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Difference Between Stock Market and Commodity Market

The market provides a wide range of assets. And, it is for the people so that they can invest their funds to make money. It is crucial to choose the appropriate route to maximize rewards. It is a challenge to select an ideal asset from a wide range of investing possibilities. In modern times, investment in almost anything is possible. Direct stock investment or stock baskets, commodities or ETFs. Many financial markets are open to you if you want to start trading. You can do it at different financial marketplaces that offer a variety of asset classes. The most popular investment avenues among investors are Stock markets or Commodity markets. [B-01] The stock market provides an opportunity to invest in the ownership of a company. A commodity market provides an opportunity to invest in different commodities. These two asset classes hold a decent profit potential. Stock and Commodities investment is possible through different markets. The main reason for the development of the commodity market was to develop a way to hedge price fluctuations. The stock market’s focus is towards growth and profits. Usually, beginner investors confuse between the stock market and the commodity market. You can choose the form of investment best for you. Just by knowing the differences between them. We need to know the basics of stocks and commodities before investing. What is Stock? A stock is an instrument that represents a person’s ownership of a firm. A stock market is a marketplace to buy and sell shares of listed companies between parties. Along with this, it also has exchange-traded funds, mutual funds, and derivatives. The stock market, equity trading, and share trading are other names trending in a stock market. As a result, the stockholder enjoys the same voting rights as the business owner. As the company grows and generates profit, shareholders get dividends for the same. A stock market is a market, where buying and selling of stocks take between Individuals. It provides liquidity to the owner of shares. The value of the stock of a company is dependent on internal factors as well. Any changes in the external or internal composition of shares affect all shareholders. The stock market traders can trade intraday or take delivery of shares. It is dependent upon the investor’s analysis and understanding of a company’s expectations. In India, you can buy and sell securities on several stock exchanges. The two major stock exchanges are as follows: National Stock Exchange Bombay Stock Exchange A trading and Demat account are also required to conduct business on the stock market. The Commodity Markets The commodity market deals with the buying, selling, and trading of commodities. Different commodities are available for trading: gold, silver, crude oil, coffee, rubber, etc. A real market and a virtual market are available to exchange commodities. Selling, purchasing, and trading of these products is possible through commodity markets. Commodity and stock comparisons include a discussion of the trading process. Most traders who trade commodities do so by entering into a futures contract. These agreements bind two parties to carry out a transaction at a specific price on a specific date. A futures contract is a tool at the hand of the manufacturer or producer to hedge against price risk. Additionally, it can serve as a unique tool for generating profit. Difference Between the Stock Market and Commodity Market The stock market deals in stocks, whereas the commodity market enables commodities. There are a few other points of distinction between the two. Some of these are as highlighted below: Purpose: In the commodities market, the goal is to protect against changing commodity prices. The stock market’s primary goal is capital appreciation and profit sharing (dividend). Ownership: You can get a part of a corporation through stock investing. Investing in commodities does not grant you an equity interest. It offers to buy or sell an underlying asset under specific conditions for a future date. Price: A stock’s price depends on the company’s performance and economic and geopolitical factors. The commodity’s price depends on both supply and demand. Product: The face value and factors of one security unit are identical to another security unit of the same type. In the commodities market, the definition of similar products can differ. For Example, White Sugar and Raw Sugar, Robusta Coffee and Arabica Coffee. Dividend: Liquidity: The stock market has very high levels of liquidity. It makes buying and selling shares quite simple. Liquidity in the market for commodities is lesser. A few very traded commodities have a reasonable level of market liquidity. Margin-Requirement: Compared to the commodity market, the stock market has a lower margin requirement. The stock market has the option of intraday trading as well as long-term investing. Whereas, the futures and options in the commodity market expire every month. Risk:In general, the stock market is less erratic and unstable than the market for commodities. Whereas wild price swings in the commodity market can make it unstable. Participants:Investors, hedgers, arbitragers, and speculators are some participants in the stock market. Investors in the commodity market include traders, producers, producers, manufacturers, and speculators. [B-02] Final Thoughts A right investment decision using the right tools can generate good returns. The digital world makes trading in every market easier and more accessible. There is no dearth of opportunities in markets these days. An investor willing to put in time and effort can generate reasonable returns. Thus, it is critical to know about the various products available. And, one must know how to go about trading in them. To know more about the stock and commodity markets, visit the Piramal finance website.

