How Fintech Is Disrupting The Financial Services Industry?

FINTECH is the popular expression in the banking and financial services industry. It's development and the broad utilization of innovation taking care of business. Fintech refers to money transfer and specialized stages identified with cash transactions, whose area stretches out from banking to payments to investments.

Numerous fintech new businesses have mushroomed in the past few years with an emphasis on helping consumers save, invest, borrow and pay better. The word Fintech may sound complex, however, it's the straightforward simple task of replacing paper-based procedures with innovation and applications.

Fintech has been around for a long time, helping banks in back-office capacities, executing exchanges and managing customer databases. The term fintech was coined in 2011 and it's generally utilized today to portray the innovative financial technology.

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Financial Planning For Teachers: 5 Tips

Instructing is a noble profession. It is quieting and satisfying. As another instructor, it is normal to feel overpowered and get the jitters. All things considered, the obligation of instructing is enormous. Remember to sort out and plan your funds alongside classes and lessons.

Start planning arrangements for short and long-term finances. Might you want to simply live from paycheck to paycheck or begin getting ready for a superior monetary life? Don't you need to take vacations? All the more essential, would prefer you not to lead a good retired life?

Financial Planning For Teachers: 5 Tips

Right, that’s a lot to think and execute. Take one step at a time. On looking back, you’ll have walked a long way to secure finances. This is how you can plan finances to achieve life’s goals:

Read the Article for more Info | Financial Planning For Teachers: 5 Tips

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

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.

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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)

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Types Of Investment Plans

Wealth creation is a time-consuming process. It requires effort, knowledge and discipline. You cannot build wealth without saving and investing. Investment needs sound planning and implementation. The first step in investment planning is to set financial goals. These can be of three types: short-term, medium-term and long-term. You then tap the available financial resources like salary or business income, savings and so on. After you are clear on your goals and know the resources at your disposal, go ahead and plan your investments.

Types of Investment Plans

Investment planning not only involves setting investment strategies according to risk profile, financial goals and financial resources at your disposal, but also implementing and monitoring them. Today, you have a plethora of investment plans like shares, bonds, mutual funds, bank deposits, real estate, derivatives and so on.

Following are the investment options you can invest:

1. Unit Linked Insurance Plans (ULIPs):

ULIP is a life insurance product that provides risk coverage along with the investment benefit. In a ULIP, you can choose to allocate your investment in different asset classes like equity, debt, and so on. You can invest based on your choice of asset class and risk tolerance in stocks, bonds or mutual funds. The payouts from these plans can be used for education, retirement and so on.

2. National Pension Scheme (NPS):

It is a voluntary retirement savings scheme launched by the Government of India. NPS promotes systematic savings during your working life to help save for retirement. Contributions to NPS can be made from a young age of 18. NPS offers investors two choices: active choice and auto choice. In active choice, 50% of contributions are invested in equity, while the rest is in government and corporate bonds. In auto choice, investments are made in a mix of equity, corporate and government bonds, depending on your age.

3. Mutual Funds:

A mutual fund is a company that pools yours and other investor’s money and invests in various asset classes like debt, equity, and so on. There are different types of mutual funds like balanced funds, equity funds, debt funds and so on. The main advantage of investing in mutual funds is diversification which minimizes risk in investment.

Your returns from mutual funds are based on the type of mutual funds you invest and the risk involved. Equity mutual funds are highly risky but also give high returns in the long-term. Debt funds, on the other hand, are less risky and ensure the safety of your funds along with moderate returns. Balanced funds invest in both equity and debt. These funds give you moderate returns at moderate risk.

4. Public Provident Fund (PPF):

PPF is a popular long-term investment which offers capital preservation and attractive interest rates. PPF enjoys the EEE status. The money you invest enjoys Section 80C benefits up to Rs 1.5 Lakhs a year. The interest and amount withdrawn at maturity are tax free.

You can invest a minimum amount of Rs 500 a year in PPF up to a maximum of Rs 1.5 Lakhs a year. PPF currently offers interest rate of 7.6% from 1st April 2018.

SEE ALSO: What Does A Financial Advisor Do?

 

5. Sukanya Samriddhi Yojana (SSY):

Sukanya Samriddhi Yojana (SSY) is a small savings scheme launched by the Government. It aims to create awareness on the importance of the girl child and seeks her welfare. The SSY account has to be opened in the name of a girl child only. It can be opened anywhere in India, through post offices or authorized commercial banks in India. The rate of interest on SSY is revised on a yearly basis. Currently, it is 8.1% per year.

6. Liquid funds:

Liquid funds are also called money market instruments. Liquid funds invest in money market instruments like treasury bills, commercial paper and certificates of deposit with a maturity term under a year. They give good returns in times of high inflation and in an high interest rate regime.

7. Initial Public Offer (IPO):

When a Company sells its shares to the general public for the first time, it’s called an IPO. These are mainly launched by new companies having a sound business model and a track record of profits. An Initial Public Offer could also be launched by a company which has been in business for a while, but wants to raise additional capital by selling part of its stake to the public.

