit is –

M = R [(1+i) n -1]
M= maturity value
R = the monthly installments
i = rate of interest / 400
n = number of quarters

Thus to pick a scheme that meets your requirements, use the recurring deposit emi calculator to calculate the monthly payments and the maturity value.

How to save for your retirement with a recurring deposit?

A recurring deposit is a type of saving cum deposit scheme offered by banks. Another type of deposit scheme offered by banks is a fixed deposit. A fixed deposit has rigid frameworks where the amount you invest remains locked in for a period of time.

However, you may make withdrawals from the fixed deposit account only against stiff penalties.
An rd account on the other hand offers you the flexibility to deposit money in installments, much unlike a fixed deposit where you deposit the money at one go. You can invest money at periodic times of your choosing, and earn interest on the amount.

Features of a recurring deposit account –

1. The minimum deposit period is 6 months whereas the maximum deposit period is 10 years.
2. The rate of interest offered on a recurring deposit is equal to that of fixed deposits.
3. You may also take a loan from the bank by keeping the deposit as a collateral.

The interest on an rd account is usually calculated on a quarterly basis. The interest rates are compounded, where the interest amount is added to the principal. The new amount (principal + interest) is taken as the new principal on which the successive interest rate gets calculated.

The procedure –

To start a recurring deposit scheme, you will initially have to decide upon the tenure and type of deposit scheme. Once the plan starts, you will have to invest the required amount till the concerned period of time is over. The rate of interest for a recurring deposit varies from 7% to 8%, depending upon the deposit amount and tenure. The risks in a recurring deposit is very low where you can easily calculate the final amount you will receive at the end of the tenure.

You need to choose a bank where you would like to open an RD account. Once the scheme and tenure is decided, you need to make a provision for payment. You can allow the amount to be deducted through the convenience of an ECS (Electronic Clearance System). ECS is a process where the required amount is directly debited from your bank account on a periodic basis.

Advantages of a recurring deposit –

1. The minimum amount required to invest is very low.
2. The rate of interest for a recurring deposit account is higher than that of a savings account.
3. No tax is deducted at source or on the interest earned.
4. It is a low risk instrument.
5. Higher interest amounts owing to quarterly compounding
6. Eligible for loan up to 75% of outstanding amount

How to strategize your two wheeler loan application with the right tools?

Getting a two wheeler loan can be a cumbersome process, especially if you have not strategized it carefully. Strategizing a two wheeler loan means calculating the right loan amount, interest rate and the tenure according to your requirements. You can use a two wheeler loan emi calculator to help you strategize your two wheeler loan application.

A two wheeler loan calculator is the first step in a two wheeler loan application. Before you begin the loan application process, you need to have an estimate about how much the loan is going to cost you. The cost here means the monthly payments that you need to pay to the bank which are known as equated monthly installments or EMI.

The EMI can be calculated from the loan amount, the interest on the amount and the processing fee to be paid.

An EMI calculator uses the following formula to arrive at the result –

E= P * r * (1+r)^n/((1+r)^n-1)
The variable in the formula are –
E = the monthly amount or EMI that needs to be paid
P = the loan amount that you will borrow
r = rate of interest (monthly basis)
n = the time period or duration of the loan amount (monthly basis)

In some cases, the processing fee to be paid for the loan amount is also added in the calculations.

Information provided by the calculator

The two wheeler loan calculator provided information in three parts –

a. The EMI
The equated monthly installments or the EMI is the monthly amount that you need to pay. It included a combination of the principal component and the interest component. Using this information you can come to the conclusion regarding the affordability of a loan.
b. The segregation
The segregation is a breakup of the entire loan amount which needs to be paid back to the financial institution. You will get information on the processing fee, principal amount and the interest amount.
c. Amortization tables
The amortization table can tell about how you will have paid back to the financial institution, year by year, as the loan progresses. These tables also help you comprehend how the interest part of the loan will be repaid.

Thus before you decide to go through, use the two wheeler loan EMI calculator to find out all the required information regarding the loan. It can help you decide whether a particular loan fits your requirements.

Two wheeler loan and their benefits all you need to know

The growth rate of two wheelers in India for the last five years has been in the range of 3% to 8%, according to a report by economic times India. Industry players have predicted that the growth rate will be in the high single digits for the first quarter of 2017. Factors like declining fuel prices and interest rates are driving up demand in this sector.

A rise in demand for two wheelers is linked with the loans for two wheelers. The demand for two wheeler loan is also expected to receive a boost as the demand for two wheelers picks up. A 2 wheeler loan can either stand as an unsecured or secured loan. A secured loan requires you to pledge a collateral and generally has a lower interest rate. Whereas an unsecured loan requires you to make a down payment of 10%-15% of the value compared to a collateral. The rate of interest in case of an unsecured loan is naturally higher.

Where can you get a two wheeler loan?

Two wheeler loans are provided by banks as well non-banking financial companies (NBFCs). The interest rate offered by banks are slightly lower than the NBFCs. You should make an informed choice before taking a loan. The showroom from where you are purchasing the vehicle may also connect you with financial institutions that offer two wheeler loans.

Features of such loans–

1. An identity and residence proof is required before procuring a two wheeler loan.
2. You may be required to furnish your salary slips, bank statements and income tax returns.
3. A documentation charge up to 2% of the loan amount is usually levied.
4. A loan processing charge of 1%-2% of the loan amount is charged.
5. You will be asked to make a down payment of 10%-25% of the vehicle cost.
6. Depending on the loan tenure, the interest rates can vary from 10% to 11%.

The benefits of a two wheeler loan –

1. Two wheeler loans are now available online where the process is easier and quicker.
2. Some companies offer a discount of 0.5% on the interest rate.
3. A large number of non-banking financial companies offer two wheeler loans. In some cases, a low credit score may act as a deterrent for getting a loan from banks where the NBFCs can step as a better option.
4. The loan sanctioning process usually takes less than 2-3 days.