08-11-2023

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How Corporate FD is Different from Bank FD: All You Need to Know

Why should a person invest in fixed deposits over others? What makes corporate fixed deposits preferable to bank fixed deposits, or vice versa? One of the safest investments that provides guaranteed and risk-free payments is a fixed deposit. Corporations also provide fixed deposits. They typically last for a shorter time than those offered by banks. If you are worried about the declining interest rates of bank fixed deposits, corporate fixed deposits offer an alternative. In this article, we will explore in more detail what a corporate FD is, how it differs from bank FDs, and its advantages. We will also discuss the disadvantages of corporate foreign direct investments. [B-01] What is a Corporate Fixed Deposit? Similar to banks, several companies and non-banking finance companies are allowed to receive deposits for a set duration at a set interest rate. These deposits are sometimes referred to as “corporate fixed loans.” They provide the security of guaranteed returns and the freedom to choose their tenure. Company FDs also offer a higher interest rate than bank FDs. How Corporate FDs and Bank FDs are Similar to Each Other? Corporate fixed deposits offer a guaranteed return. Corporate Fixed Deposits offer the security of a guaranteed return. This is one of its main benefits over bank Fixed Deposits. Consider the following scenario: You invest Rs. 1 lakh in a corporate FD, and the involved NBFC or company pledges to give a 7 percent interest rate annually. At the end of the year, you will receive Rs 1.07 lakh regardless of the behavior of the markets or how interest rates change. The exact maturity amount that you will receive is also disclosed to you at the time of investing. This significant benefit increases the ability to create future financial plans. Higher rates for senior citizens. Similar to the majority of bank deposits, corporate fixed deposits often provide older individuals with a higher interest rate. This is a bonus for elderly people who are retired and rely on the returns from fixed deposits for income. Flexibility in selecting the tenure. Corporate fixed deposit terms typically range from one to five years. You have the freedom to select any period in this range. As a result, if your goal is one year away, you should invest for one year. If it is 2.5 years away, you should set your tenure in that manner. The interest rate will vary. The longer the term, the greater the interest rate. Is Corporate FD Riskier? Due to the unsecured nature of company FDs, several investors are worried that they will lose money if the company they are investing in, goes bankrupt. It is crucial to remember that all NBFCs and businesses that accept deposits must abide by the rules and regulations established by the RBI and the Ministry of Corporate Affairs (MCA). Because of this, only a few NBFCs in India out of more than 10,000 are permitted to accept public deposits. By taking these steps, investors’ exposure to risk when investing in corporate fixed deposits is minimized. Before Investing: Things to Think About Below are some of the crucial factors you should think about before investing in a corporate deposit, or FD: Choose the appropriate response: It is crucial to select a plan that meets your needs perfectly. It is crucial to compare several corporate deposits and FD plans before investing. Prioritise your needs and evaluate them before investing in a plan. The RBI Guidelines for NBFCs to Adhere to While Launching Fixed Deposits A fixed deposit has a minimum tenure of one year and a maximum tenure of five years. The Reserve Bank of India has set a ceiling for the interest rate on fixed deposits that cannot be exceeded. This interest rate is occasionally modified by the RBI. An NBFC follows the law to collect as many fixed deposits. It is permitted by law to collect FDs. However, this differs among NBFCs. An NBFC is required to provide the RBI with all pertinent information regarding fixed deposits. These are not permitted to continue rewarding their depositors with rewards or incentives. Top Bank Fixed Deposits in India Below is the list of top bank fixed deposits in India: HDFC Bank FD State Bank of India FD Canara Bank FD Axis Bank FD Top Corporate Fixed Deposits in India: The top corporate fixed deposits in India are listed below: Ansal housing and construction Ind Swift Ltd Surya Roshni Ltd Jindal Stainless Ltd Shri Ram [B-02] Conclusion The goal of this article is to provide a thorough analysis of the various merits of both corporate and bank FDs. Investments in fixed deposits are safe and reliable. You can select the safer, lower-returning bank FDs or the higher-returning company FDs based on your investment objectives. If you want the ability to make early payments, there are other things to keep in mind. For example, the kind of tax benefits you wish to receive. Make the decision that is best for you by keeping all of these variables in mind. Investment Reliable does not offer financial advice, but they do provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their research. Also visit Piramal Finance, which has more in-depth, educational, financial-related articles.

08-11-2023

When should you invest in Fixed Maturity Plans?

