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Looking to meet your financial goals

Every person has a different situation when it comes to personal finance. Nobody has the same expenses, rent, commitments, or lifestyle. But every person needs to plan finance to maintain their lifestyle. Setting goals is an essential part of financial planning. It can support you in planning for your financial goals. Moreover, it can also clarify what kind of lifestyle you want. If you don’t set financial goals, you’ll likely feel like you’re just spinning your wheels. It’s time to set some financial goals to finally get moving. [B-01] 7 ways to meet your financial goals Before meeting your financial goals, you should first understand what financial goals are. A financial goal is any target you aim for while saving money. Depending on your financial planning, these targets could be short-term, mid-term, or long-term. Take financial advice. Also, understand your needs before setting your financial goals and working toward them. Here are seven ways to meet your financial goals: Start an emergency fund. Life is uncertain. Thus, it is necessary to be prepared. Saving for emergencies is highly necessary to plan finance in a better way. Regardless of your situation, this has to be the first on your list. Without an emergency fund, even a tiny financial shock can set your life back. And if it turns into debt, it can have long-term consequences. The amount of this fund depends on your financial situation. Examine previous emergencies and the impact they had on your financial objectives. This analysis will help you understand how much money you need to set aside. Numerous scenarios can fall within this emergency category, including: Accidents Fires Job loss Medical expenses Home repairs Get out of debt. If you’ve got any debt, get serious and start paying it off. Getting rid of debt is a fundamental goal for personal financial planning. However, do not use debt to pay off debt. Paying off debt seems complicated at first. It requires a lot of motivation. Still, it’s a necessary step necessary to plan finance efficiently. Start by reducing your debt every month. Slowly increase the repayment amount if you can. This method will help you save money on interest and unnecessary extra fees. You will also be able to build your credit score. You will also enhance your net worth this way. Identify your time frame. You can plan finance more efficiently if you divide your goals into short-, medium-, and long-term financial targets. Additionally, it helps match your investment objectives with the right resources. Short-term financial goals Short-term goals are those you desire to accomplish within the next few months or a year. Setting short-term goals to plan finances can provide you with a strong foundation for your bigger goals in the future. Mid-term financial goals Mid-term goals take longer to complete than short-term ones. But they have a shorter time frame than long-term goals. Some examples of mid-term goals to plan finance include starting a new business, learning a new skill, getting a job, etc. Long-term financial goals Long-term goals are those that will take more than ten years to complete. Retirement plans are the most common example of a long-term goal. Be realistic about your goals. Being a realist is extremely important to plan finance correctly. Consider your income and expenses while establishing your goals. This will help you ensure that they are achievable. Your financial goals are personal to you and are a continuation of your fundamental values, and this is what matters to you the most. Please do not compare your situation with others and copy their financial goals. Focus on your case only. A realistic financial goal is easily attainable. If you set up unrealistic and impossible-to-achieve goals, you might worsen your financial situation. A realistic financial goal is easily attainable and will keep you motivated. Invest your money. After taking care of your fundamental needs, start investing as soon as possible. Even small investments count if you wish to plan finance with a long-term perspective. By investing, you can increase your money. You can also use it to achieve your long-term financial goals. Your investments will undoubtedly provide you with returns. Meet your needs, not your desires. Understanding this old saying, “There’s enough for everyone’s needs but not for their greed,” can help you to plan finance in a better way. Never make impulsive purchases or go shopping for needless wishes. The secret to reaching your financial goals is discipline. It doesn’t mean you can’t spend money on things you want. However, if you wish to save money, you must give your financial decisions a lot more thought. Monitor your progress. Make checkpoints for yourself. Ask questions like, “Where am I with my investments?” Am I moving forward toward achieving my financial goals? Am I on the right path to plan the finance for the future? If you seek financial advice from an investment advisor, ask them how often you should meet to review your progress. You should be aware of your periodic financial progress to make it easier to realign with your goals when necessary. Keep track of your costs, savings, investments, and overall wealth. The more you evaluate your progress, the more likely you are to be successful in personal financial planning. [B-02] Conclusion Achieving your financial goals is all about consistency and balance. You can make your dreams a reality by meeting your financial goals. If you haven’t started personal financial planning, the right time is “now.” These tips mentioned above will help you to plan finances more efficiently. However, a relatively high level of financial literacy is necessary to set reasonable financial goals. Suppose you consider yourself ill-equipped to make decisions regarding loans, EMIs, etc. In that case, you can seek financial advice from Piramal Finance. It is a leading finance company engaged in providing financial services. They provide a highly superior customer experience through top-notch customer service and product personalization.

