How To Invest In A Mutual Fund For Beginners?

Mutual Funds are alluring investments for citizens who need to develop reserve funds over the long-term. Mutual Funds are adaptable and can be profited for sums as low as Rs 500. They can be held for quite a while or a shorter period. Mutual Funds are not hazarded free and have a proportion of hazard contingent upon the sort.

How To Invest In A Mutual Fund For Beginners?

New financial specialists mistake Mutual Funds to be a solitary item. Be that as it may, Mutual Funds are of different kinds like value, obligation and half breed stores. Mutual fund arrangement is done in view of the investment horizon, resource classes and tax treatment.

1. Understand the risks:

Before investing in mutual funds, it is important to understand the risks involved. Mutual Funds carry risk from the underlying securities and investment methodology.

• Equity funds (mid and small cap) carry the highest risk and offer higher rewards.
• Debt funds carry low risk and offer lesser returns.
• Hybrid funds are those which invest in both debt and equity. They balance risk and return.

Evaluate risk profile and invest in those mutual funds which best meet expected returns and risk tolerance.

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How To Invest In A Mutual Fund For Beginners?

Should You Include Your Parents In Employer's Health Insurance?

Truly, you ought to incorporate your parents in the Employer's Health Insurance. A business' medical coverage is a group health care coverage plan given by your employer. For what reason would it be advisable for you to incorporate your folks in organization group insurance?

Covering your parent's guarantees that you or guardians don't confront issues on an affliction. While you can get guardians, standalone health insurance policies, the most ideal approach to get them secured is by incorporating them in your organization's group health insurance.

Should You Include Your Parents In Employer's Health Insurance?

The Human Resource (HR) department of your association may inquire as to whether you need to incorporate your parents in the group health insurance. In the event that you need to incorporate them, you'll need to pay an extra premium.

What would you do given such an option?

1. Go for it by paying an extra premium

2. Turn it down just to save a little money

Read this to know why you must get parent’s covered in your employer’s group health insurance plan:

What is an employer’s group health insurance policy?

Managers like organizations and firms offer group health insurance plans to workers, their life partners and kids. This makes a feeling of reliability towards the association. Group health insurance premiums are paid by the organization. With regards to including your parents, a few firms broaden this advantage for nothing, while others request that the workers pay extra premiums.

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Should You Include Your Parents In Employer's Health Insurance?

Chatbots As Your Personal Financial Assistant

Chatbots are assuming a major part in the financial services industry. Banks, Insurers, Mutual Funds are utilizing chatbots to upgrade client experience and interactions. Chatbots can answer client questions right away. They can work as partners to life insurance agents, bank administrators, and mutual fund distributors.

What are chatbots? Chatbots are PC programs which can talk with individuals and gain from these interactions. They work utilizing machine dialect and artificial intelligence. Chat with life insurers, mutual funds and banks and get queries resolved in seconds. Chatbots can exhort you on monetary items and help you pick money related items which coordinate your needs.

Chatbots As Your Personal Financial Assistant

There's a major discussion going on. Ought to chatbots take the necessary steps of people? Actually you and most clients couldn't care less, regardless of whether inquiries are replied by a client benefit official or a chatbot. All you mind is inquiries are replied. Chatbots are extraordinary when they enhance the proficiency of individuals. They fill in as virtual colleagues to financial services agents and improve the customer experience.

Read The Article to know More | Chatbots As Your Personal Financial Assistant

10 Smart Ways To Make The Most Out Of Credit Card

Credit cards have made purchasing things, simple and advantageous. You essentially purchase now and pay later. Credit cards likewise offer different advantages like reward points, which have pulled in numerous youngsters to credit cards.

10 Smart Ways To Make The Most Out Of Credit Card

These are 10 tips on how you can make the most out of credit cards:

1. Choose that credit card which suits spending needs:

Think about spending needs and propensities while picking a credit card. Each credit card has diverse advantages and rewards. Select that credit card which will give most extreme advantages. Let's assume you are a successive voyager. A movement credit card that offers rewards like air miles, in vouchers and parlor access at air terminals is perfect for you.

2. Don’t buy more than you can repay:

Credit card holders tend to purchase more than they can repay. This is the reason they fall into a debt trap. They overspend and battle with reimbursements. Spending choices ought to be constructed not with respect as far as possible but rather on a capacity to repay.