Fixed Maturity Plans (FMPs) are becoming scarce. In these close-ended plans, you could invest as much money as you wanted and get it back after a certain period. But, the 2014 budget changed the definition of LTCG in FMPs from one year to three years. Now, the minimum maturity period is longer. However, these schemes are still available if you want to invest. Very few people know about fixed maturity schemes. This article gives an overview of fixed maturity plans and everything you need to know about investing in one. [B-01] What are FMPs? A Fixed Maturity Plan (FMP) is a closed-ended debt-based mutual fund. That is, you invest in a fixed-term joint debt fund. This fund invests in fixed-income securities with maturities matching the fund’s maturity. For example, suppose an FMP has a term of three years. In that case, the fund manager will invest in securities with maturities of three years or less. They fall no later than the FMP’s maturity date. These securities can include: Certificates of deposit Commercial papers Treasury bills Corporate bonds Government securities State development loans You will only receive your money after the plan matures. Therefore, if you invest in a 5-year fixed maturity plan, you will get your money only after five years. How do fixed maturity plans work? Fixed maturity plans aim to reduce interest rate risk. When you own debt securities, you must be cautious. Any increase in interest rates may decrease the value of the securities. However, because fixed maturity plans are closed-ended, investments are often held until maturity. Hence, yields are locked at the time of investing. Therefore, portfolio yield is maintained. It also protects the amount from fluctuations in interest rates during the scheme’s term. Therefore, fixed maturity plans are safer investment options. What are the features of fixed maturity plans? 1. They are close-ended. Fixed maturity plans, as previously indicated, are only redeemable after the maturity term. This is invalid only if they are traded on a stock exchange. Fixed maturity plans can have tenures of a few months to a few years. 2. They give predictable returns. Fixed maturity plans invest in fixed-income instruments. An FMP’s maturity date is directly related to the maturity period of these instruments. As a result, fixed maturity plans can provide a relatively set rate of return upon maturity. You also know your expected returns (on maturity) at the NFO (New Fund Offer) stage. Therefore, if you are searching for investments with predictable returns at maturity, FMPs may be a good choice. 3. They have a lower risk profile. Fixed maturity plans have a lower exposure to interest rate risk due to their highly predictable returns. Furthermore, these funds typically invest in high-quality assets. It can reduce the possibility of a default or credit risk. 4. You get the advantages of indexation. Let’s look at an example of how indexation might help an FMP in a mutual fund. Consider this: you invested in an FMP before March 31, 2021, and its term is slightly longer than four years, or 1095 days. Your plan will be completed sometime after April 1, 2024. In this situation, you will keep your investment for four financial years rather than three. In this case, you can claim four-year indexation advantages, reducing your tax bill. What are the benefits of fixed maturity plans? 1. They have minimal interest rate risk. FMPs are least vulnerable to interest rate risk. This is because the fund manager usually holds the instruments until maturity. FMPs often invest in assets with better credit quality to reduce credit risks. They also help to avoid liquidity risks. 2. They are low-cost. In fixed-maturity plans, investments are made in line with the maturity of the fund. Hence, there is no constant buying or selling of securities in the scheme. This lowers the scheme’s costs. 3. Low tax is charged. Investments in an FMP made after a fixed time allow an investor to use annual inflation benefits. This can lower taxes on their gains. Should you invest in fixed maturity plans? Fixed maturity plans are a useful tool for investors who want predictable returns. Your investment is locked for a specific period. This is suitable for investors looking to achieve various short-term or long-term goals. The goals align with the maturity profile of the invested FMP. It will be useful if they want certainty in the returns. They provide a relatively stable investment alternative. They also broaden the portfolio of your debt mutual funds. This gives them a due advantage. When should I invest in FMPs? According to mutual fund specialists, rising economic interest rates are driving demand for FMPs. Since January 2022, interest rates have increased. The increasing rate environment is a favourable moment for fixed maturity plans. As a result, AMCs firms are rushing to launch new FMPs. This comes after the industry virtually wrote off FMPs during the 2018-2019 financial crisis. To avoid defaults, several FMPs had to extend their maturity dates. Mutual fund experts believe that FMPs are better positioned now when long-term debt funds are experiencing negative returns. According to them, many investors sell their plans after experiencing unsatisfactory outcomes over some time. During such circumstances, FMPs might be beneficial to mutual fund firms. However, few people need it. [B-02] Conclusion When investing in an FMP, it is important to be cautious about a few factors. One of them is the credit rating of FMPs. Before investing, you should review the fund’s rating profile. Your objectives are also important. You should see whether your investment objectives align with the terms of the FMP. You might have to wait until maturity to redeem these investments. You may seek financial advice from a professional financial advisor before investing. You can consult help from financial experts like Piramal Finances.