8. Gold ETFs:

Gold ETFs are commonly called paper gold or e-gold. These are basically open-ended mutual fund schemes, which invest in standard gold bullion of 99.5% purity. These units are listed on a stock exchange. These provide returns, in lieu of physical gold in the spot market. A minimum of 1 unit can be purchased by the investor.

9. Stocks:

Stocks are commonly known as shares and come under equities. These are units of ownership capital of companies and hence, give investors ownership rights and a share in profits. Shares are traded on the stock exchange. These are risky investments but give good returns in the long-run if carefully managed.

10. Bonds:

Bonds are debt instruments. These are issued by governments and companies. These are debt instruments through which issuers avail loans from investors. The issuer pays a fixed rate of interest over a period of time. Due to the fixed returns, these investment options offer fixed returns at low risk.

11. Certificate of deposits (CD):

Certificate of deposits are issued by banks. These are like promissory notes. Investors cannot redeem these certificates before the maturity date. Certificate of deposits earn higher interest when compared to savings accounts.

12. Commodity market:

Commodities are resources that affect the overall economy. The common commodities traded are wheat, gold, metals and so on. Commodities are listed on the commodity exchanges and can be traded like stocks.

13. Hedge funds:

 Hedge funds are professionally managed private investment companies or partnerships. These invest in underlying assets like financial derivatives and publicly traded securities. These are characterized by high returns, high fees and low liquidity. These are usually invested by people with high net worth.

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Impact Of Increasing Repo Rates

RBI has increased the repo rate by 25 basis points for the second time in a row. On August 1st 2018, in its third bi-monthly monetary policy review of 2018-19, RBI increased the repo rate and it now stands at 6.5%. Earlier on June 6th 2018, RBI had hiked the repo rate by 25 basis points and it stood at 6.25%. For the first time since October 2013, repo rate has been increased at successive policy meetings.

Want to know more on Investment Planning? 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.

Impact of Increasing Repo Rates

Repo rate or repurchase rate is the rate at which RBI lends money to commercial banks, should they face scarcity of funds. An increase in the repo rate means banks borrow money from RBI at higher rates. To absorb the increased cost of borrowing, banks charge higher interest rates to borrowers (people who avail loans). Interest rates on home loans, car loans and personal loansshould increase with a repo hike. Hence, the increase in repo rate is transferred to the common man.

Adverse effects of the increase in repo rates:

Consumer’s borrowing cost increases: To absorb the increased cost of borrowing from the RBI, banks charge higher interest rates to borrowers. Interest rates on home loans, car loans and personal loans will increase significantly. Hence, the increase in repo rate is transferred to the common man.

Risky investments are put on hold: People will look to deposit money in bank FDs as many banks will hike deposit rates. This is good news for senior citizens and people who live on interest income from bank FDs. Not so good news for mutual funds and stocks as many citizens avoid risky investments. People prefer the safety of bank FDs when repo rates go up.

The economy will slow down: Due to rising interest rates, borrowing from commercial banks slows down. Consumers postpone availing home loans and car loans as purchasing of houses and cars are postponed. Let’s say you want to purchase a car. The interest rate is 10-12% a year. Now the repo rate goes up and banks hike interest rates on car loans.  Will you buy the car now or wait for interest rates to fall? If a large number of consumers postpone purchases of houses or cars, there will be a slowdown in infrastructure, auto industry and of course the banking sector. This will dampen the economy.

Home loans will become costly: With the repo rate hike, banks will increase home loan interest rates. This is definitely bad news for citizens looking to avail home loans. Existing borrowers may not find interest rates going up immediately. Even if banks MCLR comes down in the same month, the borrower feels the effects only after 6 months or a year. The bank will not increase home loan EMIs, but will extend the tenure of the home loan, keeping EMIs constant. This will increase borrower’s interest costs.  

SEE ALSO: Will Banks Raise Interest Rates?

Positive effects of an increase in repo rates:

Interest rates on FDs and Small Savings Schemes will increase: As repo rates rise, banks offer higher interest to depositors. Therefore, an increase in repo rates will not only hike interest rates on loans, but it will also lead to a hike in interest offered on Fixed Deposits, Small Saving Schemes and so on. This will benefit senior citizens who live on interest income. SBI has already increased fixed deposit rates by 10 basis points on July 31st 2018.

A measure to curb inflation: With higher interest rates, consumers postpone borrowing. Spending is curbed. With money sucked out of the economy and less liquidity, inflation is brought under control. How? Lesser money chases equal or more goods, pushing inflation down.

Why is inflation rising?

Trade wars: With the U.S. and China fighting a trade war, the World suffers. As tariffs barriers are imposed between Nations, imports get costly.

Increasing fuel prices and the weak Rupee: Even a single dollar rise in crude oil prices, increases our import bills by Crores of Rupees. This results in increase in the prices of petrol and diesel. Diesel being the main fuel used in transport of goods, transportation costs rise. This is reflected in the final prices of goods and services. As prices of goods and services increase, so does inflation.

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Beware before Taking Financial Advice From Friends and Family