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Differences Between Flat and Reducing Interest Rates

Banks and NBFCs provide people with assistance to meet their financial needs. Financial help may include an MSME credit for a firm, a housing loan, a business loan or a personal loan. When applying for a loan, you can choose a fixed or lower interest rate. People may find it difficult to understand the effects of interest rate options that lead to losses and cause them to be hesitant about taking loans in the future. If you are interested in applying for a loan, it is important to understand flat interest rates and reducing interest rates, and what the difference can mean for you. [B-01] What Is a Flat Interest Rate? A flat interest rate is a lending rate that remains constant during the loan duration. The interest is assessed for the whole loan sum at the start of the loan term. The financial firm sets the repayment plan and the EMIs due by the borrower. It also keeps your overall payback responsibility fixed and allows your finances to be organised ahead of time. Flat interest rates are higher than reduced rates. For example, assume you borrow Rs. 100,000 at a 10% interest rate. Every year, the interest portion would be 10,000. So, if you want to return the loan in three years, the total principal amount and the interest rate would be Rs. 1,00,000 plus Rs. 30,000, or Rs. 1,30,000. This will be split into three years, resulting in a total of Rs. 1,30,000 split by 36 months or Rs. 3,612 per year. Perks of a Flat Interest Rate These are the perks of a flat interest rate: Simple To Track and CalculateThe flat rate formula is simple to calculate. Loan debts that are set at a fixed interest rate are clear and easy to understand for both the lender and the borrower. In India, all semi-financial groups such as village banks, self-help groups and ASCA provide fixed MSME and corporate loan rates. Beneficial For Farmers Many lenders in poor nations, notably farmers, want loans that permit balloon payments since a flat fee formula is easier to grasp. Flat-rate Loans Favour In-Kind Loan TransactionsThe notion of a flat interest rate existed before the advent of money. It is the most typical method of repaying a debt in regular installments. What Is a Reducing Interest Rate In this case, a personal loan rate is calculated based on the principal outstanding amount at the end of a given period. As previously indicated, a part of each EMI paid goes toward the principal, with the rest going to the interest. The following interest calculation is based on the outstanding principal balance rather than the initial principal amount. For example, if you obtain a loan of Rs. 1,000,000 with a reducing interest rate of 10% p.a. for five years, your EMI will decrease with each payment. In the first year, you will pay Rs. 10,000 in interest; in the second year, you will pay Rs. 8,000 on a reduced principle of Rs 80,000 and so on until you pay Rs. 2,000 in interest in the final year. In contrast to the fixed rate strategy, you will end up paying Rs. 130,000 lakh rather than Rs. 150,000. This approach is especially useful for figuring out the interest due on housing, mortgage and property loans, as well as overdraft and credit card facilities. You must only pay interest on the unpaid loan amount using this method. The effective rate of interest offered for such loans is the same as the rate utilised for fixed deposits and savings accounts. Perks of a Reducing Interest Rate The main benefit of a reducing interest rate loan is that you must pay less interest over time than a flat interest rate loan. The following are additional perks: Interest Rate ReductionOne factor in choosing a reducing interest rate is that the principal amount drops rapidly, lowering the interest payable on the loan. Loan AmountThe total cost of the loan is cheaper when using the reducing interest rate method. Key Differences Between a Flat Interest Rate and a Reducing Interest Rate CategoryReducing Interest Rate Flat Interest Rate Interest ResponsibilityLower than the interest paid under the flat interest rate system.Higher than the interest rate paid under the reducing interest rate system.The Basis for Calculating InterestBased on the whole sum of unpaid principal.Based on the total amount of principal.Calculation Complexity LevelCompared to a flat interest rate plan, it is harder to compute.It is easy to compute than the diminishing balance system.UtilisationPeople who live in cities favour the reducing balance interest rate plan since the total interest duty is lower than the interest rate due under the flat interest rate system.Farmers like the flat rate interest rate plan because it is easy to compute and grasp. Flat and Reducing Rate of Interest Calculators The following are the flat and reducing rate of interest calculators: Flat Interest Rate Calculators In flat-rate loans, interest is based on the original principal amount throughout the loan term. Formula: Principal (P) Annual Interest Rate (I) – expressed as a percentage Tenure (T) is measured in years (P I T)/100 = Total Interest Total repayment amount = P + (P I T) /100 Monthly EMI = ( P + (P I T)/100) / T*12 (T is in years) Reducing Interest Rate Calculators In reducing balance rate loans, interest is computed on the remaining principal amount at any time. Formula: EMI = [P x Ix (1+I) T]/ [((1+I) T)-1)] Where: P denotes the main amount I is the interest rate / (100×12) T equals the number of years multiplied by 12 Total rate equals monthly EMI multiplied by T – P Total amount equals monthly EMI multiplied by T To use a flat and reducing rate of interest calculator, you can easily enter the required loan data into the calculator and get started. Here are the steps to use the flat and reducing rate of interest calculator: Step 1: On the calculator, enter the principal amount of the loan Step 2: Enter the agreed-upon tenure and interest rate details Step 3: Click ‘calculate’ to find out the sum of interest you will pay on the loan you have taken. [B-02] Conclusion Reduced rates and the ease of calculation associated with flat rates may not be as advantageous as first believed. Experts believe that, although flat rates are straightforward to comprehend, they may not be as accurate when it comes to repaying large loans. As a consequence, before taking out a loan, compare the interest rates for both options using a flat and reducing rate of interest calculator. Based on this, make an educated decision. Be sure to visit Piramal Finance for more information and informative articles.
