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Get Detailed Information About SIP Mutual Funds

SIP, or a systemic investment plan, is a tool that allows investors to invest at regular intervals of time using fixed amounts. SIP mutual funds allow the investor to sit back and not worry about timing the market. This allows for easy investing without any hassle. You can give your bank standing instructions to debit the required amount every month. It is suitable for anyone who does not want to start their investments with a large amount of money. SIP plans are becoming more popular in the Indian mutual fund market as they allow the investor to invest in a disciplined manner without having to worry about the ups and downs of the market. SIP investments are the best way to enter the world of mutual funds. [B-01] When and how do I start a SIP plan? SIP mutual funds allow the investor to start investing efficiently in a time-based manner. You can invest a set amount at predetermined intervals in a mutual fund scheme. The initial money invested can be as low as Rs. 500, and the pre-defined SIP intervals can be weekly, monthly, quarterly, semi-annually, or even on an annual basis. Some SIP plans even allow investments as low as Rs. 100. SIP mutual funds can provide long-term benefits due to average costs and the power of compounding. You can start a SIP online directly through an AMC. You can also do it offline, through a mutual fund distributor or agent. Benefits of SIP Investments There are many benefits to investing in SIP plans. This allows it to be one of the most preferred forms of mutual fund investment. Compounding Benefits over a long period tend to get better with the power of compounding. Compounding works by reinvesting your profit over a long period, thus accelerating the profit-earning process. To fully benefit from the power of compounding, you should begin investing as soon as possible. You would also have to stay in the SIP mutual fund scheme for as long as you can. You can easily calculate compound returns through your SIP plan with the help of various easy-to-use SIP calculators available online. Starting early This goes hand in hand with the power of compounding. Once you start early and invest regularly, it will be easier for you to achieve your goals. It makes a big difference. It isn’t about how much money you start with. Having a small amount of money to begin your SIP plan with will go a long way if you stay invested for a long time. Does not require a huge initial investment SIP plans allow you to start investing with very little initial capital—as little as Rs. 500 every month. This is great if you don’t want to start investing a lot of money or if you do not have enough resources. This also allows you to grow your SIP investments at your convenience. You can add more to your SIP earnings as you grow financially. This is done with a top-up SIP or a step-up SIP. Invest at your convenience With SIP investments, you can choose your initial amount, starting with as little as Rs. 500. You can also select your SIP date. If you are a salaried individual, choosing a SIP date at the end of the month makes sense. This is because you will have enough money in your bank account for the SIP deduction. This also prevents the bouncing of your SIP instalment. Some mutual fund houses allow you to vary your SIP contribution by using smart SIPs. This is based on the movement of some pre-criteria such as the index level, the P/E ratio, etc. SIPs leave a sense of financial discipline with investors in the long run. Returns Fund managers are experts who manage your SIP mutual funds. They collaborate with their team or market research analysts to develop schemes that maximise your returns. Professional management can help you earn a lot more in the long run. Also, you can avail of tax benefits only on SIP investments in Equity Linked Saving Schemes (ELSS). Every year, you can get a tax deduction of Rs. 1.5 lakh on ELSS. Disciplined savings SIP plans require you to make regular investments. This may be monthly or annually. This ensures that you have a habit of saving money. It also means that you can make your money grow over time by staying invested in market-linked investments that have the potential to beat inflation. This ability of mutual funds to help you generate inflation-beating returns is not a characteristic of many other mutual funds. Key Points SIP investment is one of the best forms of mutual investment, but it has to be done regularly over a long period. Under Section 80C of the Income Tax Act, investments made through ELSS are eligible for a tax deduction. You can save tax every year by investing in a SIP plan. You can even make your portfolio more diverse by investing in SIPs in two or more funds. You can hold on to great compounding benefits by holding your SIPs for a long interval of time. Start investing as early as you can to reach your goals. [B-02] In conclusion SIP investments are not free of market risks. They are only a tool that helps you invest steadily in mutual funds. However, when compared to other mutual fund schemes, SIP funds provide better returns and are more user-friendly. For more information about SIP funds, connect with finance houses such as Piramal Finance.

