Savings accounts versus Liquid funding options: Invest your savings the right way!

Investing your earning is the need of the hour, not matter the amount you are earning. While there are plenty of options you can consider, the most important choices come under the short tenure category. Under this, you can either opt for a saving account or a liquid funding option such as mutual funds.

But is the different between these two options and how it can benefit you? Given below is the difference between the two investment options and how you can benefit from investing in this short term tenure:

The rate of return: Both options offer a return on the amount that is invested. In both cases, the higher the amount you invest, the more you will receive in return. However, the rate of return for both options is different. In the case of mutual funds, the returns can be as high as 7%. However, this rate will differ on the market conditions. Meaning it can drop to the lowest amount at a short notice, thus leading to no returns at all. With the savings account, the rate of return can be anywhere between 3 to 4.5%. Normally, this will stay consistent through the investment tenure without changing drastically.

Tax implication: In both investment options, the tax is levied. However, the rate of the tax levied will differ with each option. In the case of the mutual funds, the short-term capital gains tax is levied based on the investor’s applicable tax slab tax rate. In the case of the saving account, the interest that is earned is taxable as per the investor’s applicable income tax slab. In either case, the income bracket will play an important role in determining the tax bracket for investment in either option.

Ease of operation: If you need to access the funds in the mutual funds, you need not go the institute. If there is any amount that needs to be paid, it can be done online. This makes it simple to access, especially on short notice. However, with the savings account, in order to access the funds invested, it first needs to be deposited in the bank account first.

Suitable for: As an investor you can choose to invest in either option. However, each option possess different risks levels and different returns. In the case of mutual funds, the risks are high, but so are the returns. For those who have a high risk appetite this makes for an ideal investment. For those who want to just park their funds with the least amount of risk, the saving account makes for a great investment choice.

4 factors you need to keep in mind when making an international money transfer

Millions of individuals from around the world make online money transfers for plenty of reasons. The reasons will include purchasing or selling an international property or even sending funds to family or friends overseas. If you are one of these individuals, you need to understand the different requirements for the international money transfer. They include the following:

1. Appropriate exchange rates: This is the first concern you will first need to consider when making any money transfer. The exchange rates of the financial market are not fixed and can fluctuate due to various contributing factors. Factors such as the country’s current economy, speculation of financial performance, inflation and recession can affect the exchange rates. This can lead you to compensate for the increase or decrease in the exchange rate, which would include transferring more funds. But by being aware of these factors, you can calculate the appropriate exchange rate and know how much you need to invest accordingly, and thus save up your funds instead of spending unnecessarily. If you are planning to make an online money transfer, you can check the rates online before you invest the appropriate amount.

2. Low transfer fees: Apart from the exchange rates, you will also need to keep track of the transfer fees. Depending on the institution you have opted for, the transfer fees can be pretty high, every time you move funds overseas. This can be calculated in percentage, or whether the amount surpasses the acceptable transfer limit. In either option, you will end up spending a lot more than what you would want to, or even on unnecessary funds. Therefore, you need to know how much of a money transfer you will end up making, based on the amount being transferred and the transfer fee.

3. Custom service: You should not compromise on the quality of your service, just because you will be paying a lot less than other competitors. In most financial institutes, an individual manager will be assigned to each account, and provide the relevant assistance. Furthermore, it allows you as a customer to speak to a dedicated expert whenever required, such as when making large transactions or a first-time online money transfer. The personal assigned to your account will provide you with security against subsequent foreign exchange movements along with helping you negotiate the often unpredictable foreign exchange markets. This will enable you to secure a money transfer that will satisfy your requirements and allow you to budget ahead with confidence.

4. Security: When making any international money transfer you will be risking your funds to the conditions of the market and scrupulous individuals who can take advantage of any flaws in the institute’s system. However, a credible organisation will help you safeguard your funds and offer you a peace of mind, anytime you make a money transfer.

Why opting for a forex travel card is better than other options

When travelling to a country abroad, there are plenty of financial expenditures you will end up making. Be it a business trip or a financial one; you will be required to make small or medium expenditures from your pocket. This can include purchases for general items, food items or even travelling requirements.

Opting for cash for these instances may seem like an ideal solution. However, you may not have sufficient cash to spend on all requirements, without risking of spending it all. You also risk carrying an immense amount of funds least you become a target for the local thieves. Furthermore, if you opt to use your banking cards, you risk incurring high fees in terms of service charges or high conversion rates.