08-11-2023
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5 Ways to Build a Substantial Retirement Corpus

Planning a life after retirement will help you meet financial needs. It will also give you a peaceful hassle-free life. A proper calculation that you make today to invest in savings for your post-retirement saves your future. This article will give you a deep understanding of the retirement corpus, its calculation, and the best ways to build them. [B-01] What exactly is a retirement corpus? Corpus is defined as the total amount that you invest in a particular scheme. A retirement corpus is an amount that you invest in schemes for your life after retirement. A retirement corpus is part of the planning process for your post-retirement period. Retirement corpus helps you to plan the days when you don’t have a regular income. What is the need for a retirement corpus? No one needs a stressful financial life even during the years when there is a regular income. How much more is it important when there is no regular income? Retirement corpus secures your life in your grey-haired period. Investing in retirement corpus will also save your loved ones. Building a corpus for your post-retirementmakes you live independently even in your post-retirement days. The corpus that you build for this purpose will help you in facing unforeseen situations and medical emergencies. Thiswill also help you in facing inflation when you don’t have a source of regular income. You can also have the advantage of leaving some amount for your generation using your retirement corpus. The amount you save consistently for a long period will also build the habit of pre-planning and saving. 5 ways to build a substantial retirement corpus Start with what you have: The sooner you start building your retirement corpus, the more secure will be your post-retirement life. So start with whatever you have. Don’t wait for the right time. Calculation: When you calculate a retirement corpus, the first stepis to calculate the years after your retirement. Then, you can decide how much money you need to meet your expenses daily. You have to take note of inflation. Systematic Investment Plan (SIP): Systematic Investment Plan is the habit of setting aside and investing some amount consistently regularly. Though your investment is small, SIP will help you have more returns. Saving vs Spending: It is always good to save and then spend. Don’t spend and save the remaining amount. This will help you to contribute more towards your retirement corpus. You will also control your unwanted expenses. Diversify Your Income Sources: Diversifying the income sources is multiplying your income. Many people regret due to insufficient funds only after retirement. To avoid this, you have to diversify your income. This will help you not to regret it too late in life. A substantial portion of the diversified income should be invested in your retirement corpus. How to calculate retirement corpus? Step 1: Calculate the age of retirement and the number of years you have till your retirement. For example: If your current age is 30 and your retirement age is 60, the number of years before retirement is 30 years (60-30 years). Step 2: Life expectancy is the number of yearsa person lives on average. At present, the life expectancy in India is 70 years. But it is subject to change. Step 3: Calculate your expenses for a year after your retirement. Step 4: While calculating your expenses, take note of inflation. Inflation is the general rise in prices. The money value will not be the same when you retire. It is always advised to fix inflation as 6% to 8% when you calculate. Step 5: Now you can calculate the exact figure of your retirement corpus. The formula used to calculate this retirement corpus is FV = PV (1+r)^n Where, FV- Future Value (monthly income needed after retirement-with inflation- INR 30,000) PV- Present Value (monthly income needed now) r – expected inflation (say 6%) n – period till retirement (60-30 = 30 years) So, FV = 30,000 (1+0.06)^30 = INR 1,72,304 per month for 1 year, you have to multiply the answer by 12 (since 1 year= 12 months) Therefore, 1,72,304 X 12= 20,67,648 The annual income you require after retirement is Rs 20,67,648. Besides, you must also consider Life Expectancy= 80 years The period from retirement to the end = 20 years Rate of return on investment = 8% Expected Inflation Rate = 6% Thus, Inflation-adjusted rate of return = (1+0.08)/(1+0.06) – 1 = 1.89%/12 = 0.001575. The monthly savings you need to get the fund is INR 27,680 Where to invest for retirement corpus? You can invest in some of the important government schemes like PPF and EPF. There are many such government schemes for building your retirement corpus. They include the Senior citizen savings scheme (SCSS), Atal Pension Yojana (APY), National Pension System (NPS), etc. You can also choose non-governmental schemes. Public Provident Fund PPF (Public Provident Fund) Scheme is the most secure option for long-term investment and saving in India. The main purpose of the PPF Scheme is to invest a small amount of money and get a return for that. The PPF scheme is guaranteed fully by the Central Government of India.You can start to invest from INR 500 to 1,50,000. This account can be opened only by Indian citizens. Post offices and other participating institutions can be accessed for opening a PPF account.Employees Provident Fund An Employees Provident Fund (EPF) is a saving scheme for building a retirement corpus. Both the employer and employee should contribute 12% every month to the EPF account. The interest return for EPF is higher than the PPF Scheme. The amount will be deducted directly from your salary to the EPF Account.EPF is managed by a statutory body called the Employees’ Provident Fund Organisation (EPFO). EPFO is currently under the Indian Government’s Ministry of Labour and Employment. [B-02] The bottom line We hope that you understood the importance of retirement corpus and the effective ways to build it. Start building your retirement corpus as soon as possible. The financial experts of Piramal Finance will help you decide on the investment. We also make customised calculations on your retirement corpus. Kindly get in touch with us for further doubts. Wishing you a financially independent life after retirement!