08-11-2023

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Things To Know Before You Go For A Mutual Fund SWP

One of the main reasons to invest your money is to get stable monthly returns. Mutual funds are a popular saving scheme, and many people invest in them. Some people like to keep their money for longer periods in mutual funds as they want to create a corpus. The goal could be to create a second source of income while you work or to create a stable source of income after you retire. In any case, having a second source of income can be very useful. If you invest money in mutual funds, you can set up an SWP plan to get a monthly fixed sum for your needs. Read on to learn more about SWP in mutual fund and how to use it for your benefit. [B-01] Mutual Fund SWP A Systematic Withdrawal Plan (SWP) is a method used by investors to get a certain sum of money every month from their investment. It is the exact opposite of a Systematic Investment Plan (SIP), wherein you invest a fixed sum every month in a mutual fund. With an SWP plan, you can define the money you want every month. This amount will be sent to your bank account every month on a fixed date, and you can use this money for any of your needs. SWP in mutual fund is one of the options to book profit that you are making. While you can set any amount as SWP, it is better to set an amount lower than the returns you are making. Most experts agree that your SWP should not be more than 10% of your annual investment. For instance, if you invest Rs 18 lakhs every year, you can set your SWP plan to Rs. 15,000 per month or Rs. 1.80 lakhs per year. You can opt for the amount and frequency of your SWP in mutual fund. Crucial Aspects of SWP in Mutual Fund You must make an informed choice if you want to set an SWP plan for your mutual fund. Here are some critical aspects of SWP that you must know about: Type of fund: If you want to start SWP in mutual fund, you should choose a suitable mutual fund type. You can opt for debt, equity, or hybrid mutual funds. However, it is better to opt between hybrid or equity funds. These two fund types offer better returns than debt funds. If you want to keep your original money safe and want only to draw from your profits, debt funds will not cut it. They offer lower returns, and if you set your SWP plan at a higher amount than what you are making, you will erode your capital. Hence always opt for a fund that offers high returns to set your SWP. Flexibility: SWP Plan will offer you a lot of freedom to select an amount that meets your needs. With SWP in mutual fund, there is no guarantee that you will get a fixed return on your investment. But you can surely define the amount you want to draw monthly from the mutual fund. This allows you to get a certain amount every month. But if your mutual fund is not making enough money, you can always decide to stop the SWP. This flexibility is helpful in certain situations to match your needs with reality. Make sure you do not withdraw too much, as it can affect your future finances. How much to draw: This is your choice. With your SWP plan, You can take out as much money as you want until the total money you have invested in the fund. But if you start drawing too much, your original investment will reduce. Hence, the chances for your money to grow will also reduce. Thus, you need to know how much you can get every month without affecting your financial goals. Most experts agree that you should not draw more than 10% of your total investment in one year. For instance, if you invest Rs. 2.40 lakhs in a year, you must not draw more than Rs. 24,000 that year. How to apply: Applying for SWP in mutual fund is very easy. You can set this option when you start a new mutual fund scheme. You can also start this option on an existing account. You need to access your mutual fund through internet banking or through your AMC. You will need to fill up an SWP form where you must give all the vital details. You must also list the amount you need to draw and submit the form. The AMC or registrar will process it and you will start getting the money in your account. [B-02] Investment in mutual funds is a good option. With SWP in mutual fund, you can create a stable source of income over a period. However, it would help if you learned about an SWP plan before making a decision. Visit the Piramal Finance website for more such informative articles and financial products.