08-11-2023

Other

Mistakes To Avoid When Managing Working Capital For Your Business

Working capital loans are hard to control. Your company’s ability to reach its business goals and maintain its stability depends on how you raise money. To get cash and improve the cash conversion cycle, you must optimise several areas. There can be a lot of mistakes made when you try to get more working capital loans (also known as net working capital, or NWC). Here are some problems with working capital loans that could cost you your business if you don’t catch them right away and fix them: [B-01] Problems with Working Capital Loans Poor production strategy Suppose your business forecasting or production schedule is always wrong. In that case, your working capital loan will be used to pay for raw materials and manage and store the extra inventory, especially if you are making more than you can sell. This is one of the most common and expensive problems with working capital finance. Still, it can be avoided if you regularly check your sales estimate and make changes when necessary. This will allow you to change your purchasing and production plans to meet your business’s needs. Unplanned expansion It could strain your working capital loan if you don’t pay close attention to the extra money you need for growth and expansion. You can borrow the money at a higher interest rate to keep the business running. If your expansion plans fail, they won’t bring in as much business as you thought they would. Neglecting timely account receivables collection Accounts receivable are the main way you get money for working capital. Your working capital loan interest rate could be high if you don’t have a good way to collect payments or if your clients don’t pay you on time. Accounts receivable are a weak spot for many businesses. Even though it looks like an asset on the balance sheet, it could quickly become a liability. Then the business needs to borrow money to keep running, even if the interest rate is high. Extending a time of high credit Businesses often extend the credit period longer than usual to get new customers, keep old customers, or keep an account active. For example, if they want more business, they can extend the standard length of credit from 30 days to 45 or 60 days. Even though you can’t completely avoid it, making it a habit or giving credit to all of your clients can hurt your cash flow. As a result, the interest rate on your working capital loan will go up. Not getting a down payment for big orders Large orders that rarely come need more money. In addition to buying more raw materials, businesses sometimes need to hire more people. They also need to buy more tools to fulfil large orders. If you can’t get a bank loan or an advance to pay for the extra cost, you’ll have to pay for it out of your operating capital. This could lead to a lack of money if big orders take longer than expected. Getting working capital from suppliers Businesses often ask their suppliers for longer credit terms to help them get through times when they don’t have enough money. For example, your vendor might give you a 30-day grace period, but you can’t pay on time because you’re running out of money. You want 10–15 more days to pay off the debt. Using vendors as a source of credit is a good way to get a working capital loan, but it comes at a cost. If you pay your vendors late, they might stop doing business with you. Vendors could refuse to give you credit, which would slow down delivery. Neglecting short-term responsibilities and events In addition to their payables to suppliers and vendors, companies may also have other short-term obligations like loan payments, lease renewals, and income taxes. All of these costs take money from the available working capital loan. When figuring out how much of a working capital loan the company needs, you must consider these short-term debts so that you don’t run out of money when the bill comes due. In the same way, you still need to save money for things you can’t plan for. For example, even though it can’t be predicted, transportation costs may go up because gas prices are going up or because workers will ask for pay raises or overtime pay. Putting money aside for these things is necessary to ensure they don’t get in the way of everyday business. Letting suppliers and customers choose payment methods Almost every business has paperwork to fill out when a new customer, supplier, or client comes on board. Even though the formats and ways of entering data are different, they all have the information needed to speed up the payment process. One common mistake is to ask for the payment plan you want and then accept it without looking into it. This is bad because it makes it hard for the buyer to negotiate payment terms or think they have already done so. Two, if the rule is set by accident that any payment term is fine, the team onboarding the new business may have to do a lot of extra work to keep track of them all. Last but not least, this strategy would affect working capital, even though it would save time at first. [B-02] Conclusion Even though it’s hard to get a working capital loan, your company’s ability to reach its business goals and keep its finances stable depends on it. Cash needs to be made, and the cash conversion cycle (CCC) needs to be improved in many ways. Now you know everything you need to know about working capital loans. For more information, visit Piramal Finance.

08-11-2023

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Difference Between a Fixed Deposit and a Debt Mutual Fund

