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Stocks Markets

Should you invest in Stock Market or Fixed Deposits?

Investing money could be a very smart move for planning a better future. But it is also followed by a question of where to invest so that the returns are promising. Whether to invest it in fixed deposits or go for stock market investment? Do you too face this problem of being unable to reach a conclusion? Well, think no more because this article is all about that and it will help you navigate through it. In this article, we will discuss fixed deposits and stock market investment separately, and their benefits, so that it helps you decide which one to prefer. [B-01] What is a fixed deposit and what is its significance in investment? Being one of the oldest ways to invest money, a fixed deposit is a form of investment in which you grow a lump sum amount of money at a fixed interest rate over a set period. It is a very safe way to invest money as it is free from market-related risks and guarantees you promising returns. Although there are some tax deductions from the interest amount, you can still make a handsome amount of money from the interest rate you receive. It is also free from all types of market fluctuations which is another big advantage. What are some of the advantages of investing in a fixed deposit? Here are the reasons why you should be investing in a fixed deposit rather than in any other investment options. Assured returns: The returns on fixed deposits are assured under any circumstances. Though the amount might not be very big, since it is consistent, you should not have a problem investing in it. No market-related risks: There are no market-related risks in fixed deposits, unlike stock market investments. Markets might fall, or even might increase, but the interest rate and the returns of the fixed deposit remain unaffected. Easy renew: Fixed deposits can be easily renewed according to your preference and requirements. If you want to renew your existing plan, you can go to your bank and ask for a renewal, which is an easy process. No risk of losing principal: Since the whole amount in your fixed deposit is completely free from market fluctuations and risks, there is no way for your principal amount to be affected. Serving the economy: Fixed deposits help you maintain the liquidity of funds which increases the circular flow of money in the economy. Not only is it a safe savings option, but it also serves benefits customers and the economy. What is a stock market investment and what is its significance? A stock market is a place where different companies buy and sell their shares to gain profits. Here, a buyer sets a specific price for a share that a seller agrees to buy. So, all in all, it represents the fractional ownership in a company in which investors buy a stock which they think will go high in the coming future. What are some of the benefits of investing in a stock market? More returns: Stocks give you more returns than most of the other investment options for a longer period. When you buy a company’s shares, you assess the company’s assets in the future and expect them to grow. These equity returns are way more than other returns that you make from fixed deposits. Immunity to taxes and inflation: Tax deductions and inflation can both harm your wealth and create discomfort in your journey of investing money. But in stock market investment, you get better tax treatment over some time and prevent the negative effect of inflation. High liquidity: Since average daily volumes are quiet on the higher side in stock market investment, there is always high liquidity. This liquidity makes it very easy for you to buy or sell any stock you want shortly. Acquiring ownership: If an investor acquires a piece share of a company, he or she has partial ownership of the company. In some cases, if this percentage is high, you get some powers of the company like the right to vote. Which one is better – fixed deposits and stock market investment? To answer this question, a fixed deposit seems to have a better grip over stock market investment and here is why: Risk factor: Fixed deposits might not give you as high returns as a stock market, but it is completely free from market-related risks. The stock market on the other hand might give you high returns and ownership but still is subjected to risks. Premature withdrawal: When you invest in a fixed deposit, you can withdraw a portion of your principal amount if you have an emergency, whenever you want. But this advantage is not there in a stock market investment as you buy shares of a company in the place of actual money. Periodic income: Income is periodic and regular in a fixed deposit as your principal amount gives you assured returns. On the other hand, there isn’t any periodic income in a stock market investment, rather the income is not uniform. [B-02] Wrapping it up Fixed deposits seem to be a more liable and safe option than stock market investment. If you correctly understand the market structure and shares, then you should invest in stocks. They offer you much higher returns. But, if you don’t understand the market structure, and don’t know much about the risk factors, you should go for a fixed deposit. If you love reading articles on topics like stock market investment, fixed deposits, mutual funds, SIPs, financing, etc., visit Piramal Finance.
08-11-2023
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Home Loan