08-11-2023

Mutual Funds

Different Types of Mutual Funds and Its Benefits

In recent years, awareness about mutual funds and the equity market has increased. There has been a transition in investor behavior. Initially, investors sought traditional low-risk but moderate-return investment instruments. They are now open to investing in solutions that provide new, moderate or high-risk, and good returns. [B-01] What are mutual funds, and how do they work? Mutual funds are investment programmes funded by shareholders that trade in diversified holdings and are professionally managed. Mutual funds are defined as pools of money collected from investors. These pools of money are used to invest in different stocks, bonds, and other securities. These investments are managed by professionals or expert investors in the field, known as fund managers. When investing in a mutual fund, you have to weigh your options. Different mutual funds are available with varying objectives, risk factors, credibility, and rates of return. It all depends on your investment goal, and fund selection is subjective. Once you have selected a mutual fund that you want to invest in, you can invest in it by filling out the relevant forms online or offline. Once you have done that, you can transfer whatever amount you are willing to invest. Your investment amount will be pooled with that of the other investors. This fund is accumulated by all the investors and managed by the fund manager. The fund manager invests the money in different stocks, bonds, etc. The fund manager does this after carefully observing, studying, and analysing the market. You can apply for redemption when you are ready to redeem your amount. The redemption can be done online or offline, and the amount will be deposited in your bank account. What are the types of mutual funds and their benefits? Mutual funds are classified based on four factors. Investment objectives: Why are you investing in the fund? The goal of the investment determines the type of fund. Investment period: Is it a long-term or short-term fund? You can invest for a few days or even a few decades. Returns: The returns from the fund often depend on the risk you are willing to take. Benchmark: Some mutual funds invest in companies with a certain valuation. This is called a benchmark. Various other factors determine mutual fund returns and payouts. All these factors are determined by the Security Exchange Board of India (SEBI). SEBI and the National Institute of Securities Markets (NISM) regulate mutual funds. Based on the factors mentioned above, there are different types of mutual funds. However, they are mainly classified into four categories. Equity mutual funds These types of funds are mainly invested in equity or stocks. These are further classified based on the size of the company they invest in (small/medium/large-cap funds), or they can be classified based on the objective or strategy (income-oriented, aggressive, value, etc.) Usually, it is a blend of both. Equity funds are of the following types: Large Cap: These firms invest 80% of their funds in stocks of firms ranked 1–100 by their market capitalization, also known as “large-cap stocks.” Mid Cap: These firms invest 65% of their funds in stocks of firms ranked 101 to 250 by their market capitalization, also known as mid-cap stocks. Small Cap: These firms invest 65% of their funds in stocks of firms ranked above 250 by their market capitalization, also known as mid-cap stocks. Bonds Also referred to as fixed-income funds, these mutual funds invest in bonds or debt instruments. The interest on these investments becomes the return for the mutual funds. These bonds are subject to interest rate risks. Index funds These are mutual funds that invest in stocks that are part of a market index. For example, Nifty50. depends on the performance of the share prices of the top 50 companies on the NSE. As the name suggests, it largely depends on the volatility of the market index. These funds are usually in higher demand as they require lower management fees from investors and there is less research for analysts to do. Hybrid or balanced funds As the name suggests, these funds invest in a mixed bag of stocks, bonds, shares, money market instruments, etc. These funds reduce the risk by investing in different options. Hybrid funds have a few subcategories: Equity-oriented: These funds invest 65% of their funds in equity and the rest in debt instruments. Debt-oriented: These funds invest 60% of the funds in debt instruments and the rest in equity. Arbitrage funds: They mostly invest in stocks. They profit from the differences in buying and selling a company’s stock at the same time. Solution-oriented: These funds are tailored to certain objectives. These are the funds planned for specific life goals, such as retirement. What are the benefits of investing in mutual funds? Managed by Professionals: The funds are managed by experts in their fields, backed by research analysts who carefully monitor the markets. Diversification: When you invest in stocks directly, you are at a greater risk. When you invest in mutual funds, they are diversified. Therefore, you are putting your eggs in different baskets. Liquidity: Even though mutual funds have lock-in periods, they are liquid. You can buy or sell units at NAV. Tax benefits: If you invest in ELSS funds, you can qualify for tax benefits under Section 80C of the 1961 IT Act. Risk factor: You can choose funds as per your comfort level with risk. If you are willing to take a higher risk with your investments, you can invest in high-risk funds. Objectives: You can choose funds according to your objectives. Therefore, you can plan your retirement or your child’s marriage and invest accordingly. Variety: There are many options to choose from. You can find mutual funds based on your risk appetite, investment amount, goal, and many other selection factors simply because there is a lot of variety. [B-02] Conclusion As you can see, investing in mutual funds is beneficial for various reasons. It is profitable not just in the short run but also in the long run. You do not have to do research because the analysis is performed by experts. All you have to do is be sure of the objectives and funds you choose. If you want to read more interesting articles about personal finance and investment, you can visit Piramal Finance.