For decades, fixed deposits have been the go-to for Indians. However, recently, the popularity of debt mutual funds has increased. If you are a new investor, you might wonder which option is better. Read more to understand what fixed deposits and debt mutual funds are and the difference between them. [B-01] Understanding Fixed Deposits A fixed deposit is one way to invest. Here, you invest a sum of money in a bank for a fixed period. You are guaranteed to get this sum back at the end of the term (maturity period), along with interest. The rate of interest is chosen at the beginning. You are lending money to the banks, which use this sum to grant loans to others. A part of the interest they receive from these loans is given to you. You can invest in fixed deposits or term deposits for a short-term or long-term, ranging from 7 days to 10 years. You can only make one type of deposit with FDs. You must pay the penalty if you wish to withdraw money from your FD before maturity. Types of Fixed Deposits Non-cumulative FDs Here, the banks will give you interest at fixed intervals of your choice. It can be monthly, quarterly, half-yearly, or annually. Thus, you will have a regular income from the FD. Cumulative FDs You can choose to reinvest the interest every year. Here, you do not have the provision to get regular payouts. Instead, the total interest, along with the principle, is returned at maturity. You can earn a higher profit due to compounding. The interest for the following year will be calculated based on the principle plus the interest from the previous year. Features and Benefits of Fixed Deposits Easy to liquidate In an emergency, you can easily liquidate your FD and obtain funds. However, withdrawing from an FD before maturity is better avoided as it significantly reduces returns. Minimal risk and assured returns Once the amount has been deposited at a specific interest rate, it is unaffected by any changes in interest rates or market fluctuations. Thus, the returns are assured. Low minimum investment If you want to try investing but don’t have a large amount, FDs are a good option. This is because investment amounts can start as low as Rs. 500. Easy to invest FDs are easy to invest in, both offline and online, either through net banking or mobile banking. Senior citizen benefits People over 60 are offered a higher interest rate on fixed deposits and have a tax benefit. If the source is less than ₹50,000 per year, their interests are not tax-deductible at the source. Other benefits There are several other benefits, like loans against FD. You can avail yourself of loans of up to 90% of the deposit in your FD at very low-interest rates. You can get tax deductions by investing in tax-saving fixed deposits. Understanding Debt Mutual Fund In debt mutual funds, the asset management company invests your funds in fixed-income debt instruments. You are giving loans to governments (as bonds or treasury bills), corporations (as bonds or commercial papers), or financial institutions (as certificates of deposit or debentures). They are also known as fixed-income funds or bond funds. These entities promise to pay back the principal after some time, along with interest. However, the ability to uphold this promise varies from company to company, resulting in a credit risk associated with the investment. The risk you have depends on the type of borrower and the lending duration. Sources of Income A debt fund has 2 sources of income: Interest Returns You get interest from the bond holdings, called coupon income. Capital Gains You can trade debt instruments. If the bond price increases, selling the bond will result in a profit. The bond’s price changes when the bond’s interest rate changes. This results in a gain or loss of capital. If the bond’s interest rate decreases after you buy it, your bond with a higher interest rate becomes more valuable. With this, your bond price increases. Thus, bond prices move in the opposite direction of interest rates. The type of bonds determines the income a mutual debt fund earns through capital gains and interest. When market yields drop, the price of long-term bonds inflates more than that of short-term bonds, and when market yields climb, long-term funds lose more value. So long-term bonds are more likely to make capital gains or losses. For short-term bonds, the income is mainly from interest, as capital gains and losses don’t impact it much. Features and Benefits Access to market returns and professional expertise Investing in a debt fund gives you two possible sources of income: interest and capital gains. It also allows retail investors to access wholesale debt markets or money markets. These are segments where they cannot directly invest. Balances your portfolio Debt funds have less risk. It helps with portfolio diversification. Variety of investment options There are many different types of debt funds available along the entire spectrum of maturity and credit risk to match your needs. You can invest in debt funds for as little as one day or for as long as three years. Liquidity You can easily cash debt funds, usually within one or two working days. There are usually no penalties involved when a mutual fund investment is withdrawn prematurely. Low-Cost Investment As per SEBI norms, the total expense ratio of a mutual debt fund cannot surpass 2% of assets under management. Difference between FD and Debt fund Fixed DepositsDebt Mutual FundsYou make a one-time deposit to a bank or NBFC for a fixed period. The rate of interest is predetermined.Debt funds are invested in debt instruments like bonds. The entities that issue the debt securities promise to pay their investors a periodic interest for the money invested. There is only one source of income, which is interest.There are two sources of income: interest returns and capital gains.The bank is the borrower, and you are the investor. Here, you earn interest.Debt funds are the investors. Here, the debt funds earn the interest.Fixed deposits have assured returns. They are 100% safe. Periodic interest payments to fixed-income mutual debt funds can be variable or fixed. There is no guarantee. There is always some risk involved.Low net gainsBetter for short-term investments compared to FDs as they offer a higher net return.Less tax efficient and thus less post-tax returnsMore tax efficient and thus earn better post-tax returnsFewer investment optionsWide range of investment options [B-02] Conclusion Fixed deposits and mutual debt funds are two ways to invest. Although they operate similarly, there are differences between them. Before investing, decide on the risk you are willing to take, the investment period, and your financial goals. Go through the various FD or mutual debt fund schemes and select the ones that match your needs. Visit Piramal Finance to know more.

08-11-2023

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What Are the Benefits That You Can Get from a PMS?

You can’t wait to handle all your properties as a property owner or manager. Everyone wants it without needing to deal with stress or go the extra mile. You might have heard about the property management system, but you’re not sure what it is. Then you should see the good things that come with it. You should get a property management system early. [B-01] What exactly is a PMS system? A property management system is a system that allows you to maintain your property. These systems are usually tech-related. You can make it in various forms. It can suit your needs and those of your property or properties. The goal is to take away the stress of property management. The goal also includes making it easy to do the most work. If you are unaware of the advantages of PMS, consider the following. You can expect to get these things from an ideal system: Benefits of a Property Management System Ease A property management system will make things easier for you in many ways. A good property management system helps you manage your assets. Buildings, renters, and finances are examples of such assets. Real estate management doesn’t take much time or work. You also don’t always have to be there. To assist you, speak with a property management company. Get a property management system. You can profit from a good property management system, whether new or experienced. Obtainable An outsider must often enter or inspect a property. Install a management system to manage your property. It’s accessible from almost any location on the planet. You have access to information about open positions, required maintenance, and rent payments. If the urge strikes, you don’t have to leave the bed to check each rental unit. The accessibility makes for the most convenience. Talking Using property management software can also help you bridge distance-based communication gaps. You can always contact your renters, a repairman, or a company offering any other services. A property management system lessens the stress of constant conversation. You might give your property management company specific instructions. This can change how renters and management interact. Save and restore A property management system enables you to carry out several tasks. These include maintaining information, records, and details as opposed to the previous paper-based method. You are unlikely to lose any of your important data in a fire or flood. The backed-up data can be transferred to a new device. For as long as you think is necessary, your data will be kept secure. Less or No Paperwork Required Using the property management system requires a technological approach to property management. Using paper works is thereby rendered unnecessary. A digital copy of an agreement signed and returned is as valid as a hard copy. You can store more work without putting in extra effort to transport them. Using property management software has an extra advantage. Accounting and Financial Planning Services Have you ever made accounting mistakes when managing a property? If so, you need to set up a property management system immediately. It covers every aspect of accounting and even offers practical financial guidance. The system for managing properties can be used to process payments. You will receive an alert to approve pending payments, such as rent or the plumber’s bill. Safety Almost anyone can get their hands on private information if it’s written down. But, using a property management system allows for secrecy. Your tenants and customers or clients can feel secure in your care. You can add locks to guarantee that only you have access to vital property management data. Easy access control is a breeze. Lower Prices A property management system also helps you save money and reduce wasteful spending. If you can get your finances in order. You can save on transportation and other expenses. The property management software won’t come for free, but it won’t be as expensive as other options. Easy-to-Navigate Interface Worried you won’t be able to handle the system’s administration on your own? Don’t worry; a property management system is very easy to use. So you can find your way around and do tasks with little training. You can customise property management software according to your needs. So you can choose which features you want or don’t want. [B-02] Conclusion Buying a system for managing properties is best for you and your business. With it, you can gain much more and do more than if you run your business the way everyone else does. There are a lot of other benefits to the property management system that is easy to enjoy. Contact property management right away to talk about your property. It is the best approach to managing it. Piramal Finance is a great option for you for such finance-related content. Visit their website to learn more about the products and services they offer.