Top Benefits of Why to Get Housing Loan in Women’s Name

Home purchasing is at the top of the priority list, regardless of the cause. However, putting together the necessary cash to purchase a home can sometimes be challenging. Home loans are available for those who need them. Banks today offer attractive home loans that can make people’s long-held dream of owning a home come true. Several states in India give extra benefits to women who buy property to be more independent. Previously in India, it was uncommon for women to make financial decisions, as men often held this authority within the household. Women’s socioeconomic status in our society has changed along with the times. Today’s women have achieved financial parity with males and can choose their loan terms and neighbourhoods. The only industry where women still have work to do to catch up to males is real estate. Women can get extra benefits that give them more power and help them become financially independent. These are the advantages of a home loan that you, as a woman, should be aware of to make an informed decision. [B-01] Let’s take a quick look at the benefits of getting a home loan in a woman’s name: Payment perks During the financial year, you can get a tax break on the interest of up to Rs. 2 lakh if you live in the property. The total interest on the home loan will be taken out of the Net Rental Value after the home has been rented. Women can also get a tax break of Rs 2 lakh on the interest rate they pay on a home loan. If you and your husband are co-owners of the house loan, you can claim tax refunds for the interest you have spent on the loan. Open to a more significant loan amount and a more extended repayment period Another advantage of the housing loan for women is that they may be eligible for a more significant amount of money and a more extended repayment period. Lenders extend home loan qualifying criteria to entice women and borrowers by granting Rs 30 lakh to Rs 3.5 crore loans for up to 25 years. These additional benefits and the relaxation of eligibility requirements are considerable advantages for women. The interest rates are at a lower level When it comes to applying for a house loan, this will be one of the most significant perks that women will receive. Indian banks typically provide lower interest rates to women borrowers regarding housing loans. When applying for a loan, the most attention is paid to the interest rate charged on the borrowed money. Since home loans are usually for large amounts over long periods, even a tiny change in the interest rate can make or break the borrower’s interest burden. Women’s house loan interest rates are usually 0.25 percent to 0.50 percent lower than men’s. Other financial institutions offer a reduction in the interest rates that they charge on women’s home loan programs to female homebuyers. There’s a better chance that your loan request will be approved. Before approving a loan application, all lenders check it against a set of rules. This necessitates that the borrowers fulfil the eligibility requirements set forth by the lender, provide all required documentation and proofs, and have a satisfactory CIBIL score. Conversely, people often believe that women are more responsible with their financial obligations than males. When making payments toward EMIs, they are frequently considered to have a higher degree of dependability. Given that loan approval is based on a series of figures and records. When a woman is listed as the primary borrower on a loan application, there is a greater chance that the request will be granted. This fact transcends the guidelines set forth by the financial institution. Reductions are Made to Stamp Duty Fees In some places, Stamp Duty is less when a property is bought and registered in a woman’s name. However, this is not an incentive the lender provides, and it is still considered a form of women’s house loan. Stamp duties are determined by the governments of individual states, so their rates differ from one another. While stamp duty rates vary from state to state, they are often lower for single women buyers or co-owners. Stamp duty is also a significant financial burden for anyone who buys a home. In some states, women are usually given a 2% or 1% discount when purchasing a house. For example, this could save you up to Rs 100,000 on a home that costs Rs 50,000,000. When governments sell pieces of land through a lottery system, there may be some unique privileges that are explicitly reserved for women. It is in a couple’s best interest to purchase a home jointly in the name of the female spouse because of the numerous benefits of doing so. Pradhan Mantri Awas Yojana (PMAY) plan benefits As a result of the government’s “Housing for All” campaign, more support is available to women who want low-interest home loans. The government mandates that women take advantage of an interest subsidy of up to Rs 2.67 lakh. Through this program, women are given priority when applying for home loans and are treated equally to males. Women of various ages, social backgrounds, and marital statuses can make their own financial decisions, bringing them closer to equality. While many opportunities are open to women, the one thing to keep in mind is finding a lender with reasonable rates. [B-02] Conclusion Now that you know the privileges granted by the lenders to female borrowers, you can proceed. They should seriously consider purchasing a home because there is a better-than-average probability that they will be approved for a mortgage loan. Lenders also encourage women to apply for home loans because the default rate for home loans taken out by women is lower than that of men. The benefits of a housing loan might be used toward a property purchase.
08-11-2023
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Other

