How to invest in a national pension scheme? What are its types and charges?

Retirement can be a difficult time both physically and financially. With the slow deterioration of health, financial security can be attained if one is careful. A government-sanctioned pension scheme, known as the national pension scheme, is the simplest and cheapest way to ensure this financial independence post-retirement.

What is the National Pension Scheme (NPS)?

It is the least known government approved pension schemes in India. It is a specialized investment where people can deposit small sums of money over the years. The NPS would then offer a lump sum payout during the retired life of the investor. Therefore, the investor does not need to maintain other savings for his/her post-retired life.

Types of NPS

NPS is divided into two types or tiers, namely, Tier I and Tier II.

• Tier-I Account
In this type of National Pension Scheme account, the withdrawals are limited. If you are investing in the first tier of NPS, you can withdraw up to 20 per cent of the funds before reaching the age of 60. The remaining 80 per cent of the money is used for buying the annuity for you. Due to the annuity plan, you would need to pay a fixed sum of money until the scheme matures or until you pass away.

• Tier-II Account
It is a savings option where you save voluntarily. Therefore, from such an NPS account, you are free to withdraw whenever you like and as much as you like.
The charge involved with National Pension Scheme investments

• During the initial set up of the NPS account, you would need to pay the POP charges. Rs. 100 is charged as registration fee. Furthermore, 0.25 per cent of the initial investment is charged as a contribution. The minimum amount is Rs. 20 and the maximum is Rs. 25,000.

• For subsequent transactions, the subscriber pays a 0.25 per cent fee on the amount subscribed. The minimum payment is Rs. 20, while the maximum payment is Rs. 25,000.

• Any transaction that does not involve any subscriber contribution will result in a charge of Rs. 20.

Keep these factors in mind if you are planning to invest in the National Pension Scheme so that you can take advantage of the benefits from such investments post your retirement life.

What is the process of mutual fund investment? Its types and features explained

Investment is one of the simplest ways to increase wealth. However, most people are unaware of the intricacies of the markets to navigate investments profitably. Mutual funds investment is a specialized system where anyone can invest money. You do not need to have an extensive idea about the workings of the market as professional fund managers manage your investments. In exchange, you pay a minor portion of the profits you earn to these fund managers.

What are mutual funds?

Mutual funds refer to a pool of money accumulated through a number of investors. This accumulated fund is invested in various market schemes, such as debt funds, stocks and liquid assets. The profits and losses from this investment are shared equally among the group of investors. However, due to the involvement of professional fund managers, the risk of losing money is severely restricted.

Now that you know what mutual funds are, here is a look at the types of mutual funds investment you need to know about.

Types of mutual funds

1. Equity funds
In this kind of mutual funds, your money is invested directly into stocks and equities of various companies. These schemes provide high-risk high-return opportunities to investors.

2. Debt funds
Investments into company debentures, government bonds and fixed income assets are classified as debt funds. These mutual funds investment provide a limited return but are much safer than equity funds.

3. Money market funds
In these kinds of mutual funds, the money is invested in liquid assets, such as T-Bills, CPs and more. Such investments are safer and offer moderate returns. However, money market investments are best suited to people looking to invest a lump-sum amount.

4. Sector funds
Sector funds are those mutual funds investments where your money is invested in one particular sector of the market, such as infrastructure. The risk and return depend on the current performance of the sector where you have invested your money.

5. Index funds
In such an investment, your money represents a particular index on the stock exchange in a bid to determine the returns and the speed of the index.

6. Tax Saving funds
These mutual funds investments are preferred by those trying to save paying taxes on the profits earned through their investments. Generally, a large chunk of the profits are paid off as income tax, but investing in tax saving mutual funds will result in greater profits reaching your hands, as you are liable for annual tax exemptions.

If you are looking to invest in mutual funds, your choice is limited to these six types. However, seek advice from financial experts to understand, which one is the best option for your investment profile. 

What is a loan against credit card? Its advantages and top banks offering them

Emergencies are always just around the corner and you can never be truly prepared to handle them. Often, such situations will force you to spend a great deal of money. However, you may not have such huge sums lying around in your bank account. At such a time, a loan is your best option. However, most loan application processes are long and strenuous.

Therefore, you should consider a loan against credit card at such times.

What is a loan against credit cards?

If you require money and own a credit card, you can apply for a loan against the card. When you apply for such a loan, your bank will provide you with the required amount of money, which you would then repay through the credit card bills. Some people confuse loan on credit card with cash withdrawal using the card, but these two are different.