3. Avoid paying minimum balance:

Banks don't charge a premium in case you're expeditious in paying an extraordinary levy. Individuals as a rule fall for the base adjust choice. This is a trap in which you get caught and think that its hard to get out. 

Paying the base adjust against credit card contribution keeps away from punishment on late reimbursements, yet regardless it has detriments. The outstanding balance continues to attract interest at 2-3% a month.

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10 Smart Ways To Make The Most Out Of Credit Card

Why Is There No Insurance For Mental Illnesses In India?

Insurance is a panacea. A solution for all ills. On falling wiped out, your family surges you to a hospital and the medical coverage design deals with the hospital expenses. Your car is associated with a mishap and extremely harmed. Forget about it….Just surge your car to the safety net provider and the surveyor will evaluate the harm… You will be made up for the misfortune.

Your business is crushed by a natural catastrophe like a flood. Simply think about the surges in Kerala where in excess of 150 individuals lost their lives. Simply think about the crores of rupees, organizations in Kerala have lost. Luckily, you have business protection and can make a claim for harms. The business protection deals with your business.

Your bike is associated with an impact. You surge the bicycle to the back up plan and he settles the claim. Indeed, there's protection for everything. In any case, shouldn't something be said about a mental illness? Is there protection for mental illness in India?

Why Is There No Insurance For Mental Illnesses In India?

The Parliament of India had passed the Mental Health Care Act 2017 to ensure people with mental issues enjoyed a life of dignity. This Act expresses that safety net providers must have an arrangement for restorative protection for the treatment of psychological mental illnesses, much the same as physical illnesses. Be that as it may, back up plans couldn't care less. They disregard the protection of dysfunctional behaviors in India.

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Why Is There No Insurance For Mental Illnesses In India?

4 Reasons To Invest In Direct Mutual Funds

Securities Exchange Board of India (SEBI) has come out with several reforms, keeping investors welfare in mind. One such reform was the introduction of direct plans in mutual funds.

Though many investors are familiar with direct plans in mutual funds, they are uncomfortable while actually investing in these mutual fund schemes. Many investors still have doubts regarding direct plans of mutual fund schemes.

4 Reasons To Invest In Direct Mutual Funds

Investors can invest in direct mutual funds through the mutual fund company (website). Regular mutual funds can be bought through mutual fund advisors, brokers or distributors/intermediaries.

Investors earn approximately 0.5% higher on equity mutual funds and 0.2% higher on debt funds vis-a-vis direct mutual funds.When you buy a regular mutual fund, the mutual fund company pays a commission to the agent. This commission is an expense to the company and hence, recovered from the investors. That is why the expense ratio is higher for regular mutual funds compared to direct mutual funds. The expense ratio measures the costs incurred by the company to operate a mutual fund.

Investors who are familiar with mutual funds can invest in the direct plans of mutual funds schemes. Investors don’t prefer investing in direct mutual funds as they may not have the necessary knowledge or time to manage the investment. If you invest in direct mutual funds, you save on commissions paid to life insurance agents. 

There are no eligibility criteria to invest in direct mutual fund schemes. However, investors must be aware of risk appetite and financial goals to invest in direct mutual funds.

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4 Reasons To Invest In Direct Mutual Funds

Long Term Saving Plans

Financial planning helps achieve short, medium and long term financial goals. It considers your current financial behavior and variables to predict and design your future financial position, so that you achieve financial goals. Owning a house, living a peaceful retired life, educating your children in the best universities, buying a high-end car, going on an exotic holiday are all financial goals. However, just setting a goal is not enough. You need to plan for it in financial terms. This is when savings and investment come into the picture.

Irrespective of how much you earn, saving is inevitable. Ideally, you should save first and spend later. One way to ensure regular savings is to draw a budget. This will give you an idea on your financial position. It will also give a clear picture on how much you can afford to spend as opposed to how much you actually spend.