08-11-2023
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Swap Derivatives and Types – An Overview

Swaps and Swap Trading A derivatives contract is one of the best expansion and trading documents for investors and traders. A swap derivative is a contract between parties that exchanges cash flows for a set period of time from different financial instruments. The basis for most of the swaps involves notional principal amounts like bonds or loans. [B-01] The instrument in a swap can be anything legal that has financial value. Generally, the principal amount stays with the real owner and does not change hands in the swap contract. Though one of the cash flows might remain unchanged, the other one keeps changing and is based on a benchmark interest rate, a floating currency exchange rate, or an index rate. At the beginning of the contract, one of the series of cash flows is determined by an inconsistent variable, like an interest rate, foreign exchange rate, commodity price, or equity price. Working of Swap Trading Swap trading operates when two parties agree to swap their cash flows or liabilities on two separate financial instruments. The most common of these swaps are interest rate swaps. A swap is not uniform, it doesn’t trade on a stock exchange, and it is uncommon for retail investors to get involved in a swap. The contracts of swaps are dealt over the counter between businesses and financial institutions. The terms and conditions are negotiable and can be customised as per the needs of both parties. There is risk involved in swap contracts, as they occur on a counter market, and one party can default on the payment. Types of Swaps There are uncountable variations in swap agreements. Out of those, some of the most common ones are shared below: Interest Rate Swaps: Interest Rate Swaps are meant to change the fixed interest rate to a floating interest rate for cashflows. In such swaps, one party, X, gives consent to pay a fixed amount to party Y on a notional basis for a predetermined period at fixed intervals. To balance its foreign reserves, China used this swap with Argentina. In addition, the Federal Reserve of the United States used this currency swap to enter into currency swap agreements with European central banks. This currency swap was used by them in the 2010 financial crisis in Europe to balance the euros that had been deteriorating due to the Greek debt crisis. Currency Swaps: Currency swaps refer to those swaps where the two parties interchange principal and interest payments on debt that is denominated in separate currencies agreed upon by both parties. The principle is notional in interest rate swaps, but this is not the case with currency swaps. The principle is not theoretical and is changed along with interest obligations in currency swaps. Currency swaps can also occur between two countries. Here, Party Y gives consent to pay Party X on a floating interest rate with the unchanged notional principle, the same amount of time, and the same intervals. The currency used to pay the cash flows in an interest swap is the same and is also known as a “plain vanilla interest swap.” The agreed payment dates are called settlement dates, and the time in between them is known as the settlement period. Swaps are negotiable and customised contracts, so the payments can be done monthly, quarterly, annually, or as decided by both parties. Total Returns Swap: In these swaps, the complete return from a particular asset is exchanged for a fixed interest rate. Also, the party paying the fixed rate takes on the discovery of the primary asset, whether a stock or an index. For example, considering capital appreciation and earning dividend payments, an investor can pay a predetermined price to a party in return for stocks. Commodity Swaps: These kinds of swaps are used to swap cash flows that are based on a commodity price. With the floating price of commodities, any one party can swap the floating rate for a fixed rate. For instance, the spot price of Brent Crude Oil can be exchanged for a price that is set over a predetermined period by producers. As a result of this, producers can lock in a set price and alleviate losses based on future price fluctuations. Debt-Equity Swaps: In this sort of swap, the equity is exchanged for debt and vice versa. It is a process for financial reorganisation in which one party swaps or alleviates the debts of another party in return for an equity position. For a public trading company, this is swapping bonds for stocks. Debt-equity swaps are a way for a firm to recapitalize its debt and change its capital structure. Credit Default Swap: Credit Default Swaps, or CDS, refer to those swaps involving an agreement by one party that provides insurance to another party if a third party cannot pay on a loan provided by the second party. In this kind of swap, the first party recommends paying the principal amount that is gone and the interest on a loan to the credit default swap buyer, considering that the borrower is unable to pay on their loan. [B-02] Conclusion A swap is a derivative contract between two parties. In this contract, one party will swap the value of cash or an asset with the other. For instance, consider that X company, which is paying variable interest, can exchange its interest payments with Y company. The company Y will then pay a fixed rate to the X company. Other than this, swaps can be used to swap other types of values or risks, such as the potential for a credit default in a bond. From this brief information about swaps, swap derivatives, the workings of swaps, and types of swaps, you must be clear about the topic in detail. If you need more relevant information about swap derivatives or other financial investments, head on over to Piramal Finance. Happy investing!