08-11-2023

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Give A Thoughtful Gift To Your Loved Ones

Is an instant personal loan a good idea? Can instant personal loans have any effects? What is a safe way to apply for a personal loan? Giving a gift to a loved one is a wonderful way to express how much you care about them and how glad you are to have them in your life. People with financial problems can get the proper presents for their loved ones with the aid of an instant personal loan. Obtaining a personal loan through the Internet is quick and simple in every aspect. You may borrow a quantity that works for you. You’ll have many options for repaying the loan and cheap interest rates. Prepare to deliver expensive and sincere presents to those you care about while we handle the money. [B-01] Benefits Paperwork is reduced. You need to present a few documents to get an instant personal loan. The simple approach and minimum amount of required paperwork allow applications to be processed swiftly. You won’t have to compile a slew of paperwork or visit the bank only to hand them over. To apply for a loan online, you simply need to submit the necessary paperwork. Processing and payment are completed quickly. Your loan application will only be accepted in a few weeks. This is fantastic news if you need to purchase brand-name clothing for the holidays at the last minute or if you want to give your family the most current presents. Instant personal loan funds are often sent to your account within a few hours of applying and meeting the prerequisites. You won’t have to spend time and energy travelling back and forth to the bank for an extended period of time only to obtain your loan funds. Furthermore, the funds may be sent to your account in a few minutes if you get a personal loan that has already been authorized. Modular payment plan It will be easy for you to apply for a personal loan after the holidays. The time it takes to repay a personal loan might range from one to five years, and your monthly payments can be adjusted to meet your budget. There is full security You do not need to locate collateral to get an instant personal loan. A personal loan is unsecured, meaning the borrower is not required to put up any collateral to get the funds they need. When considering whether or not to provide you with the loan, the lender will not consider the value of the collateral. Instead, they will consider your credit history and ability to repay the amount. Because you may not have enough money, you may be unable to provide your loved ones with everything they want. With an instant personal loan, however, nothing can stand in the way of a joyous Christmas spent with family and friends. Take out a loan, but only if you’re certain you’ll be able to repay it. Use an EMI calculator before applying for a personal loan to see if you can afford the payments. Who can apply for an instant personal loan? People who are paid Customers that fulfil conditions for an instant personal loan, such as earning at least Rs. 15,000 per month. If you can present documentation of who you are and how much money you earn, you may speed up the application process and obtain your loan more quickly. Students Finding a cosigner and applying for a personal loan is the best option for a student to pay for school or a large purchase. This is another option for you. Tata Capital provides several advantages, including speedy clearance and quick distribution. Individuals who have recently retired People who are retired and get a monthly pension check may be eligible for a loan. Even if you haven’t worked for the government or the military, they can offer you money swiftly if you satisfy their qualifications. Is a specific CIBIL score required to get a personal loan? Your payment history is bundled into a single figure known as your CIBIL score. The figure might range from 300 to 900, indicating how well you performed. This score is based on how well you performed across the board. This score is then used to determine if the borrower is a good credit risk and the loan conditions. Your CIBIL score will play a significant role in whether or not you are approved for a loan that does not need collateral. Applicants with CIBIL scores over a minimum of 700 are usually approved quickly. To be accepted for an instant personal loan, your CIBIL score must be between 720 and 750. What is a personal loan EMI calculator? An instant personal loan calculator may be used to determine the total cost of repaying a personal loan, including interest and principal. Using the EMI calculator, you may determine how much you can pay each month over a suitable period. You may use our EMI calculator to see how much you need to pay monthly to repay the loan. [B-02] Summing up The main goal of this article is to provide a detailed description of the steps you must take before applying for a personal loan. You should be aware of all the options available and then take an informed decision. Consider all of the circumstances before deciding on the best method. It would help if you spent a lot of time thinking about the past because it can teach you a lot. Do visit the Piramal Finance website, and you will come across other articles that are informative and helpful. They discuss various related topics in great detail.