Long Term Saving Plans

Discipline and commitment is the key to having a good financial plan. Start early and let time earn you money. Also remember, regular savings are the best way to meet long-term goals. So, how do you go about it? Check out the following steps:

1. Set financial goals and timelines:

Assign goal timelines. This will give you a time-frame to work and achieve them. Say you are 30 years old and plan to retire at the age of 55. You will want to buy a car in 2 years time as your family size may increase from 2 to 3, with the birth of a child. You would then want to make a plan for their higher education, which is after 16 years. You would have to plan for your retirement.  

All these goals require funds. Unless you are a millionaire, availing loans may be inevitable. You will have to arrange for the down-payment on the home or car, for which you will have to start saving money.

Clear goals and timelines give you a set direction. Based on this, you can determine your investment mix and risk taking capacity.

2. Assign monetary values to goals:

To buy a car worth Rs 10 Lakhs, you need to arrange 15% of the value of the car, i.e. Rs 1,50,000. To buy a house of Rs 50 Lakhs, you need to arrange for at least 20-25% of the value which is Rs 12.5 Lakhs. You have to focus on retirement planning and child education planning. Consider inflation and other macroeconomic changes while planning. Don’t forget to insure your life, assets and loans. Also, create an emergency fund.

3. Align your savings with your goals:

Be clear on the reasons for saving. You may want to save for an emergency, a vacation or retirement. Once you know the quantum of savings, you will able to align your savings with goals.

Give standing instructions to the bank to automate payments like electricity bill, loans EMIs, and so on within a day or two of your salary. Ideally, savings should be 30% of your monthly salary. In the real World, saving even 10-15% is quite tough.

Ensure that bills are paid from your salary account. Transfer the rest of the money to a savings account.  Schedule a weekly or monthly transfer of funds for expenses, based on the budgeted figure.

See Also: How EMI Calculator Works?

4. Design investment mix:

Now that you have a clear picture of the funds required in the short, medium and long-term, plan your investments. Your investments should grow to the level that your monetary needs are fulfilled. To achieve this, design an investment mix which depends on your risk profile.

Investors are classified on their risk profile:

• Risk-averse investor: Risk-averse investors are the ones who settle for lesser returns, following their low risk-appetite.
• Risk-curious investor: Risk-curious investors are the ones willing to take some risk and expect slightly higher returns for the same.
• Risk-aggressive investor: Risk-aggressive investors accept higher risk for higher returns.

5. Save the difference:

If you happen to save a little extra in a given month, put this money in a savings bank account.

6. Invest according to your goals:

To achieve:

• Short-term financial goals:

To achieve short-term financial goals like taking a vacation or saving for emergencies, invest in liquid funds or short-term bonds. It is wise not to risk your capital or returns by investing in equity (highly volatile) and debt mutual funds (vulnerable to interest rate risks).

• Medium-term financial goals:

For medium-term monetary requirements like down-payment, invest in balanced funds. Balanced mutual funds are a combination of equity and debt and invest in a mix of stocks and bonds. Equity builds wealth over the long term. Debt gives high returns at low risk. You will also enjoy diversification benefits.

• Long-term financial goals:

For long-term targets like retirement and child education, take the advantage of higher returns of equity. Remember, in the long-term, equity gives the best returns and multiplies wealth.

7. Action plan:

So, what is your action plan?

Equity is the best investment option to earn good returns and accumulate wealth over the long-term. Newbie investors aspiring to test the waters of stock markets can start by investing in liquid mutual funds and then switch to a systematic investment plan and transfer the investment to an equity fund.

SIPs are the best way to achieve long-term financial goals:

• SIP is a method of investing in Mutual Funds.
• SIP gives you the benefits of cost averaging.

8. Monitor the financial plan:

Any plan needs active monitoring. Check if the actual investment returns are in line with the expected returns. If some investments are underperforming, give them a fair amount of time. If they still don’t catch up, realize the investments and find alternatives. Keep an eye on the tax reforms and see if they impact your financial plan.

Be Wise, Get Rich.

5 Things You Must Know Before Investing In ELSS

ELSS stands for Equity Linked Savings Schemes. ELSS are diversified Equity Mutual Funds that invest mainly in equity and equity-related instruments. ELSS invests in companies with strong growth potential and a resilient business model.

Many new investors hesitate to invest in ELSS on learning about the high exposure to equities. However, studies show that equities give superior returns if you stay invested for the long term.