08-11-2023
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Buying Penny Stocks and Their Risks

It’s no secret that the stock market is known for its uncertainty and risk. For penny stocks, this risk factor peaks tenfold. Penny stocks are shares of small public firms that trade at low prices. These equities are pretty speculative. Generally, new investors make the mistake of investing in them. Hence, these penny stocks can be risky if you plan to buy any. Moreover, these stocks are worth less than a penny due to extremely low demand. [B-01] However, certain circumstances can cause their prices to skyrocket. But that’s a rare phenomenon! So if you’re googling “best penny stocks to buy“, hold on to your horses. In this blog, you will learn all about penny stocks and the risks that come with them. What are Penny Stocks? First things first, penny stocks usually cost less than Rs. 10 in India. These are the stocks of businesses with comparatively small market capitalizations. They are also known as nano or micro-cap stocks. Penny stocks have the potential to rise dramatically and generate significant returns. Moreover, it happens in a relatively short period, ranging from a few weeks to even a few days. This is why some investors find penny stocks alluring. They believe they can purchase a significant number of shares for a relatively low cost. In return, they hope to receive exponential returns if the stocks become multi-baggers. Simply put, these investors anticipate that penny stock businesses will expand quickly. Furthermore, they believe that a turnaround is imminent, which will increase the stock value. Herein lies the problem. Generally, penny stocks fail to produce exponential profits. So what they anticipate is only possible once in a blue moon. Why Should I Not Buy Penny Stocks? Here are six reasons why you should not invest in penny stocks: Penny Stocks are Inexpensive Penny stocks typically quote low prices since they are worth more. Most penny stocks seem appealing due to their low P/E ratio. A lower price-to-earnings ratio is generally a good sign. A low P/E also indicates a lack of investor confidence in the stock. Generally, these penny stock businesses frequently engage in creative accounting. As a result, this causes the profits to be exaggerated. Manipulative Investors Penny stocks are less likely to generate trade activity on the exchanges. Therefore, they’re vulnerable to easy manipulation. As a result, even a small investment can cause the market price of these shares to soar to unimaginable heights. Penny Stocks Typically Move in Lucrative Industries At this point, the game of penny stocks follows a set pattern. At the height of the technology boom, numerous fly-by-night businesses changed their names to resemble IT firms. In addition to generating interest, these companies successfully managed IPOs and private placements at absurd valuations. But, unfortunately, the investors got duped and realised this quite late. In Penny Stocks, Basis Risk is a Significant Concern What exactly do you need to know about basis risk? First, it is the discrepancy between the buy and sale share prices. It is crucial, since it raises costs when you purchase them and lowers your advantage when you try to sell them. You’ll also notice that such stocks are usually found in lower circuits. As a result, trading in and out of these stocks becomes impossible. In return, you lose out on your investments. Volumes May Grow and Disappear in the Blink of an Eye With penny stocks, you might witness this frequently. For example, you can enter a stock while witnessing high volumes. Then, when you establish a position, you might see that purchase orders are being cancelled. So, what causes this to occur? Most of the counter’s buyers and sellers are the same circular traders. When they observe retail purchases at higher levels, they will cancel their purchase orders from lower levels. It implies that the selling/buying order book will now appear lopsided. As a result, it will encourage more selling. This is way more frequent when a small number of dealers control the majority of the volumes. No Records to Investigate Before investing, research is crucial. An investor should evaluate all the factors. It must include the stocks’ fundamentals, technicals, financial data, past news, and management information. However, these penny stock firms are owned by micro-capital limited entities. As a result, there are no insights available to the public. Therefore, buying these stocks might be dangerous due to the need for more research opportunities. Generally speaking, it is challenging to identify penny stocks with solid fundamentals that provide significant returns. To sum up, we think that penny stocks are a precarious investment. Therefore, before choosing to invest in penny stocks, one should perform all necessary research. If you’re seeking our opinion, we advise you to stay far away from penny stocks. All About Penny Stocks: A Quick Recap Let’s review what we’ve discussed today: Penny stocks have extremely low market capitalizations. They trade at extremely low prices. Due to their low price, they frequently attract investors. But they come with high risk and are very vulnerable to market volatility. Investors may find it particularly challenging to purchase or sell their penny stocks. It is due to their limited liquidity and low trading volume. Price manipulations are a common phenomenon with penny stocks. [B-02] Final Words We think there are better uses for your hard-earned money than investing in penny stocks. These stocks are unlikely to fetch you any profit. Instead of these penny stocks, you would be better off buying high-quality stocks that can be well-invested. If you are still interested in investing in penny stocks and are searching for penny stocks to buy, check out the Piramal Finance website right away.