08-11-2023

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Everything you need to know about Junk Bonds

In an era where financial security holds utmost importance, people tend to prefer saving over spending. Saving more money might help you have a decent corpus, but you might be cutting down on your expenses. A better alternative to saving more is to invest that money and multiply it over time. There are several investment options ranging from Fixed Deposits and National Pension systems to the stock market and crypto. Out of many investing options, there is another option that investors are looking for — Junk Bonds. A junk bond is a new investment option that has emerged quite recently. It functions in a certain way and is mostly issued by the government and various other corporations. It is also known as a high-yield bond which is rated below investment grades by different credit rating agencies. Well, do you want to know the meaning of a junk bond, and how to invest in it? [B-01] Then this article is solely dedicated to junk bonds and their significance. This article will help you understand the meaning, purpose, pros, and cons of having a junk bond. What is a junk bond and what is its significance? A junk bond or a high-yield bond is an investment option that is rated below the investment grades by different credit agencies. These investment-grade bonds are generally a higher-risk option as compared to several other investment schemes like FDs, mutual funds, etc. These bonds are mostly issued by companies that have poor shape. The quality of the junk bonds might also vary many times, depending upon the company through which you get them. There is a rating scale according to which different bonds are ranked known as the Standard & Poor’s credit rating scale. There are several markers like AAA, BBB, etc. On that scale, a junk bond is rated below BBB in the rating scale, indicating the highest risk of a company missing an interest payment. However, there are several higher-rated junk bonds that do not default and provide good returns to investors. How can a new investor start investing in a junk bond? Investing in a junk bond is an easy process, and you can learn it quite fast. You can buy junk bonds from many brokerage firms that buy and sell individual bonds regularly. If you want better outcomes and a diversified portfolio, then you can also buy junk bonds through a mutual fund or an ETF. These options are quite preferable for those investors who are eager to invest in junk bonds but lack confidence while selecting their process of investment. Having a diversified portfolio will increase your yield and lower your risk of investment. What are some of the benefits of investing in a junk bond? There are several benefits of investing in a junk bond and they are: High returns: As compared to other investment options available in the market, junk bonds provide a better yield to investors. In addition, you can increase the returns even more if you learn the basics properly and prefer a diversified portfolio. Constant cash flow: Most bonds are one of the preferable ways to provide the consistent cash flow required for your portfolio. So, as junk bonds are also not as volatile as stocks, you will maintain a constant cash flow without facing the risk of losing all the money. Diversification: As junk bonds perform differently among different financial conditions, they diversify your investment portfolio more than stocks. What are some of the disadvantages of investing in a junk bond? Unfortunately, there are many downsides to investing in junk bonds, especially for new investors. Risk of defaulting: As you already know that junk bonds are mostly issued by companies that do not have substantial financing stability, and there is a risk of default associated with it. In comparison to various other investment-grade bonds, junk bonds are the ones that have the highest risk of default. Issue of liquidity: Though junk bonds are tradable, you may not be able to trade them as frequently as investment-grade bonds. So, in case you had a financial crunch or a crisis, it will be harder on your part to immediately sell them off. In some cases, you might have to compromise on a lower rate than the actual market price. Higher risk of investing in individual junk bonds: Investing in individual junk bonds possess a higher risk than investing in a collection of junk bonds. You should even consider buying a well-diversified collective junk bond to increase the returns and minimise the risk factors. [B-02] The Bottom Line: Junk bonds have become a bit popular in recent times because they provide high returns to investors. Furthermore, they also provide a constant cash flow benefit to the investors to maintain the steadiness of their portfolio. They also diversify your investment portfolio more than that stocks. However, investing in junk bonds also has many risks involved with it, which you must be aware of before jumping into the process. You should be aware of all the downsides and conduct sample research before buying any junk bonds. You should prefer choosing a company that has a strong financial footing and ensures no default during the interest payment. You can discuss investing in junk bonds with your financial advisor and then reach a consensus before investing in it. In case you have come this far, it means you are a keen reader of topics like finance and investment. If that’s the case, you should visit Piramal Finance to find highly engaging content on topics like loans, investment schemes, etc.