So what is the alternate tool for your financial requirements? This is where the forex travel card will be useful. This foreign exchange card functions like a pre – paid banking card, which can be loaded with a fixed amount of funds in the local currency. To access the funds on the card, it must be swiped.
But unlike the other banking card, the forex card comes with plenty of benefits. They include:

Direct access to your bank account: One of the most important features of the forex travel card is the direct access to your bank account. Once you have completed using all the funds on the card, you can contact the lending bank and ask them to transfer a sufficient amount of funds onto the card. This can be done by directly contacting the bank, or even emailing an application for it. You can even have someone from your family make the transfer request on your behalf.

Hold multiple currencies: Another important benefit of the forex card is the foreign currency. Most lending banks offer forex cards that can hold multiple currencies. This makes it beneficial if you will be travelling to multiple currencies in one trip. Rather than carrying multiple currencies in physical cash, you can easily carry the card and access the required local foreign currency when required. Furthermore, when you load the card with your local currency, the conversion rates are fixed. Therefore, when accessing funds in the foreign currency, you will get financial protection against fluctuating financial conversion rates.

Withdraw funds when required: As previously mentioned, you can easily access funds on the card with just a swipe. This makes it useful if there is a swiping machine at the point of sale. However, in the event you need to access physical cash, you can easily use this card at the local ATM and withdraw funds. A small service fee will be levied to withdraw the funds from your account.

While there are plenty of other benefits to this card, you must ensure that the card fits your financial requirements before you apply for it.

Factors to remember in order to choose your health insurance wisely

While healthcare estimations are soaring higher with each passing year, you will be looking for ways and means to ensure that you stay healthy at all costs. However, there are certain medical illnesses and disorders you cannot avoid at any costs. This is where the health insurance will work in your favour. But like several other insurances, it comes with several riders and benefits, which has led to several variants to it.

You will also need to choose from the different insurance lenders available in the financial market, along with the different types of health insurance. Furthermore, there is a matter of the fine print that you need to read through. In the end, buying the right insurance for your health will not seem like a simple affair.

To help you get started, here are a few factors you need to consider when opting for the right insurance type to suit your requirements:

Start young: Plenty of financial advisors have often recommended purchasing a medical insurance a young age. The logic behind this is that at a young age you will not have that many problems with your health as you would do once you reach your forties. However, most applicants consider the prospect of a medical insurance later in their life, where the waiting period will be 2 to 3 years. Moreover, purchasing a medical cover right in the beginning will decrease the amount of insurance premium over time.

Easily compare policies online: There are several different types of health insurance covers in the market. So choosing the one that suits your requirement to perfection will be a tricky deal. But with a bit of research, you can easily choose a policy that will suit your requirements. The best way to go about it is by comparing policies online. A comparison here will leave you with a breakdown of the different policies which will give you a better understanding.

Opt for the right category: Apart from the different types of health insurance covers, there are also the different categories you need to consider. For example, you can opt for a single policy, or a family floater policy, designed for your family as a whole. In the case of nuclear families, it is better to choose a family health insurance plan, rather than an individual policy for each member.

Opt for additional coverage: Most health insurance plans provide additional coverage for specific needs. Some plans even include covers such as maternity and critical illness amongst many others. Under these covers, you may have to pay for an additional premium, but in the long run, it will benefit you especially when you will be faced with unprepared expenditures under these categories.

Are you aware of these business loans myths?

As a small business owner, you would be required to finance an aspect of your business development. While there are plenty of options available, the small business loan is one such option.

It might be intimidating to obtain this loan, after all there have been rumours where loans for the business applications have been rejected. However, you shouldn’t believe everything that you hear. In fact, here are some of the common myths about getting this business loan that you should be aware of:

Myth #1: Getting the small business loan is the hardest thing

Obtaining financial for your business will not be an easy feat. However, it doesn’t have to be an insurmountable challenge. In fact, the best way to avoid any trouble is to prepare for any possibility of challenges that your applicant will face. In this way, a lot of frustration in obtaining financing can be avoided just by doing your due diligence. 

Myth #2: You will need the perfect credit score to get an approval

Previously, low credit score where known to preclude you from getting the loan your required. However, today’s financial environment is a bit more flexible to credit ratings. Most banks, both the upcoming and the traditional banks may still have a few restrictions when it comes to obtaining credit, however they will offer you plenty of alternate options, based on your business type, time in the business and cash flow.

Myth #3: The worst way to obtain a small business loan is through a bank

It is a belief that banks will only cater to the business that have shown prominent growth, or even have a strong reputation. In other words, there will be a chance of a loan application approval, only if your business is big and with a strong reputation. On the contrary, banks do offer custom loans that cater to the needs and requirements of small businesses. In fact, plenty of banks offer financial aid for local businesses, in order to help the, grow and develop, while matching their growing financial needs. If you can project your growth development, you can approach the bank as a financial lending partner, for a long term purpose.