08-11-2023
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Electronics

Laptops – Buy Latest Laptop on EMI at Best Prices in India

Laptops are of great significance in the 21st century. Be it work, study, play, or meetings, laptops make everything accessible and convenient. They can be called one of the greatest inventions of the modern era. Besides the diversity of services they provide, laptops minimise our efforts to a large extent. With ongoing advancements in tech products, laptops have reached a different level of diligence and lifespan. However, purchasing the latest laptop is expensive, especially with rising laptop prices. Buying a new laptop with a good display, decent battery backup, high storage capacity, and good build quality can be expensive. But with an EMI option, you can afford the latest laptop price and at the same time pay off the amount with ease. This article solely focuses on the latest laptops that you should buy. This article includes the six best laptops, the latest laptop prices, and the best EMI option available. [B-01] What are some of the best and latest laptops on the market? Here is a list of some of the best laptops you should consider putting on your wish list. The details also include the latest laptop price. HP-15S 12th-GEN The HP 15S is one of the best options in today’s market because of its exclusive features and effortless functions. The latest laptop price of this product on Amazon is around INR 59,000, which comes with a no-cost EMI. The EMI starts at INR 2,821 and varies from bank to bank. The build quality is good. It has 8 GB of RAM and 512 GB of storage space. The laptop has a 15.6-inch FHD (full high definition), anti-glare, and micro-edge display. MI Notebook Ultra MI Notebook Ultra is also a very good option in the latest laptop price list for 2022 because of its unique build, design quality, and effortless performance. The latest price of this product on Amazon is INR 64,000 with no-cost EMI. The EMI on this product starts at INR 3,058 and varies according to the tenure and credit limit you desire. The laptop comes with both 8 GB and 16 GB of RAM and Iris Xe graphics. It is updated with the latest versions of Windows 11 Home and MS Office 21. It also has a fingerprint sensor and a weight of about 1.7 kg. Dell Inspiron 3515 This latest laptop makes this list because of its performance and build quality. The latest laptop price of this product on Amazon is around INR 43,000 with no-cost EMI. The EMI starts at INR 2,054 and varies according to the lenders. The build quality is good, and it comes with 8 GB of RAM and a storage capacity of 512 GB. It has a 15.6-inch screen with FHD, Vega graphics, and an anti-glare feature. It is also updated with the latest versions of Windows 11 and MS Office 21 and weighs about 1.8 kg. HP 245 G8 AMD Ryzen 5 HP 245 G8 AMD Ryzen 5 has an overall rating of about 9.3/10 and is 4th on the latest laptop price list. The HP 245 G8 AMD Ryzen 5 has good performance, and the laptop is very lightweight (weighs about 1.52 kg). The price on Amazon is around INR 43,000 with a no-cost EMI option. The EMI on this laptop starts at INR 2,054 and varies according to the bank limit and the repayment period. This laptop has a 14-inch screen with Radeon Vega 8 graphics and no optical disc drive. It has 8 GB of RAM and a 1 TB internal hard drive. It has Windows 10 and comes in a dark ash silver colour. Lenovo IdeaPad Gaming 3 Lenovo IdeaPad Gaming 3 is the 5th best latest laptop in the whole latest laptop price list and has an overall rating of 9.1/10. It is an ideal pick for gaming. The price of this product on Amazon is INR 58,000 with a no-cost EMI option. The EMI starts at INR 2,758 and varies according to the bank. It has a decent screen size of about 15.6 inches and an FHD display. It has 8 GB of RAM and 512 GB of internal storage. It also has an updated version of Windows 11. You will also get a gaming pass for three months after purchasing this laptop, which is ideal for dedicated gamers. HP 14S AMD Ryzen HP 14S AMD Ryzen is the 6th best laptop on the latest laptop list and has an overall rating of around 8.7/10. It is also a good choice for dedicated gamers. The price of this product on Amazon is INR 48,333, and it comes with a no-cost EMI option. The EMI starts at INR 2,309 and varies from one bank to another. It has a 14-inch screen with a micro-edge, an FHD display, and Radeon graphics. The laptop comes with 8 GB of RAM and 512 GB of internal storage. The laptop has Windows 11 updated and the new Alexa feature. This product weighs only 1.46 kg. There are many other options, like the HP 14 Ryzen, Fujitsu CH Core i5, and Dell New Vostro 3510, which have high ratings and good performance. But the latest laptops given in this list are the best for those who regularly use a laptop for work, gaming, or other chores. These six options are among the most sought-after laptops on the market. [B-02] Conclusion Different laptops have different and distinguished features, but for most people, the purchase is determined by the latest laptop price. Sometimes paying the total amount all at once is not possible, but EMI options can help. We have compared the latest laptops available on the market and provided the best options. If you enjoy reading articles on the latest technology, you should visit Piramal Finance to learn more.