08-11-2023

Business Loan

Things You Should Know About Secured And Unsecured Business Loans In 2022

If you’re a business owner, you may be considering taking out a loan to help with expenses. But how do you know if you should choose a secured business loan or an unsecured business loan? Both types of loans have their pros and cons. A secured business loan may have a lower interest rate, but it also puts your assets at risk. On the contrary, an unsecured business loan doesn’t need collateral. But the interest rate may be higher. Before you decide which type of loan is right for your business, you must know the difference between secured and unsecured loans. [B-01] Secured business loan A secured business loan is a loan that needs collateral. If the business cannot repay the loan, the lender can seize the collateral to recoup the losses. The most common types of collateral used to secure a business loan are real estate, equipment, inventory, and accounts receivable. Secured loans are generally easier to obtain than unsecured loans, but they also carry more risk for the borrower. When you avail yourself of a secured business loan, the bank or financial institution providing the loan will keep the ownership deed to the asset. You will get the deed back only once you pay the debt in full. Main features of secured business loans Fixed Rate: The interest rate of a secured business loan is fixed and cannot be changed. This provides businesses with certainty in budgeting and financial planning. Collateral Requirement: Secured loans need collateral to back up the loan. This provides the lender with greater security in case the business is unable to repay the loan. Lower Interest Rates: Secured loans have lower interest rates. This makes them more affordable for the borrower. Longer Repayment Terms: Secured loans often have longer repayment terms than unsecured loans. Higher Loan Amounts: Secured loans can offer higher loan amounts than unsecured loans. This allows businesses to access more funding for their projects and investments. Benefits of a secured business loan Lower interest rates: Secured business loans offer lower interest rates than unsecured loans. This is due to the reduced risk for the lender. Flexible repayment terms: With a secured loan, borrowers can choose from a variety of repayment plans to fit their budget and cash flow. Easier to obtain: Secured loans are easier to obtain than unsecured loans because the lender has a guarantee of repayment. Higher loan amounts: Secured loans typically offer higher loan amounts than unsecured loans. This can be beneficial for funding larger projects. Lower risk: Since the loan is secured by collateral, lenders will usually take on less risk when approving a loan. This can lead to more favourable rates and terms. Improved credit score: Secured loans can help borrowers improve their credit scores. But they have to show responsible repayment behaviour. Unsecured business loan An unsecured business loan does not require the borrower to put up any collateral. This type of loan is often more expensive than a secured loan. Because the lender is taking on more risk, it can be a good option for businesses that do not have any collateral to offer. This type of business loan is mostly based on factors such as your income, credit score, and financial records. It is also one of the main loans that start-ups tend to use to establish their new firm. Main features of unsecured business loans The quick and easy application processThe application process is usually straightforward. Fast approval and fundingUnsecured business loans can be funded quickly. This allows businesses to secure the funds they need for their operations. Flexible Repayment OptionsUnsecured business loans have flexible repayment options. They can be tailored to meet a business’s needs. No collateral is required.Unsecured business loans do not need any collateral. This makes them ideal for businesses that do not have any valuable assets to offer as security. Access to Working CapitalUnsecured business loans provide businesses with access to working capital. It can be used for a variety of business operations. Benefits of an unsecured business loan Fast and easy approvalUnsecured business loans need less paperwork. They have shorter processing times than secured loans. This makes them an excellent option for businesses that need quick cash. No requirement for collateral.Unsecured business loans do not require any collateral. This makes them accessible to businesses without any significant assets to secure a loan. Flexibility in UseAn unsecured business loan provides businesses with more flexibility in how they can use the funds. This is different from secured loans, which often require businesses to use the funds for a specific purpose. Establish CreditUnsecured business loans can help businesses establish credit. It can also help improve their credit score over time. [B-02] Final Words The type of loan you choose is heavily influenced by your current situation. It also depends on your short-term and long-term goals. Therefore, it is important to know the difference between secured and unsecured business loans. A secured business loan is much easier to obtain. It comes with a lower interest rate. An unsecured business loan is easy to obtain but has higher interest rates. It is also important to know that secured business loans are backed by collateral, while unsecured business loans are not. So, you may opt for an unsecured business loan. That is, if you need money immediately and don’t have collateral. A secured business loan may help if you have a low credit score. Consulting a financial expert like Piramal Finance is your best bet. They can help you understand every financial aspect of these loans.