 5 Things You Must Know Before Investing In ELSS

ELSS is the most tax-efficient Mutual Fund scheme. ELSS Investors are eligible to avail a tax deduction up to Rs 1.5 Lakhs a year under Section 80C of the Income Tax Act, 1961.

Types of ELSS:

ELSS is of two types:

1. Dividend funds

2. Growth funds

1. Dividend funds:

Dividend funds are further classified as Dividend Payout and Dividend Reinvestment. If you opt for Dividend Payout, you will receive tax-free dividends. On the other hand, dividend by way of Dividend Reinvestment is reinvested as a fresh investment. With this money, more units are purchased.

2. Growth Funds:

Growth Funds are meant for long-term wealth creation. It is cumulative in nature. The full value of such investments are realized on redeeming the fund.

Methods of investment in ELSS:

Investors can invest in ELSS in two ways:

1. Lump sum

2. SIP (Systematic Investment Plan): SIP is a way of investing in Mutual Funds. It involves investing a fixed amount of money each month on a specified date. SIP gives the benefit of rupee cost averaging.

Important points to keep in mind before investing in ELSS:

1. Exposure to equity:

Investors are hesitant to invest in equity because of market volatility. You should have sound knowledge of stock markets to directly invest in equity. Newbie investors wishing to invest in equities may start with ELSS funds. This is an ideal way to get exposure to equities.

ELSS is managed by professional fund managers. You can start investing in ELSS with a nominal initial investment. You can choose to start with a systematic investment plan (SIP) by investing amounts as low as Rs 500 a month. As ELSS is professionally managed, you stay tension free and far from the hassle of timing the market.

2. Lock-in period:

Investment in ELSS comes with a lock-in period of three years. ELSS has the shortest lock-in period among all tax saving investments coming under Section 80C. Public Provident Fund (PPF) comes with a lock-in of 15 years and National Savings Certificate (NSC) with 5 years.

Once you invest in ELSS, you cannot redeem the investment for a period of 3 years. Parking your surplus funds in Equity Linked Savings Schemes (ELSS) for 3 years earns great returns.

Even though ELSS has a lock-in of 3 years, it is good to have a long-term investment goal. Investing in ELSS for the short-term will not give great returns. ELSS is an equity investment. It will give great returns if held for at least 7 to 10 years. Moreover, attaching financial goals to ELSS investments will make you a committed and dedicated investor.

SEE ALSO: How to Invest in ELSS

3. Returns:

Equity being a major component, ELSS has a potential to generate higher returns in the long-term. This doesn’t mean you expect unrealistic returns. Investments like equity which are exposed to high risks have a potential to earn high returns but such returns are not guaranteed.

Also, don’t expect returns to remain consistent each year. It is safe to expect a tax-free return of around 9-10% a year over the long term.

4. Risks:

The basic nature of equity funds is high risk. Therefore, Net Asset Value (NAV) is not free of fluctuations. With high risks come higher returns. Just stay invested for a long time. 

5. Tax exemptions:

Section 80C of the Income tax Act, 1961, offers tax benefits on various investment avenues like Employees Provident Fund (EPF), Public Provident Fund (PPF), life insurance policy premiums, Home Loan Principal and so on. These investments are eligible for tax deductions. Under this section, taxpayers can claim a maximum collective tax deduction of Rs 1.5 Lakhs a year.

Therefore, if you have claimed exemptions relating to other investments, the entire investment in ELSS may not qualify for a deduction. Example: You have the following investments for the Financial Year 2017-2018.

PPF: Rs 70,000

NSC: Rs 50,000

ELSS: Rs 50,000

If you have already claimed investments made in PPF and NSC (70,000 +50,000= 1,20,000), you cannot claim the entire Rs 1,50,000 in ELSS. You can claim only Rs 30,000.

Investment planning is of utmost importance to enjoy growth and tax benefits.

Be Wise, Get Rich.

Financial Planning For Ex-Servicemen

The Nation runs on the sweat of farmers and the sacrifice of the armed forces. Serving in the Army, Navy or the Air force is the dream of many young men and women in our country. The respect this job commands is just too much to count. As you a man who serves in the defence forces guard our Nation’s boundaries, you just cannot forget financial planning. Defence personnel retire early. Officers may retire in their late 40s or early 50s.