08-11-2023
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Investment

Top Benefits of Investing in SIPs

When investing in a mutual fund, you can choose between two types of investments: a) Investing all your money in one go b) Investing smaller amounts over a longer period. The latter is also known as Systematic Investment Plans or SIP plans. Both approaches have advantages and disadvantages. This information can be valuable, especially for a new investor. People like to invest in mutual funds on a regular and consistent basis. However, a few key considerations need to be kept in mind. The following sections will also examine a few primary advantages of SIP investment. [B-01] SIP Investment Benefits Most people who invest in SIP make their investments every month on a specified date. It is important to remember the NAV (Net Asset Value) of units. In a mutual fund, these units fluctuate daily. As a result, the number of units you purchase through a SIP transaction will also fluctuate daily. In the following section, we’ll discuss the advantages of SIP investment, all of which are made possible by the feature mentioned above. 1. Rupee Cost Averaging “Rupee cost averaging” refers to a type of investing practice. Here, more fund units are purchased when the fund’s Net Asset Value (NAV) is low. Also, fewer units are purchased when the NAV of the fund is high. Investors can better protect their wealth because the cost of buying units in a mutual fund is spread out in the SIP. When you invest in SIP, you don’t need to worry about the right time to enter or exit the market. 2. Unique Power of Compounding The term ‘compounding’ refers to the process by which the gains from your investments earn additional gains. When you regularly invest in SIP, you can reinvest any profits you make. This has a snowball effect. In the future, gains will be even greater than before. You can maximise the return on your investments by committing them to various financial vehicles for an extended period. This is the other advantage of SIP investment. It enables you to start investing at a younger age. 3. Controlling Your SIP Investment Amount You can invest in mutual funds with as little as Rs. 500 per month. This type of investment is preferable to a lump sum. Implementing this strategy for investing money each month won’t put undue stress on your finances. Since the SIP investment includes a ‘step-up’ feature, it allows you to put away more money every month. You can invest your money in as many SIPs or mutual funds as you see fit. The SIP investment strategy can help people get closer to their financial goals more quickly. 4. Make Your SIP Investment Work One of the numerous advantages of a SIP is that it is simple to configure. This is only one of its many advantages. Money is put aside consistently via a SIP investment. You don’t have to worry too much about timing the market or doing much research. Choose a solid fund and instruct your financial institution to deduct the monthly SIP amount. This is done from your account automatically. You can ensure that you will never pass up an opportunity to put your money to work. This is a great way to make your money work for you. 5. Financial self-control The objective of a SIP plan is to invest a predetermined sum of money at regular intervals. Typically, once a month in a mutual fund of your choice. This accomplishes two goals for you: a) First, it gets you into the habit of saving money. b) Secondly, it puts you in a good position to make your money grow over time. Also, keeping it in a market-linked investment might beat inflation. Both of these goals are important for your financial future. You won’t find many other investments that can provide this. You will receive returns greater than the inflation rate. This is the best part of SIP Investments as mutual funds. This is something you can’t get with a lot of other investments. 6. Returns on SIP investments You can choose the period during which you want to invest. This is another advantage of SIP investment. Before purchasing mutual funds, you might be required to make at least six payments to your SIP. On the other hand, there are no time constraints placed on investors. This is a great advantage of consistent payments to a fund. You can reuse your profits for another SIP investment. If you have multiple SIP investments going at the same time, you will have greater returns. Most people have two to three SIP plans running at the same time. This allows them to have multiple small investments with large returns after a few years. An Important Reminder Some organisations portray SIP investments as safe investment plans. This eliminates market risk by delivering above-average returns. Please remember that SIP investments are not risk-free from market volatility. It is something you need to keep in mind at all times. As stated earlier, an SIP is a method of making gradual mutual fund investments. If you acquire units when the market is falling, the value of those units will decrease if the market continues to fall. This is the main premise behind this strategy. [B-02] Final Thoughts Investing in a systematic investment plan (SIP) is an effective strategy. This is great for achieving your long-term financial objectives. You will also be generating returns superior to the inflation rate. This is due to the various advantages that SIP investment has. When selecting a plan for a mutual fund, you should also contact financial experts who can guide you professionally to better gains. To read related blogs, head to the Piramal Finance website right away.
08-11-2023
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Gold Loan

How to Get the Lowest Interest on Gold Loan in India?

Thanks to technological and financial advancements. Because of them, loans are much simpler to get these days than they were a few years ago. Many of us need to take out student loans to finish college. And those loans can be difficult to manage after we start earning money. Also, for many of us, buying a house is a desire. It’s a large commitment, yet most of us can’t afford to do it without a loan. [B-01] Automobile fanatics are willing to take out a loan to finance a vehicle they can’t afford. Gold loans are quick alternatives to personal loans. They have shorter repayment terms and higher interest rates. As we begin making payments on the gold loan, we realize that our interest rate is too high. Hence, the high-interest results in a significant increase in our monthly outlay. In this post, we’ll look at seven ways to get the lowest gold loan interest rate in India. How to Get the Lowest Gold Loan Interest Rate in India? Set-Up Auto Pay for Your Gold Loan If you don’t make your EMI or other payment on time, you’ll have more debt and possibly have to pay late fees. Borrowers may be in serious financial trouble as interest and fees increase. You must make all payments on time to avoid late fees and interest charges. Not paying your bills on time can also harm your credit rating. By signing up for a debit mandate, you can rest assured that your EMI payments will be processed on time, every time. Also, the EMI can be paid in advance from the linked bank account using a debit mandate. Reduce the Duration of the Gold Loan Many debtors mistakenly believe they cannot negotiate their loan terms. But, if you have a solid credit history, you may be able to negotiate better conditions with your lender. If you can, reduce your loan term and increase your monthly payments to reduce your debt more quickly. Additionally, the interest you pay will be less if you have a shorter loan term. It is better to shorten the loan term and pay higher EMIs. This is especially better if your income has increased since you first took out the loan. Although the shorter loan term may sound appealing, it will result in higher EMIs. Suppose you cannot make your EMI payments on time due to various factors. In that case, you will be subject to late fees and negative marks on your credit report. As a result, loan terms should be selected and adjusted with care. Make Partial Payments You will save a lot of money if you can pay your loan in full or even in part. For example, suppose you receive extra money, either as a bonus or some other unexpected source of income. In that case, it’s better to put that money toward paying down your loan. Yet, before making any prepayments, you should confirm the fees with your lender. That’s because some impose fees after a specific amount or number of partial payments. On the other hand, others do not. When it comes