08-11-2023

Education

Unit Conversions For Length, Area, And Volume

When you are buying a home, you need to focus on many aspects. One of the key aspects is the area of the house as you will have to pay the price based on the area. Unless you can perform unit conversions correctly, there are high chances of making mistakes. Any error by you in this aspect can cause some serious issues later on. Hence, whenever you are buying a property or machinery, you need to use a unit conversion calculator. It is a free online tool that allows you to convert units from one to another easily. Whether it is length, area, or volume, the unit conversion calculator can surely help you out. It will help you complete the process quickly and remove any chances of errors. Before you start, you need to learn that in India, the metric system is used for most purposes. So, you must be well versed in it. [B-01] Read on to learn more about unit conversions and how you can perform them easily. Metric System for Length, Area, and Volume In India, the metric system is used for all purposes, whether it is length, area, or volume. The metric system is used across the country for unit conversions. Here are some key aspects of the metric system that you must know: Basic Unit: The basic units under the metric system are metres, grams, and litres. Purpose: if you want to find out the area of a property or the capacity of a machine, you need to know all about the metric system. Unit Conversions: It is possible to convert from one metric unit to another with a simple formula. You can easily convert from smaller units to larger units, and vice-versa. Usage: Metric system is widely used in India and European countries. Land size, property area, and machine capacity are all defined using the metric system. Benefits: When you have to change from one unit to another, the metric system is easy to use. This is not the case with an imperial system which is very hard to convert from one unit to another. Unit Conversion Calculator Many units are used under the metric system, but not all units can be used every time. You will need to undertake unit conversions i.,e. convert one unit to another. The purpose can be any, but it is vital to know all about using a unit conversion calculator. It is a free online tool that can be used through a website or mobile app. Many platforms offer this feature. So, you can select any of the apps or websites you prefer. Here are the steps you must follow to use a unit conversion calculator: You must have the data ready with you. It means all the units that you want to convert must be noted somewhere. Now, open your browser and type ‘unit conversion for the area’ or ‘unit conversion for volume’ as per your needs. Several links will open on the screen. Choose any of them according to your choice. You can also get an app for the same from the Play Store or App Store. Based on your choice, it can be a free app or a paid app. You can select any type of unit conversion you want i.e. length, area, or volume. Once you opt for it, the unit conversion calculator will show the relevant unit conversions. Now, the unit conversion calculator will open on your screen. Firstly, here you will need to select the base unit i.e. unit in which the data is present. Select the unit from a drop-down menu and then enter the figure in the blank field. Next, you need to select the resulting unit i.e. the unit in which you want the answer. This option will also have a drop-down menu. After you select both unit options, click on the calculate button. The result will be visible on your screen. You can note it down on a piece of paper for ready reference. If you are using an app, you can take a screenshot for easy reference. The results which you will get are accurate and quick. You can repeat this process as many times that you want for different unit conversions. Avoid doing this manually as there are many chances of an error which can prove very costly later on. You can shuffle between various online tools to verify your results. As it is free to use, you can use a unit conversion calculator as many times as you want. Common Area Units Used in India Original UnitResulting Unit1 sq. mtr.10.7 sq. ft.1 sq. in.0.006 sq. ft.1 sq. ft.0.09 sq. mtr.1 sq. km.247.1 acres.1 sq. yd.0.83 sq mtr.1 acre.4886.9 gaj.1 hectare.2.50 acres. Common Length Units Used in India Original UnitResulting Unit1 inch0.02 mtr1 foot0.30 mtr1 km1000 mtr1 mtr1 mtr Common Volume Units Used in India Original UnitResulting Unit1 cu mtr.1000 ltr.1 barrel.159 ltr.1 cu ft.28.3 ltr.1 litre.1 ltr.1 gallon.3.78 ltr.1 pint.0.4 ltr. [B-02] You must learn about various vital units of length, area, and volume. This will come in handy when you have to convert from one unit to another for any given purpose. To learn more about unit conversions, visit Piramal Finance. They offer many blogs and articles to help improve your skills in finance. They also have various loans and finance options to meet your urgent financial needs with great deals and offers.