08-11-2023

Business Loan

How can you Avail of Government Loan Schemes for Your New Business?

Want to find out more about the government loan scheme? How does the government start loans? How to take advantage of government loan programmes? MSMEs are the key to a country’s economic growth (Micro, Small and Medium Enterprises). MSMEs can always find a way to solve big economic problems like poverty, unemployment, income inequality, and imbalances between regions. Its most important job is to make sure that everyone has the same amount of money and that local development is fair. This industry employs a lot of people in our country and makes use of local talent, both of which are important parts of the country’s GDP. At the moment, about 11.10 crore jobs in India are provided by the MSME sector. This is why this sector is also called the growth engine of India. MSMEs make up 8% of the country’s total GDP, 40% of its total exports, and 45% of its manufacturing output. Both the organised and unorganised sectors have MSMEs. [B-01] Government Loans to Businesses The MSME sector is the most important part of the Indian economy. People know that this sector makes up almost 30% of India’s GDP and creates most jobs there. The government of India offers different credit programmes to help the MSME sector grow. It is important for India’s growth and plays a role in it. Government loans can help small and medium-sized businesses get the right amount of money they need. The Indian government’s start-up business loan programme makes it easy to get the money to turn good business ideas into profitable businesses. MSME Loan Government loan scheme programme, which is also called “PSB Loan in 59 minutes,” was started by the government of India. It set up a quick business government loan scheme portal for people who want to grow their businesses. Under this programme, public and private sector banks and NBFCs can lend INR 1 lakh to INR 5 crores to MSMEs. You can get the money you need in the time you need it. Which business can get a loan through this programme? Some things decide if a business is allowed. Income/revenue. The ability of the borrower to pay back the loan. Credit facilities are already in place. Other things that the lender of the money decides. There are also other good things about this plan; The whole process of getting a loan should be super fast and only require a few papers. The government scheme loan is processed without any help from a person when the loan is approved. So, it is called a scheme for Advanced Technology Backed Loans. When someone applies for a loan, their information needs to be kept safe and secure at the highest level of security. The Micro Units Development and Refinancing Agency Ltd. It is in charge of the Pradhan Mantri MUDRA Yojana. Under this scheme, MUDRA helps banks and NBFCs refinance their loans to micro units that need loans of up to INR 10 lakhs. Under PMMY, MUDRA divided the loan into three categories called “Shishu,” “Kishore,” and “Tarun” to show the stage of growth or development. A plan to help small and medium-sized businesses get loans with guarantees. The Government of India started the CGTMSE business loan programme. The MSME sector could get credit without putting up collateral. It includes both new and existing businesses. The CGTMSE scheme is run by a trust called Credit Guarantee Fund Trust for Micro and Small Enterprises. It was set up by the Ministry of MSMEs and the Small Industries Development Bank of India (SIDBI). Under this funding programme, MSMEs can get loans of up to INR 200 lakhs, and eligible women get priority. The Guarantee Cover can cover up to 85% of the amount of the credit facility that has been approved. The trust funds charge a fee of 1% of the amount approved each year. 0.75 per cent for loans up to Rs. 5 lakh, 0.85 per cent for loans over Rs. 5 lakh but up to Rs. 100 lakh. According to the eligibility criteria, this scheme is for businesses that do the following, whether they’ve been around for a while or just started up. The National Small Business Administration (NSIC): NSIC is an Indian government business that is ISO-certified and works with MSMEs. It works to help and encourage the growth of micro, small, and medium-sized enterprises (MSMEs) by providing combined support services in finance, marketing, technology, and other related services all over the country. To help MSMEs grow, NSIC offers several programmes. Marketing Support Scheme: Help with marketing is important for the growth of any business. It is especially important for the growth of MSMEs in today’s highly competitive market. To help these kinds of businesses, NSIC came up with programmes like Consortia and Tender Marketing. NSIC puts together groups of MSMEs that work on their behalf to make things easier for them. These groups are called “Consortia of MSMEs.” NSIC also sets up “Marketing Intelligence Cells” to spread the word about different programmes for MSMEs. Credit Support Scheme: Under this scheme, NSIC helps MSMEs get the money they need to buy raw materials, do marketing, and spread the word about their products. The Credit-Linked Capital Subsidy government loan scheme (CLCSS): CLCSS is a new credit programme started by the Ministry of MSMEs. Its main goal is to help MSMEs, especially in rural and semi-urban areas, improve their technology. Under this plan, businesses can get a 15% subsidy if they buy machinery that meets certain requirements. But there is a limit on how much the subsidy can be, which is INR 1 crore. [B-02] Conclusion India has about 40 million registered and unregistered Micro Small and Medium Enterprises (MSMEs). Both the organised sector and the unorganised sector include MSMEs. About 40% of India’s GDP comes from these MSMEs, and they continue to be an important source of jobs. The MSMEs help solves important problems in the country, such as poverty, unemployment, etc. Small and medium-sized businesses (MSMEs) are run by entrepreneurs who can get a loan from any of the schemes that fit their needs. Investment Reliable does not offer financial advice, but we do provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their research. Also visit, Piramal Finance has more in-depth, educational articles.