All You Need To Know About The Benefits Of Working Capital Finance

Many business owners believe that financing from banks and other lenders will always be the best option to fund business growth, but that is not always the case. Working capital finance can help your company get the money it needs to meet immediate cash flow challenges. This also allows you to maintain your credit rating and keep control of your assets and debt repayment strategies. Learn more about working capital finance. Determine whether it is the right fit for you. Read this article to learn about working capital finance. [B-01] Defining Working Capital Finance Working capital is the money a company has available to cover its expenses between periods of sales. It can be used for day-to-day operations, long-term investments, or additional working capital loans. Working capital loan interest rate is one of the most important factors in determining how much you will pay in interest on your debt. A low working capital loan interest rate will result in a lower monthly payment, while a high one will lead to higher monthly payments and potentially a higher total cost of borrowing. The primary factor that affects working capital loan interest rates is the length of time between when the funds are borrowed and when they are repaid. The longer it takes for repayment, the higher the rate. Types Of Working Capital Working capital is the amount of money you have available at a given time. There are four types of working capital: cash in hand, accounts receivable, inventory, and current assets. Cash in hand: Cash in hand is the most liquid form of working capital finance because it can be put into use immediately. Accounts receivable: Accounts receivable represent how much customers owe a company for products or services that have been delivered but not yet paid for. Inventory: Inventory stands for products a company has on hand that are ready to be sold to its customers. Fixed assets: The final type of working capital finance is fixed assets, which refer to items like property and equipment that the company owns and may utilise over time. How Does Working Capital Work? A working capital loan is a type of business loan where the finance company allows you to borrow up to 75% of what your inventory, receivables, and other assets are worth. Working capital finance loans have interest rates that vary, depending on the financial strength of your company and what collateral you have for the loan. They can be anywhere from 2% all the way up to 7%. Borrowers are required to repay the amount borrowed plus interest within 90 days. Otherwise, they may face liquidation in order to pay back the debt. As long as the borrower has some sort of collateral to offer (real estate, vehicle, etc.), they will receive a lower interest rate than someone who doesn’t. How To Calculate Working Capital The working capital finance is the total value of all cash needed plus all accounts payable divided by 365 days in a year. Working capital formula: Current assets / Current liabilities = Working capital ratio A lower working capital loan interest rate could save you a lot of money over the life of your business, depending on how much working capital you need and how long it takes to get repaid. The Importance of Working Capital Management Working capital is the difference between a company’s current assets and liabilities. The level of working capital needed varies based on the type of business. Companies need to manage their working capital levels. This is because they have an impact on liquidity and solvency. This, in turn, can have a big effect on the company’s creditworthiness. Working capital finance is determined by several factors. They include credit history, industry type, and the size of the company. There are some reasons why your business might require additional working capital: To fund new projects and equipment: The working capital loan interest rate is usually lower than the company’s credit card debt, so it can be a good way to help fund projects and equipment. They will increase your revenue in the future. As a short-term solution for cash flow issues: Working capital loans are usually paid back in one year or less. So, they’re an ideal short-term solution for companies with cash flow issues. To repay higher-interest debts: If you have more expensive debts such as a car loan, student loans, or credit cards, working capital loans can often save you money in the long run by getting rid of these debts. For inventory financing: If your inventory exceeds what you need on hand to fulfil orders, then you may want to look into inventory financing options. This is because they provide additional liquidity for managing inventory levels during busy periods. [B-02] The Bottom Line Working capital is the fuel that powers a company. It is an amount of money that can be used for operations or investments. They help keep the company in operation. Working capital loan interest rates are typically set at a fixed rate of interest. This is done so that you know how much you will pay over time. Check out more finance-related articles at Piramal Finance.
08-11-2023
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Schemes