08-11-2023

Mutual Funds

Things You Need to Know Before Investing in ESG Funds

Sustainability is a trending term today, with more investors looking at ESG (environmental, social and governance) factors when making their investment decisions. It’s a good thing because ESG factors are important for long-term investment success, but there are a few things you need to know before buying into these new funds. [B-01] What are ESG funds An ESG mutual fund pays close attention to a company’s social, environmental, and governance (ESG) performance and financial performance. Before investing in a company, an ESG fund will generally find out about the company’s products and whether or not they follow the corporate social responsibility (CSR) principles. Businesses that produce goods which are considered harmful to the environment or society’s health, such as alcohol or tobacco, are not allowed for ESG investments. ESG-compliant businesses do well when it comes to financial performance as well as environmental, social and governance factors. The organisation’s greenhouse gas emissions, the workability of its business model, its use of renewable resources, and similar factors are considered environmental factors. Similarly, the social criteria include how they treat their employees, how they view work-life balance, how they ensure that everyone has the same opportunities regardless of gender or religion, etc. Here, governance means the leadership of the company and their sensitivity to shareholders. Overall, ESG-compliant businesses perform better financially and in terms of key sustainability indicators. This makes them a more attractive investment for both individuals and institutional investors alike. What you Need to Consider Before Investing in ESG Funds Before you invest in an ESG fund, there are a few things you need to know. Here are the top 3 things you need to know before investing in ESG-related funds: Diverse PortfolioExpanding on your investment portfolio is one of the best ways to protect yourself from market volatility. However, this rule can be difficult to follow when it comes to ESG (environmental, social, and governance) funds. You might be inclined to only invest in large-cap stocks because most ESG companies are large-cap stocks. However, this would limit your options and put you at more risk than a diversified portfolio would. Sustainability One of the most important topics of discussion in recent years has been climate change and its effect on both businesses and the planet. Today, companies are under pressure to adopt sustainable business practices, and investors must be careful about which organisations they choose to support. As an investor, you can do your efforts in shaping the future by investing in ethical businesses that employ sustainable practices. An ESG mutual fund is one way you can do this, allowing you to financial goals without ignoring your moral duties. Good ReturnsMany people believe that a charity is the same as an ESG fund. But, in reality, they are not. Just like any other mutual fund, an ESG fund focuses on both sustainability and returns. The Nifty 100 ESG Index was created to produce average returns of 10.9%, and that number is still increasing. ESG Mutual Fund Options Investing in companies that focus on environmental, social, and governance issues (ESG) has become popular in the past few years as more and more people are interested in making a difference with their money. Most well-known fund houses offer ESG investment opportunities, including SBI Magnum Equity, ICICI Prudential, Aditya Birla Sun Life, Kotak Mutual Fund, Quantum India, and Axis Mutual Fund. However, because this is a specialized field, the fund companies have increased the expense ratio of their ESG funds. ESG funds are designed to assess the social and environmental impact of companies, using indicators like carbon emissions, greenhouse gas emissions, and employment generation. This means that ESG portfolios typically exclude companies with high carbon footprints, such as tobacco producers, coal miners, oil and gas companies, and fossil fuel power plants. Instead, these portfolios are heavy on businesses in sectors like FMCG, healthcare, renewable energy, and technology. The Way Forward: Risks & Returns There are both risks and opportunities which come with investing in ESG funds. On one hand, there is scope for positive environmental and social outcomes linked with these types of investments. However, there is also the chance for lower returns compared to traditional investments, as well as the possibility of negative publicity if companies in the portfolio are involved in scandals or controversies. Overall, investors need to carefully consider both the risks and benefits before deciding if they should invest in ESG funds. To Sum Up When it comes to investing, there are a lot of different options to choose from. ESG mutual funds are a type of investment fund that focuses on environmental, social, and governance issues. There are a few things to keep in mind when considering ESG mutual funds. First, it’s important to make sure that the fund is in line with your values. Second, you should do your research about the fund to make sure that it has a good track record. And third, you should be prepared to commit to the fund for the long term, as these types of investments tend to be more volatile in a short time. [B-02] Overall, ESG mutual funds are great for investors who want to make a positive effect on the world and create solid returns. ESG mutual funds can be a good option for investors who are interested in promoting sustainable and responsible investing. However, it is important to remember that these funds are still subject to market risk. Before investing in any type of mutual fund, make sure to do your research and speak with a financial advisor to check if it is the right investment for you. Consult the experts at Piramal Finance to make smart investment decisions.

08-11-2023

Gold Loan

Why Gold Loan demands are scaling up in India?