In case of cash withdrawal using the credit card, you can collect cash from a nearby ATM using your credit card. The rate of interest charged on such a withdrawal is generally high. However, in the case of loan against a credit card, the interest rates are lower. Furthermore, the money lent is generally greater than the withdrawal limit on the card.

Benefits of loan against credit card

1. The lower rate of interest than most other loans, including the interest charged on cash withdrawal
2. No document required for application of the loan. This is because, all necessary information is already in the possession of the lender, as you are using their credit card for taking the loan.
3. When you take a loan against a credit card, you get the money instantly. This feature is greatly handy for people who require the money immediately.
4. You do not need to visit the bank to apply for the loan. Instead, you can apply for the same from anywhere at any time.
5. The processing fee for such a loan is usually lower than the fee charged for the processing of other kinds of loans
6. You do not require collateral for loans against credit cards. Therefore, the procedure is simpler to handle. 

Banks offering loans against credit card in India

If you are looking for loans against your credit card in India, you have many options. You can avail such a loan if you have credit cards from HDFC Bank, Citibank, HSBC Bank and ICICI. HDFC Bank offers Insta Jumbo loans against their credit cards. If you apply for such a loan against your HDFC Bank credit card, the money lent will be credited to your account within 60 minutes. Thus, the processing of the loan is extremely fast as well.

5 reasons to choose business loan over the personal loan for your company

Starting a business can be exciting and hectic at the same time. The greatest problem is to accumulate enough funds to get the business off the grounds. While some people prefer taking a personal loan to finance their business, others opt for a business loan. However, a business loan is a better option if you are seeking money for your company.

Here is a look at why business loans are preferred over personal loans-

1. Large sums of money
If you opt for a business loan, you can apply for a greater sum from the lender. You can use this money for your business or company. At the start of the business, you need the additional money to establish good relations with your client along with the arrangement of proper space for your company. Different banks have varying maximum business loan limits, check online for more details.

2. Easy approval
While you will need to provide an outline for your business, along with extensive plans for the same, the approval process is easy to crack. If you have confidence over your own business model, you just need to convince the bank to support your vision. Most financial institutions will be eager to help you if they feel that your plan is profitable. Once approved, you will get the money within a few hours or days. You do not need to meet any special business loan eligibility for clearing the process.

3. No collateral required
For a personal loan, you would need collateral, but for business loans, no such collateral is required. This is an attractive benefit of business loans, which make the application procedure simpler and faster.

4. Affordable interest rates
Business loans are a better choice if you are trying to minimize the interest on your borrowed sum. Most business loans have a nominal rate of interest, which in turn will help you grow your business in the future.

5. Tax benefits
As per the Income Tax Act of 1961, certain business borrowers are liable for tax exemptions on the repayment of the loan amount. This is yet another way, in which business loans help new businesses to grow. The money saved on taxes can be used to improve the company.

Therefore, if you require funds for your company, it is always fruitful to take a business loan instead of a personal loan.

Cash or Forex cards: what should travellers consider?

While travelling abroad, one constant worry that people have is how much money to carry with them. Since you cannot withdraw money as and when you need while holidaying abroad, it is important to convert enough money to last for the duration of the trip. This can be difficult to comprehend, which is why forex cards have become so popular among tourists.

What are forex cards?

Forex cards are similar to debit cards, where you need to load funds so that you can withdraw the same money later. However, in the case of forex cards, the money you load on the card is converted into the local currency of the country you visit. Therefore, you do not need to carry cash with you on the travel. You can use the forex card at an ATM in any foreign country to get local currency.

Benefits of using forex cards

Now that you know what forex cards are, here is a look at the benefits of using them on your foreign trip.

1. Accepted widely
Forex cards are not only useful in hotels and restaurants but are convenient to use for the payment for transportation as well. Furthermore, if you are planning to travel to just one country, you can opt for a single destination currency card.

2. Safe to carry
Carrying cash over long distances is always risky. Due to theft or loss, you may lose a large portion of the money you are carrying. Not only does it lead to financial liability, but can also interfere with your plans for the trip. However, when you use a forex card, the risk of theft or loss of the money is restricted.

3. Cheaper than a credit card
If you use a debit or credit card issued in India for transacting in foreign countries, you would have to pay an additional 3-5% of the fee on the transaction. Most Indian banks levy this currency conversion markup for all foreign transactions. With a forex cards, you can avoid this additional expense.