08-11-2023

Business Loan

Finding a Loan for Your Business Needs in 2025

No matter how big or small a business is, it needs money to do everything it needs to do. Funding is required not only as a one-time investment but also regularly as working capital. Not everyone will always have enough money to invest in a business when needed. Also, some days you’ll need a lot of money, and others you won’t. You would all like to get a loan for business with a lower interest rate. This article will provide information about small business loans and interest rates for business loans. [B-01] Average business loan interest rate in India The typical interest rate for business loans varies depending on the loan type. Business loan interest rates typically range from 15% to 24% annually. Since many business loan types are available for clients with a wide range of credit scores, interest rates are ambiguous. Types of Business Loan Interest Rates There are two main interest rates for business loans: those that go down over time and those that stay the same. These are fully explained here: Reducing interest rate Reducing interest rate is the rate that is calculated monthly on the remaining loan value. In this method, the EMI includes the principal and the interest due each month on the loan amount still owed. With each EMI payment, the amount still owed on the loan goes down. So, the interest rate for the next month is based only on the loan amount that is still owed. This interest is calculated by multiplying the interest rate per payment by the remaining loan amount. Flat interest rate A flat interest rate is the interest rate calculated on the total loan amount over the life of the loan without considering that the monthly payments will reduce the principal amount and, in turn, the interest rate. So, the effective interest rate is much higher than the nominal flat rate. This is how you figure out a fixed rate of interest. The formula for figuring out a fixed interest rate is Interest Payable per Payment = (Original Loan Amount Number of Years Interest Rate p.a.) / Number of Payments. Reasons Why You Want to Take a Loan for Business Getting a loan for a business can be a good idea. You can buy new products or hire more people with the extra money. This will help your business make more money and grow. Let’s look at why you might want to take out a loan for business: Starting a New Business Before a business can take its first step, there are a lot of things that need to be done and things that need to be set up. Capital is essential to pay for all of these, and a small business loan can make it easier on the owners. For business growth If a business is doing well and the owners want to grow it, a loan for the business would be beneficial. It can be used to pay for the creation of new products, hiring, promotion, marketing, and many other things. For Renovations It is essential always to update your office space so that you can get more customers. Getting a loan for business is the best thing to do if you want to fix up the place and add new, high-tech equipment. To get new business opportunities If you want to take advantage of a business opportunity on the market, you might need money. Loans for business can help you get money no matter where or when you need it. To stand out from your competitors Today, there is competition in every field, so it is essential to stay ahead of your rivals. Using a loan for business, you can install high-tech machines, digitise your business, switch to better software, etc. Minimum Personal Credit Scores for Small Business Loans Here’s how your credit score affects your chances of getting a small business loan. Remember that this is only one of many factors considered by lenders during the approval process. A credit score of 550 or lower When small business owners have credit scores in this range, most lenders refuse to offer them credit. Sometimes you have to be eligible for a loan from a specialised lender. But the interest rates will likely be very high. You may also be able to obtain merchant cash advances or invoice financing. But do your research and proceed with caution, as always. A credit score between 550 and 600 Most banks cannot approve your loan for business at this point. The interest rates will still be high even if you have access to alternative lenders. A credit score between 640 and 700 This is still too low to meet the criteria for most banks’ loans. There are a lot of lenders available to you that offer reduced costs. But the interest rates will still be higher than they would be for traditional loans. A credit score between 700 and 750 Here, you can apply for traditional bank loans and loans for business. Most financing options are still available. But you will usually need vast documents and proof of your company’s ability to pay. A credit score of 750 or higher You’re in the best possible position with low interest rates and useful repayment terms. With this high credit score, you can obtain affordable financing. [B-02] Conclusion Loans for business are an effective tool for funding, launching, and growing your business. As a firm owner, you may seek funding to keep your firm running, expand your locations, buy new assets, or recruit additional staff. All of this is made possible by a small business loan. Cash flow management is a vital part of every firm. For most small firms, timely access to financing is critical to survival. But how can you get loans when you currently need operating capital? If you need a small business loan in India, the internet can deliver the finest loan offers from around the nation right to your door.