to loans, lenders can waive fees for certain things. For example, making a down payment of a specific amount on loans with a variable interest rate. Opt for a Gold Loan Transfer When deciding on a lender, compare their: Interest rates Other fees Maximum loan amount Eligibility requirements, terms and conditions, and more to find the best option for you. Due to intense market competition, lenders continue to offer competitive interest rates and other fees. When deciding whether or not to accept a loan transfer offer from a new lender, it is important to weigh the pros and cons and determine how much money you can expect to save after factoring in the old and new interest rates, the remaining loan balance, any fees associated with the transfer or prepayment, etc. If you can save a lot of money by switching to a new loan, you should do so instead of keeping the expensive one. Considering the size of a typical mortgage, the interest savings from transferring your balance could be large. Consolidate Your Gold Loan To consolidate debt, one obtains a new loan to pay off existing debts, typically at a reduced interest rate. The result is a lighter financial load and better debt management. A debt consolidation loan is a form of debt refinancing. As a result, you can get a better interest rate, repayment period, and other terms by taking out a new loan to pay off all your other loans. The interest you pay over the life of the loan will go down if you consolidate your debt. A secured debt consolidation loan makes sense because its interest rate is lower than that of an unsecured debt consolidation loan. Develop Good and Loyal Relations with the Bank Some of the best banks in the country provide discounted rates to their most loyal and long-standing customers. But you can’t take advantage of their deals if you don’t have a checking or savings account with them. Therefore, we suggest you start banking with a major financial institution that provides such perks. You should save money, but don’t open too many separate savings accounts, or you’ll have difficulty keeping track of everything. Invoke Interest Deductions The interest paid on certain loans, including mortgages and student loans, can be deducted from your taxable income. Tax credits are a great way to reduce your taxable income. Consequently, don’t forget to factor in any mortgage or tuition deductions while calculating your tax refund. [B-02] Conclusion Increased market competitiveness has resulted in many enticing interest rate proposals from banks. And that’s true even if your credit is only mediocre. Shopping around online and finding the best deal possible is important when looking for a loan. This includes comparing interest rates, processing costs, prepayment and partial payment fees, fees for late payments, and other loan terms. It’s in your best interest to maintain doing your homework even after you’ve gotten the loan so you may be well-informed and reap the benefits of any better deal that may come along. Did you find this guide useful? Visit Piramal Finance’s blog for more valuable content!
08-11-2023
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Personal Loan

Own Your Favourite Ride With A Two Wheeler Loan

Bike riding is a wonderful experience, particularly for youngsters. Choosing the correct two-wheeler will allow you to navigate congested roads to work, and going on a trip with friends without any worries. A new two-wheeler may easily go on for more than 1 lakh kilometres. But if you want a good bike, you may apply for a bike loan. Knowing your eligibility for a bike loan is crucial because it can help you comprehend the subsequent steps involved in determining an applicant’s eligibility for a bike loan. This step-by-step guide will help you find the best two-wheeler loan and clear any questions or doubts. [B-01] What is a two-wheeler loan? A loan for a two-wheeler is offered to people so they may buy the two-wheeler of their dreams and pay in EMIs. Purchasing a bike on an EMI won’t affect your savings as you must pay the amount every month over up to 84 months. Two-wheeler loans are secured loans and have lower interest rates. If you select a loan with no down payment, then you need not make any payment to the lender at the time of loan disbursal. Eligibility for a two-wheeler loan Here are some requirements that must be met to qualify for a two-wheeler loan in India: For working professionals, the age range while applying for a two-wheeler loan should be between 21 and 60 years old. Self-employed people should be between the ages of 21 and 65. The monthly income for self-employed individuals must be at least Rs. 6,000. For salaried employees, it should be at least Rs. 7,000. Your business or home must have a landline phone connection, and your address must be the same for at least a year. For a two-wheeler loan, you may only get up to Rs 10 lakhs in funding. The two-wheeler loan can be repaid in a maximum of 84 months or seven years. Your eligibility for a bike loan is affected by the city in which you reside. Your chances of securing the loan might increase if you reside in a major city. Interest Rates Financial institutions determine bike loan interest rates after considering your financial situation and history. However, the credit score has a significant impact on the interest rate. A poor credit history would result in a higher interest rate, and vice versa. The interest rate charged on a two-wheeler loan typically ranges from 9.5 to 17.75%. Although there is no set credit score requirement for a bike loan, it is recommended to have a score between 700 and 750 because banks and NBFCs view this range as optimal. Advantages of a two-wheeler loan There are several benefits of applying for a loan to purchase the bike you’ve always wanted. Some of the benefits are as follows: – A high income is not required to qualify for a two-wheeler loan. Additionally, it’s not required to fall into the tax bracket. You can apply for a two-wheeler loan even if your yearly salary is INR 96,000. You can get the money you need to purchase the bike of your choice. You may get a loan to purchase superbikes as well. It is ideal for young people to get a two-wheeler loan and repay it on time to create a good credit history. Bike loans are available at low-interest rates as compared to other unsecured loans. You will make monthly payments in the form of EMIs against the loan. Hence, you’ll save your money for other expenses. Things to consider for a Two-Wheeler Loan You should evaluate your requirements and determine the precise amount of money required to purchase the desired bike. Never apply for more money than you require. You can acquire a co-applicant or guarantor if your credit score is below what the lender requires. It may be easier to receive the loan you need if you have a co-applicant or guarantor with strong credit. As you submit your loan application, submit all the papers that the lender requires. Your application might be denied if the required papers are not submitted. Sometimes lenders also provide extra perks like zero processing fee, a free gold coin during the festive season, free insurance, etc. Find out the fees involved if you ever want to prepay or foreclose on your two-wheeler loan. A shorter term will aid in loan repayment. Your EMIs, however, will be high. Decide how much you can afford to pay down each month without stressing your finances. Your debt-to-income ratio helps you learn more about your present debts and income. Your chances of securing a loan are greater if this ratio is lower. Lenders will realize that you might not accept the loan they provide if you apply for many loans at once. They can turn down your application as a result. So, do not apply with several lenders at once. Documents required The following papers must be provided to assess eligibility and start the loan application process: KYC Proof – Voter ID, passport, driver’s license, and PAN card Income proof – Salary slip, IT returns, and bank statements Address proof – Voter ID, passport, driver’s license, and PAN card Signed and completed loan application Passport size photographs [B-02] Conclusion A two-wheeler vehicle loan has several advantages, allowing you to take advantage of various deals while owning a bike. You may get your ideal bike easily, thanks to the hassle-free lending process. The criteria for two-wheeler loans rely on a variety of factors. Piramal Finance is your company if you want a speedy two-wheeler loan with less paperwork. Start the journey to your dream bikes with Piramal Finance now.