Yes, the defence personnel enjoy a lot of perks, benefits and even a pension for serving in the armed forces, But, this doesn’t exclude them from sound financial planning.

Financial Planning For Ex-Servicemen

1. Put some money in FDs

After demonetization, banks were flush with cash and cut fixed deposit and savings bank rates. Citizens who used to invest in FDs and other traditional investments, pumped money in mutual funds. The year 2017 saw record inflows in mutual funds via SIPs.

Now things are different. Inflation is back. Inflows into equity mutual fund schemes including ELSS have declined for 3 months in a row. RBI has gone for back to back repo hikes in its bi-monthly policy review. The repo rate has been hiked from 6% to 6.5%. Banks have started increasing FD rates, bringing a smile on the faces of conservative investors, senior citizens and ex-defence personnel.

HDFC Bank has increased FD rates on various maturities by up to 0.6 percentage points. SBI will offer an interest rate of 6.7% for term deposits of 1-2 years, up from the existing 6.65%. Chances are more banks will raise FD rates and it’s a good idea for defence personnel to invest some money in FDs.

SEE  ALSO: Financial Plans For Retirement Benefits

2. SCSS for ex-servicemen

You can invest in the SCSS if you are 60 years or more. Ex-servicemen are eligible to invest in the senior citizen savings scheme (SCSS), regardless of the above age limit. A joint account can be opened in SCSS with spouse.

An investment in SCSS is extremely safe and comes with a Sovereign Guarantee. SCSS offers 8.3% a year (January-March quarter), payable quarterly and interest is taxed. Rates are revised each quarter and once you invest in SCSS, the rates remain fixed across the tenure. The minimum balance in SCSS must not exceed Rs 15 Lakhs.

The investment in SCSS enjoys tax benefits up to Rs 1.5 Lakhs a year under Section 80C of the income tax act and premature withdrawals are allowed. SCSS has 5 year tenure and can be extended by a further 3 years on maturity of the scheme. TDS is deducted at source on interest if the amount of interest exceeds Rs 10,000 a year.

3. Tips for ex-servicemen to manage money better

   The rules of financial planning for ex-servicemen are the same as for you and me.

• Make a budget which not only accounts for every rupee earned, but also every rupee spent.
• Identify financial goals and make a plan on how to attain them.
• Understand inflation, (the rise in prices of goods and services with time), and make sure investments earn more than inflation.
• A soldier knows all about emergencies and plans for them. Make sure you have money set aside in an emergency fund for at least 6 months worth of living expenses. Yes, the perks are handy, but there’s no alternative to an emergency fund.
• Insurance is an essential part of financial planning. You know the importance of life insurance and health insurance. Defence personnel do not need health insurance. Service personnel and spouse are covered for life under the Ex-servicemen health scheme. But, defence personnel can avail a health insurance plan for his kids.
• The Government takes good care of the widows of defence personnel.

 

4. Ex-servicemen can pick up a job

A soldier is all about discipline. He knows how to hold a job. In the US, retired personnel of the armed forces get jobs in the defence industry. They work in Lockheed Martin or Heckler and Koch. Sadly, not many ex-servicemen work in the defence industry or take up jobs in Private Companies. But, all this is changing. Cab aggregator Ola had come up with a programme to help ex-servicemen called the “Ola Sainik” in 2015. More than 1 Lakh ex-servicemen will be absorbed as entrepreneurs on the Ola Platform by 2020. A few thousand ex-servicemen are already on board the Ola Platform.

Rival cab aggregator Uber, is not far behind and had launched the “UberFauji” programme. Ola and Uber have been facing problems with a few unscrupulous drivers and problems associated with background verification. Hiring ex-servicemen can solve these problems. Soldiers are all about discipline and Ola and Uber are reaping the benefits. It’s a win-win for both parties. Ex-servicemen get the benefits of high income and flexible timings.

An ex-serviceman who drives a car for a famous cab aggregator said that as a Punjabi and ex-serviceman, I can drive anything. He won the best-rated driver award in a particular region and also a cash reward and a gift.

Be Wise, Get Rich.

What Does Accident Insurance Cover?

An accident is an unexpected event. It may get you partially or totally disabled. This might impact your earning ability.  It would mean a loss of pay and hefty medical bills. However, Accidental Insurance does not cover suicide, self-injury, war, and so on.