08-11-2023

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Flat vs. Reducing Interest Rate: Which is Better?

If you are looking for a loan, then it is vital to know about the types of interest rates. Banks and NBFCs offer different loans, and each one has its own way of calculating the EMI. For example, if you take a loan from a bank at a 10% flat rate for five years with an initial amount of Rs 1 lakh, your monthly EMI will be Rs 3,041. However, instead of taking out a fixed-rate loan, consider the reduced-interest rate option instead. This can help reduce costs over a longer period by lowering the interest cost. Under the lower rate, your interest cost also reduces as you repay the loan. This makes it easier for you to finish the loan without stressing your finances. Keep reading to learn more. This will enhance your skill set. [B-01] The Flat Interest Rate and its Various Disciplines Flat interest rates are easier to understand Flat interest rates are more transparent and easy to understand. A flat interest rate is the sum of all payments over a period. This makes it easier to understand than lowering interest rates. But it is misleading in the long term. This is due to various issues associated with it. These issues can only be understood if you understand this concept. Reducing your debt may seem like an attractive option at first glance, as you will save money on interest payments. After you figure out how much money each payment would cost you in total if you were paying off your debts with a reduction in their principal. Then you will learn that there aren’t as many savings involved as you may think! The idea behind the concept of flat interest rates As the name suggests, a flat interest rate is calculated as a uniform percentage of the loan amount. On the other hand, a reducing interest rate is based on the remaining principal each month. The flat interest rate is permanent over the loan tenure. Hence, it is better for people who want a stable interest option for their loans. You can plan for repayment In contrast to decreasing interest rates, flat interest rates are stable in nature. Hence, one can plan ahead about the repayments and invest the money in other ventures as well. This is something that is not possible with reduced interest rates. Formula to calculate Interest per month = principal amount × tenure of the loan×interest rate per annum / total no of months you have to pay A flat interest rate will have a higher EMI With a flat interest rate, you will have a higher EMI than if you reduced your balance. So if you can afford to pay more for your loan, then only go for a flat interest rate. However, if you have to buy a new car or want to invest in a property. Advantages of reducing rate over flat interest rate Reducing interest rates are more affordable If the interest cost on a loan is decreasing after each payment, the principal will be paid sooner. By paying off your debt sooner, you can save money in the long run. This is the case with reducing rates. Herein, the interest is calculated on the remaining principal every month. As you pay the EMIs, the interest cost will also be lower. Hence, you will be able to pay off the loan sooner. There will be less stress on your finances as well. Being an affordable option on the list makes it a much more attractive option. Reducing interest rate is a little hard to understand Reducing the rate is not easier to understand. You need to know about the concept of reducing interest rates before you can opt for it. Once you learn the key aspects of reducing interest rates, you will be well-equipped to use it as an option. Flat rates are easy to learn about and thus can cater to a much larger group of people. Formula to calculate The interest = total loaned amount × interest (changing) per month Both of them are equally important One thing that someone needs to understand is that both flat interest rates and reducing interest rates are equally important. They were not introduced to cater to the needs of a particular genre. The main reason behind the introduction is to give people options depending on what type of loan and term they choose. Some people don’t like the idea of reducing rates as it is harder to understand, and if you are not well aware of the financial process, there is a huge chance you will run into issues after some time. Although this problem can be avoided with flat interest rates, it doesn’t provide the benefits of reducing rates. So the only way to swim through them is to understand them carefully before you dive into any of them. You can take the help of online articles, and there are many financial advisors who will thoroughly explain them and help you make a sound decision. [B-02] Conclusion We discussed how flat interest rates and decreasing interest rates are both important, as well as the benefits of each. It is crucial for any person to understand the terms of the loans they are agreeing to and will have to pay for a long time, and you must learn more about interest rate options before you opt for one. Any mistake here can increase the cost of the loan for you. This can make it harder for you to pay back the loan on time. If you would like to learn more about how to manage your finances and make the most of your money, visit Piramal Finance. There are many articles and blogs here that will help you learn various financial concepts easily.