08-11-2023
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What Are ESG Funds? : All You Need To Know About It

Many people invest in mutual funds to expand their wealth. There are many types of mutual funds that you can invest in. When you select a mutual fund, many factors need to be considered. These include historical returns, profits, industry, transparency, etc. But recently, a new mutual fund has become popular among investors. It is known as the sustainable approach. As a result, ESG mutual funds came into being. Though a recent entry into the world of mutual funds, ESG funds have become popular. The number of fund houses starting ESG mutual funds is growing every year. Experts predict ESG funds to become among the most popular mutual fund types in the future. But what are ESG mutual funds? Should you invest in them? Read on to learn more. [B-01] What are ESG Funds? ESG funds are a type of mutual fund where the fund managers select shares based on environment, social, and governance-related parameters. It is a form of sustainable investing. Herein, the fund managers invest in entities that have a holistic and environment-friendly way of working. Environment: The fund managers consider the factors that affect nature. These companies focus on having a lower carbon footprint, using solar power, and saving water. They want to work for a greener future. Social: This aspect focuses on the efforts to ensure the well-being of people. Such companies invest in social causes and ensure gender equality, worker welfare, and other such issues. Governance: Here, the focus of the fund managers is on the work style of a company. The factors taken into account include ethical conduct, strong policies, transparent working, and several others. ESG Funds and Investors Since ESG is now a type of mutual fund, it has attracted the attention of investors. Now many people value companies’ nature-friendly conduct of companies as these steps have a direct impact on their results. Hence, you must also evaluate these aspects when you decide to invest your money. ESG mutual funds are also known as theme-based mutual funds. They invest in socially responsible companies. The investment process focuses on entities that aim to ensure nature-friendly workings. These entities boast of business models that can meet the guidelines of sustainable working and help investors create long-term wealth. These funds can invest across a range of market caps and also with overseas companies that meet the given ESG rules. What is an ESG Score? ESG score is a vital metric that can help you decide if a company is an ESG fit. If it is, then what is its compliance level? Many entities that do market research in the equity and mutual fund industry decide the ESG score based on their practices. Such scores are not fixed and change based on the ESG steps taken by a company. While an ESG score is not mandatory, it is crucial for a company that claims to care for the environment. Every research team gives an ESG score based on its workings, thus, scores can vary. When it comes to ESG funds, the steps taken by the research team to decide on a score are not your concern. But you must use an ESG score to look for ESG mutual funds that have a high rating and are more likely to be ESG compliant. Challenges to ESG Investing If you want to invest in ESG funds, you must know about many aspects that can affect the returns you can get. Read on for details on issues you must focus on when it comes to ESG mutual funds: Lack of Data: ESG funds are relatively new in the market. As a result, data on these funds are not easily available. You must look at the reports shared by such entities and their ESG performance. While it will cost you time and money, make sure to perform due diligence before deciding to invest. Lack of Clarity: There is no method to know if an entity has a high ESG score. There are no norms to decide if a mutual fund or a share meets the ESG guidelines. Hence, you may never be sure about a share being an ESG fit. Fudging: There is always a chance that a company can tamper with the results to show a high ESG score. As a result, you will need an experienced fund manager to research and find out the facts. No Track Record: Since ESG is a new concept, the track record of many ESG mutual funds may not be available in the market. Hence, you will need to base your investment decisions on the data that you can access. [B-02] Summing Up If you are someone who wants to invest in ESG funds, ensure that you gather all data related to such funds. Conduct your research and then decide to invest in ESG mutual funds. If you need any other data or guidelines on ESG funds, visit Piramal Finance. They have many blogs and articles on a range of topics that will improve your financial skills. You will then be able to make decisions based on data and not on hunches.
08-11-2023
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