Want to know more on Accident Insurance? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

 

What Does Accident Insurance Cover?

An Accidental Insurance plan covers the insured, if he/she meets with an accident.

 

Features of accidental insurance plans:

• Accidental Insurance plans must be renewed each year.
• The sum assured of an accidental insurance plan depends on income. You may be offered a sum assured amounting to 60-100 times your monthly income or 8 to 10 times the annual income.
• Some insurers may offer accidental insurance to dependents subject to limitations relating to the sum assured.
• The premium paid towards accidental insurance has no tax benefits. However, the claim amount is not taxable.

Advantages of Accidental Insurance Plans:

1. A personal accident policy covers the insured for all losses arising due to and including temporary disablement, income loss and hospitalization.

2. If an insured dies in an accident, an accident insurance policy pays the nominee 100% of the sum assured.

3. In case of permanent partial disability, the insured receives either a percentage of sum assured for a specific time period or a lump sum. A permanent partial disability may result in loss of speech, eyesight or a toe.

4. In case of a permanent total disability of the insured, the nominee can make a claim on the total sum assured.

5. If an insured suffers a temporary total disability like a fracture, they are provided a daily or weekly benefit.

Eligibility criteria for Accidental Insurance Plan:

1. An individual must be in the age group of 18 to 65 years.

2. An accidental insurance plan can be renewed until the age of 75 years.

Types of accidental insurance plans:

Accidental insurance can be of four types:

1. Basic Accidental Insurance plan

2. Comprehensive Accident Insurance Plan

3. Individual Accidental Policies

4. Group Accident Policies

1. Basic Accidental Insurance plan:

A Basic Accidental Insurance plan pays the sum assured to an insured’s nominee or family if the insured dies in an accident. No coverage is provided for the treatment of injuries related to an accident. Therefore, the premiums of a basic accidental plan are very cheap.

2. Comprehensive Accident Insurance Plan:

Unlike a Basic Accidental Insurance Plan, a Comprehensive Accident plan covers expenses of treatment and/or hospitalization arising due to accidents.

3. Individual Accidental Policy:

Individual Accidental policies cover only an individual in case of any accident.

4. Group Accident Policies:

 

A Group Accident policy is taken by employers for their employees. A group accident plan is available at a low cost. However, this is a basic cover which may not offer benefits of an individual accidental insurance plan.

Types of disabilities:

A person can suffer from three types of disabilities due to an accident:

1. Permanent total disability

2. Temporary total disability

3. Permanent partial disability

Based on the type of disability an insured suffers, a Comprehensive Accident Plan pays the entire sum assured or a percentage of the sum assured.

SEE ALSO: How Mutual Funds Work?

What does a Personal Accident Insurance cover?

Personal Accident insurance covers:

• Accidental death: The insurer pays the sum assured to the insured’s nominee or family if the insured dies in an accident.
• Accidental disability: The insured may lose income due to disability caused by an accident. A personal accident policy or an individual accident policy covers such loss of income due to partial or complete disability.
• Accidental dismemberment: If the insured loses income due to mutilation, this will be covered by the policy.
• Medical expenses: An accidental insurance plan covers medical expenses incurred due to accidental injuries.

Exclusions of a Personal Accident Insurance Plan:

• Pre-existing disability
• Pregnancy and child-birth
• Self-inflicted injuries like suicide, drug abuse, alcohol abuse and so on.
• Alternative treatment methods
• Accidents caused due to illegal activities
• Accidents caused in a war
• Accidents due to mental disorders
• Accidents due to involvement in adventure sports and serving in the navy, army, air force and so on.

Who should avail Personal Accidental Insurance?

You should avail an accidental insurance policy if:

• You have availed loans like Home Loan, Car loan. In this case, the accident insurance policy covers the repayment of EMIs if you happen to meet with an accident.
• If the nature of your work is risky. The occupational risks are categorized into three classes:

Class 1: Low Risk (Accountants, lawyers, bankers)

Class 2: Moderate Risk (Drivers of heavy vehicles, contract laborers, professional athletes)

Class 3: High Risk (High risk construction laborers, workers in underground mines, people working with explosives)

Be Wise, Get Rich

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