08-11-2023

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9 Easy Ways To Save More And Spend Less

Knowing your earnings and spending habits is very important, especially if you want to save your money. In this fast-paced world, it becomes difficult to find practical saving plans to help you spend wisely and manage your finances. One of the main reasons it is difficult to stick to good saving schemes is excessive purchasing, which adds extra financial stress to your budget. For some people, it is nearly impossible without adhere to strict saving plans, no matter how much they try to control their spending. This article explores nine saving plans to help you save more and spend less money. [B-01] 9 Easy Saving Plans Here are nine saving plans you can adopt through which you can save the money that you earn. By spending less, you can save more and be in better financial health. Clear your debts The first step in many effective saving plans is clearing your debts. If you have multiple debts, such as loans, a significant portion of your income and savings will be put aside for repayment. The best way to clear your debts is to plan your repayments on all debts, small and large. It must be remembered that before you can start saving more money, you must pay back all the money you owe. Manage your credit cards. Most saving schemes will tell you that managing your credit card payments is one of the best ways to save more and spend less. You should start by setting up a plan to promptly pay your credit card bills every month on time to prevent being charged penalties and having your credit score lowered. A practical method that most people use is not storing their credit card data online to avoid overspending. Furthermore, you can set a spending limit by carrying cash or only one credit card when you go shopping. Plan Your Grocery Shopping You may be amazed by the effectiveness of saving plans related to grocery shopping. Plan your meals a week in advance and allot a fixed amount of money for your grocery shopping. This will keep you from unnecessarily splurging on extra food and goodies every time you shop for food. Another easy method to save money is to cook your meals at home rather than eat out at restaurants or order in. If you are tempted by the variety of options you see on food delivery apps, you can uninstall them. When you can buy the groceries you need for the week and cook at home instead of going out to eat, this is an excellent way to save money at restaurants. Cancel excess subscriptions. With the plethora of entertainment apps and websites, you may unknowingly be paying for subscriptions that you seldom use or do not even realise you have. This is very common in the case of automatic subscriptions. Look through your account statement and cancel the subscription you do not regularly use. It could be a subscription to a streaming service or an app membership plan. Another good part of saving plans is sharing your subscription fee with friends and family members. For example, a single subscription can include multiple users on streaming platforms. Plan large purchases. Before you carry out large purchases, determine whether you need them. For example, if you already have a TV in your home but want a bigger screen with advanced features, carefully assess if your purchase is a priority. In most saving schemes, it is helpful to make a list (with pros and cons) containing the reasons you want to make a large purchase. Then, if you decide to purchase the item, search for good deals and offers from multiple sellers. Plan Your Bonus, Rewards, and Refunds At least once or twice a year, you will get bonuses, tax refunds, etc. Once you get this money, do not spend it immediately but rather, put it to good use. This includes more than just keeping the money in a bank account. For example, if you have a student loan or credit card bills due, use this money to pay them back. If you do not have debts, a good suggestion in most saving plans is to create a separate account and keep the money aside for emergencies. Reduce your energy bills. An environmentally friendly part of good saving plans is to save as much energy as possible by, for example, replacing energy-consuming bulbs with smarter LED bulbs. This reduces the amount of money you spend on electricity, reduces your carbon footprint, and helps you do your part to protect the environment. Replace Vacations With Staycations Whenever you plan a vacation, try to replace your vacation with a staycation, a holiday in the country or even the city you live in. A staycation can be enjoyable if you plan trips to local attractions with your friends and family. Instead of going overseas, you can save on airline tickets and hotel accommodations by travelling domestically. When it comes to spending less and saving more, cutting back on expensive holidays is a good part of your saving plans. Sell unused goods. Decluttering is good not only for the space in your home but also for your savings. Many people reorganise their belongings and hold a yard sale of unused items such as clothes, furniture, or electronics in good condition. With apps, you can even do this online from the comfort of your home. [B-02] Conclusion At the beginning of each month, make a plan to pay your bills, subscriptions, rent, etc., on time. With good saving plans such as those mentioned in this article, you can control your spending and end up saving more money. As with all habits, good financial discipline takes time to master, but once you make it a regular practice, you will be in better control of your finances. For more useful articles like this one, visit the Piramal Finance website and receive more financial guidance and information on effective saving plans!

08-11-2023

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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