You all know that gold is one of the precious metals Indians consume in abundance. It is evident that at hard times Indians rely on gold. What could be the reasons behind the popularity of the gold loan? How can you apply for the best gold loans? What are their features, and whom can you trust when it comes to gold loans? Go through the article for a detailed explanation covering all the things that you need to know about gold loans. [B-01] What is gold loan and what is its utility? These Loans are under security because the gold acts as collateral between the borrower and lender. The Lender keeps the gold during the loan period. In this way, you are ready to secure the loan by giving possession of your gold. You can get the gold back after returning the whole amount. Gold loan tenure usually lasts between 6 months and 1 year and is mainly short-term. Since you give gold as collateral, you can get attractive gold loan interest rates from the lenders. Most banks and non-banking financial companies offer gold loans at low interest rates. Various purposes of availing gold loans are: To finance gold investments For business expansion purposes Other business needs like funding and purchasing raw materials Other unprecedented expenses Gold loan interest rates start at approximately 10% per annum. Features of Gold Loans You can fund your various needs by availing of gold loans, such as education fees and medical expenses. The gold the borrower gives to the lender serves as the security or collateral for providing the loan. The tenure of the gold loan can be between 3 months and 48 months. You may have to give additional fees in the form of processing charges, late payment penalties, and charges for non-payment as per gold loan interest rates. Lenders usually offer three options for repaying the gold loan: You can repay the loan in Equated Monthly Instalments (EMI). You can pay back the principal loan amount at the end of the gold loan tenure. You can pay the interest rate on your gold loan on a monthly basis. 6. You can also avail of discounts if you regularly pay the interest rates. You can get a 1% or 2% off on the original interest rate. The reasons behind the growth and expansion of demands Indian gold loan market is rising gradually with increasing demand. And the reasons behind the rise of the gold loan market are factors like the smooth accessibility of loans, comparatively lower interest rates, easy loan processes, and flexibility in the repayment of loans. The Reserve Bank of India also plays a prominent role in the rise of the gold loan market. It has introduced borrower-friendly options such as Gold Monetization Scheme (GMS) and Gold Deposit Scheme (GDS). Plans like this have made the process of availing of gold loans easier for borrowers. You can mobilize the gold kept at your home or a bank locker. Find the amount of loan you can avail against your gold using the Gold Loan Calculator. Things to keep in my mind before availing of Gold Loans To secure the best gold loan, you need to be conscious of certain things like: You should know the minimum and maximum amount of Loan Amounts before availing of a gold loan. And you should ensure that you have enough gold for that particular amount you want. When you compare secured and unsecured loans, it is clear that gold loans have lower interest rates. You should also keep in mind the fact that these interest rates can vary from lender to lender. So, before deciding to avail of a loan, you must compare the interest rates lenders charge and choose the best one. You should pay additional charges like- processing and documentation fees, payment failure fees, and appraiser charges. These additional charges plus; the interest rate can increase the total amount of the loan. So, you should keep the amount that lender levies in your mind before pursuing a loan. As we said earlier, the repayment of the gold loan tenure longs between 3 months and 48 months. So, you should acknowledge your ability to repay within that time before proceeding with the loan. Another vital thing to notice is the credibility of the lender. If you can rely on them for your gold is a question of concern that you should consider. Check the safety measures the lender takes and ensure the lender gets the best reviews from borrowers. Gold loan repayments are often flexible. You should consider the payment structure lenders offer before pursuing the loan and go for the one that suits you. Loan features, benefits, and requirements may be different for various lenders. So, you should give a keen comparison before choosing to proceed with the loan with a particular lender. Also, before applying for a gold loan, you should check whether you are eligible for that particular loan. Benefits of Gold Loans Some benefits of securing gold loans are listed below: Since gold loans are short-term, their tenure ends quickly. Only a few documents are required, and the loan process is easy to understand. There are no prepayment charges in specific cases. You can avail of the best gold loans at lower interest rates than unsecured loans. [B-02] Final thoughts We hope you got a clear picture of the demand, benefits, and other important factors related to gold loans that a potential borrower must know. Now you can use your jewellery that is idly sitting in your house lockers and can use it for meeting your needs. You can also build your finances by securing loans at low interest rates. For further doubts and queries, you can consult help from financial experts like Piramal Finances. They provide efficient guidance and solutions to people regarding finance matters.

08-11-2023

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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