08-11-2023

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What is Derivatives Trading? Types, Advantages, and Disadvantages

Derivatives meaning: derivatives are financial contracts that derive their value from an underlying asset. They can be bought, sold, or traded on any market. They represent a type of financial instrument. Trading derivatives involves risk and should be used wisely by investors and traders. Understanding derivatives’ meaning is vital before starting to trade derivatives. Read on to learn more. [B-01] Basics of Derivative Trading A derivative is a financial contract with a value that is derived from an underlying entity. The value of derivatives can be affected by changes in the price of their underlying instruments. This includes commodities, precious metals, and currencies, to name just a few. Derivatives can also be used for investments that aim to profit from changes in market prices. That, too, without any ownership rights to the asset being traded. Derivatives are often used by banks, hedge funds, and other large investors. They want to increase their exposure to specific markets. But without having to take on significant credit risk themselves (i.e., lending money). Common examples of underlying entities can include commodities, precious metals, currency, bonds, and stocks. Now we will look at the types of derivatives. Types of Derivative Contracts After understanding the derivative definition, now it’s time to learn their different types. There are many different types of derivative contracts. They all fall into one of two categories: long-term contracts and short-term contracts. Long-term contracts will have a specific date when the contract expires, or “matures.” These are generally long-term contracts that last between 3 and 5 years. Short-term contracts have no set ending date and expire at a specific rate. For example, a contract may state that a rate of interest of 12% will be applied to the contract if it isn’t closed before a specified date. Limiting Risk with Long-Term Contracts Long-term contracts, such as forward and futures contracts, are generally used for managing risk. These types of derivative contracts will allow a company to lock in a certain rate for a certain amount of time. For example, a company might use a forward contract to lock in a rate for a certain amount of widgets that it will purchase in the future. If the market rate goes up and the widget company wants to buy the widgets for less, it can close the contract and be refunded the difference. Hedging with Short-Term Contracts Short-term contracts are generally used for hedging against risk. Hedging is when an individual or business locks in a rate by buying a derivative contract. Businesses will often hedge against rate fluctuations. This will ensure that they can recover the money they’ve invested in the project. For example, a construction company may hedge against interest rate fluctuations by purchasing a contract that has a specified rate. Advantages of Derivatives Trading Derivatives are traded in the over-the-counter (OTC) market. Derivatives are traded in the over-the-counter (OTC) market. This is a market for financial instruments that are not listed on an exchange, but instead trade privately between two parties. In this way, derivatives can be bought and sold without going through a broker or other intermediary. Why is trading in derivatives essential? Trading in derivatives is used to gain exposure to that particular underlying asset without actually owning it. This is done by trading contracts that are based on the performance of an underlying asset, such as shares or commodities. You can trade derivatives without owning the underlying asset by buying a contract for difference (CFD). You do not have to buy any physical assets or go through the hassle of setting up a company and hiring employees if you want to trade CFDs instead. The price of the derivatives The price of a derivative is derived from the price of the underlying asset. It does not always imply the same thing; for example, if you bought a call option on Apple stock, you would expect its value to rise in tandem with Apple’s share price. If it did not, then your investment would be worth less than what you paid in. To trade derivatives successfully, traders must understand how and why they work, as well as the risks associated with them. Disadvantages A derivative contract has a fixed expiry date, after which one needs to enter into another contract for further speculation on that underlying asset’s price movement. For example, if you purchase a stock option that expires in three months and do not want to sell your shares before then, you can purchase another option that expires at the same time as your original option or at some point before its expiration date. This is called replicating an existing position—in this case, buying another option on the same underlying asset (i.e., buying two options with different strikes). Derivatives trading is riskier than trading in physical assets as these contracts involve leverage. You only have to deposit a small amount and borrow from your broker the rest of the money needed to buy the contract. You can lose more than your initial investment and lose all your money. This is why understanding derivatives and the types of derivatives is important before investing. Risks associated with derivatives trading Trading derivatives involves risk and should be used wisely by investors and traders. Diversification is the key to success. However, it is crucial to remember that not all investments are created equal. Some assets produce large returns but also carry high risks. Then there are others who don’t have any upside potential at all (and may even lose money). [B-02] Conclusion The derivatives market is an extremely complex field. But there are some basic rules that you should follow if you want to make money with them. First and foremost: never invest more than you can afford to lose! Don’t risk more than 10% of your savings or retirement accounts on any single trade. If something goes wrong (and it will), it will take years before they even begin recovering from the damage done by investing. Working with major finance firms like Piramal Finance will help you understand the procedure inside and out. They also have many blogs and articles on these topics to help you acquire key financial skills.

08-11-2023