4. Cheaper than buying foreign currency
Due to logistics and other intricate reasons buying converted currency is always more expensive than getting the same fund through forex cards. Even though the difference in prices between the two is limited, you should always prefer the least expensive option.

Keep these benefits in mind while planning a foreign trip, so that you opt for a forex card instead of relying on cash.

Things to consider before buying a health insurance policy

Living in 2018, you must have heard and come across the term ‘health insurance’ very often. This is because everyone recognizes the importance and necessity of having a health insurance policy. That is why they are choosing to invest their hard-earned money in these plans. However, before you also do the same, make sure that you consider the following factors-

1. Claims process- Before you buy a health insurance policy, make sure that you know how the claims process works. The claim process must be swift and easy to deal with, for ensuring that you get your money as soon as possible. Additionally, the claim settlement ratio of the chosen insurance company must be impressive; otherwise, you may have to face a lot of hassle to get your claim settled.

2. Sum insured- The most important part of buying a health insurance policy is to decide the sum insured amount. While selecting this amount consider your age, current medical condition, and medical history, and go for an amount accordingly. The younger and fitter you are lower will be your sum insured. Another component that you should consider is your current monthly income so that you select a sum insured that will be easily affordable.


3. Lifetime renewability- As you grow older, you tend to become more vulnerable to medical complications and ailments. It is during this time, that you will need medical and financial coverage more than ever. Hence, when you are scouting for a health insurance policy, look for one with the lifetime renewability option.

4. Waiting period- Almost all the insurance providers these days impose a waiting period for pre-existing diseases, which normally range from 2 years to 5 years. However, this varies from one insurer to insurer. If you purchase a health insurance policy when you are young, there are considerably fewer chances of you filing for a claim, and you will be able to clear the waiting period in no time.


5. Maternity benefits- Insurance providers have understood the importance of including maternity benefits in health insurance policies due to the increasing medical expenses during pregnancy and after childbirth. Before you finalize a policy, consider the sub-limits and the waiting period for claiming maternity benefits. The policy must also provide coverage for outpatient expenses.

6. Network hospitals- When you are going through several health insurance policies check the list of network hospitals. Network hospitals are those hospitals where you can avail cashless hospitalization and treatment. You will just have to show your health e-card at the hospital desk and your insurance provider will pay for the expenses directly. You will not have to pay a single dime.

Even though health insurance is necessary for ensuring stability, you must do proper research before buying one. If you end up buying a policy in a hurry and without checking it first, then you will be wasting your hard-earned money.

5 ways to organise and save more

Saving is an important habit to inculcate regardless of your earnings. If you cannot save money, you will end up broke at one point or another. However, if you do manage to save your hard-earned funds, you will be able to achieve all your dreams quite easily. If you are trying to save more, here is a look at some simple tricks that will help you in this endeavour.

1. Open savings account
Most people rely on their salary accounts, also known as current accounts, for all their banking needs. However, this is not a good idea. While the company you work for will likely open a current account in your name, you still want to maintain a savings account for conducting personal transactions and savings. With a savings account, you will be able to keep a track of every intricate expense of the month and stick to a budget.

2. Follow an airtight budget
Many people fail to meet their savings goal because they do not employ a good and strict budget. A monthly budget helps you keep a tab on your expenses and aid you to meet the monthly goal for savings. Furthermore, you can quickly identify useless expenses and stop spending money on such things. This bolsters your savings and makes it more organized.

3. Increase your income
One of the simplest means to save more is to earn more. While this may sound like a difficult prospect, investments and other avenues of side income should be explored if you are trying to save more. Just remember not to spend all of your extra earnings on books, clothes and jewellery and save a part of it for better things.

4. Make savings goals
Savings is generally easier if you have a goal to follow. For instance, you would be able to save more efficiently if your goal of saving is to fund your post-retirement life. Apart from the goal think of how much money, you would need for the same. This would greatly motivate you to save more and achieve your plans.

5. Do not use credit cards
Using credit cards can lead to huge debts, which in turn will increase your expenses and dwindle your savings. Credit cards allow you to spend money that you do not have in hand. Furthermore, greater interest rates will force you to pay huge bills. Therefore, make sure you use debit cards and cash so that you do not end up in debt.

Keep these pointers in mind to ensure that you achieve your saving goals. Furthermore, never rely on your current account and open a savings account immediately, if you have not opened one already.