Myth #4: Your application will not get approved if you opt for huge loan amount

This is one of the common myths that is associated with loan applications. While it may be alright to ask for funds, it is normally taken into consideration only if the funds will be used for personal requirements. However, for business loans most bans will offer large amounts, as the banks will in turn benefit from this loan. All you need to ensure that the cash flow of your business will match the requirements of the loan especially in terms of repayment.

Are you aware of these three factors about the NRO account?

More and more Indians are travelling abroad to earn a higher income through foreign currency. At the same time, these individuals would want to maintain the income that is earned through their residential country, especially through dividends or rent.

This is where the NRO account will prove to be beneficial. Through this account, both the foreign income as well as the residential income can be deposited in the account. The funds that are deposited in this account will be converted into the rupee value.

While plenty of individuals have this NRO accounts, it is still important for the holders of the account to know influential factors associated with the account. By being aware of the consequences of the factors associated with the account, it will have an impact on the manner in which the investor will deal with its various aspects:

Choice: When it comes to the NRO account, there are plenty of choices available to the investor, based on financial functionality. For incidence, if the investor only wants to deposit or withdraw funds, there is a choice between the saving account as well as the current account. In the case of the savings account, the funds deposited will earn interest, especially when not many transactions are necessitated. In the case of the current account, it will provide the account holder with the flexibility to undertake several transactions. However, no interest will be earned on the deposits. This extra deduction can be used for additional benefits. In terms of investment, a fixed or recurring deposit is available. In the case of fixed deposit, a lump sum amount can be deposited with the interest rate fixed to earn a return which will deposit at a fixed tenure. Similarly, with the recurring deposit, a fixed amount of the income can be deposited account on a monthly basis with the interest rate being fixed throughout the duration.

Taxation: Unlike the other NRI accounts, the NRO accounts are taxed. The entire amount of interest earned on this account is taxable. It indicates that no part of the income will be considered as tax-free. However, there is no cause for worry for non – residents as there is an exemption clause that calculates the total tax liability. This exemption limit is currently at Rs. 2.5 lakhs.

Tax deduction: The NRO account is liable for tax deducted at source for the income that is earned. In other words, any amount earned right from the first rupee will be taxable. The rate of deduction is at a general rate of 30%, which is considerably high. While there may be certain clauses where a lower rate may be applicable, it will differ based on the investing bank. However, the account holder may need to file a tax return and get the appropriate refund for this to be applicable.

Managing your wealth better with an NRE account

As an NRI who is earning in foreign currency, you have plenty of financial opportunities regarding investments and even conversion into the resident currency. However, before you can utilise your foreign earnings, you first need to deposit it in the ideal and government acceptable medium, namely the NRE account.

This NRI account stands for the Non-Resident External account, with emphasis on the ‘external’ factor. As an NRI or a PIO, you can open this account, and invest your foreign earnings in it. The following are the features of the NRE accounts and how you can benefit from it:

Features of an NRE Account:

Tax-free account: This is one of the main benefits of the NRE account. As an earning member, the last thing you would want is to let all your hard earnings get cut due to taxation. However, the earnings in this account is not a tax. This tax-free feature applies to both the principal and the interest earned. In this way, you get to earn funds without any worry about taxation.

Fully repatriable: At some point in time, or even on a monthly basis, you may want to repatriate your funds. While this process may be seemingly complicated, you can get to remit funds abroad from the account without any headaches. Moreover, unlike the NRO account, there is no cap to the amount on the repatriation or any evidential requirement from your CA if you exceed a particular amount for repatriation.

Higher interest rates: As compared to the residential bank accounts, the interest rates for the NRE accounts are considerable higher. Added to the fact that you will be earning in a foreign currency which has a high currency conversion, it makes for an ideal investment. This is especially crucial if you have a steady and high income with a requirement to remit on a regular basis.

Power of attorney: Managing your NRE account may be tedious. But you can always appoint a mandate to operate the account on your behalf. This will ease off the burden on your back while allowing the funds to be transferred to the appropriate party, especially if it is for your family member in your home country. You only need to inform your bank about a power of attorney and take the necessary steps to appoint a mandate.

Investment can be made from this account: While the value of the foreign currency is high abroad, the financial market conditions of India are quite favourable for investments. Foreign funds are a good way to get a promising return, especially if the funds from the NRE account can be used. Once the funds are invested in the account, you can invest the appropriate funds in appropriate sources, such as the Indian mutual funds and stock.