Senior Citizen Savings Scheme (SCSS): Interest Rate & Eligibility

Would you like to apply for the senior citizen savings scheme (SCSS)? Are you interested in learning about the SCSS interest rate? Do you want to know if you are eligible for the SCSS scheme? Here, we will analyse the senior citizen savings scheme in detail. [B-01] What Is The Senior Citizen Savings Scheme? The government of India created the senior citizen savings scheme in 2004 to help senior individuals save for their retirement. The major goal of the plan is to assist retirees in securing a reliable source of income. Guaranteed interest payments are made periodically and are part of the arrangement. It’s a great way for retirees to build up their savings and receive money on a quarterly basis. For the quarter ending March 31, 2022, the SCSS scheme is offering an interest rate of 7.4 per cent. To open a senior citizen savings scheme account, you must deposit at least Rs. 1,000. Deposits cannot exceed Rs. 15 lakh, and interest is paid quarterly (on March 31, June 30, September 30, and December 31) throughout the year. SCSS Eligibility Criteria The post office senior citizen savings scheme accepts contributions from those who meet the following criteria: The person must be an Indian national. Ineligible individuals include those who are non-resident aliens (NRIs) and non-resident foreigners (PIOs). To participate in this program, you must be a 60-year-old Indian resident. For those who have retired between the ages of 55 and 60 via the voluntary retirement scheme (VRS) or superannuation, the eligibility period is shortened to 1 month after receiving retirement benefits. As long as they meet the other requirements, retired military members of any age are eligible to participate in this program. You can benefit from this programme by investing just Rs. 1,000. Advantages Of The Senior Citizen Savings Scheme Below are some of the main reasons why the senior citizen savings scheme is so popular among retirees: Since the senior citizen savings scheme is a government-backed small savings program, it is one of the safest and most reliable investment options for seniors, with guaranteed returns. When compared to more conventional means of saving, such as a fixed deposit or savings account, the 7.6% annual SCSS interest rate offered by senior citizen savings schemes stands out as particularly advantageous. The procedure for investing in a senior citizen savings scheme is straightforward. A senior citizen savings scheme can be opened at any government-approved Indian bank or post office. Interest is paid out on a quarterly basis to senior citizen savings scheme account holders, ensuring that your investment will grow over time. Accrued interest will be credited quarterly, on April 1, July 1, October 1, and January 1. Documents Required To Open Senior Citizen Savings Scheme This application requires two passport-sized photographs. You need to submit a fully completed Form A. Identification in the form of a passport or permanent account number (PAN) card is required. Aadhaar cards or phone bills are acceptable forms of evidence of residence for individuals. They need to show identification that verifies their age. Proof of age can be shown via a PAN card, voter ID, birth certificate, senior citizen card, passport, or any of these. SCSS Interest Rate The annual percentage rate (“yearly rate”) for senior citizen savings scheme loans is 7.4% as of this writing. When compared to traditional savings and fixed deposit (FD) accounts, the senior citizen savings scheme offers superior returns. Interest is due on the deposit date of March 31, September 30, and December 31 for the first time and on the same dates each year thereafter. SCSS interest rate is paid on the first business day of April, July, October, and January. However, only post offices equipped with core banking may process interest payments quarterly. The scheme’s main goal is to assist seniors in maintaining a steady income. Guaranteed interest payments are available through the plan, and they can be gotten quarterly. It supports senior citizens in making quarterly interest payments and retirement savings. For the period ending March 31, 2022, the senior citizen savings scheme is providing an interest rate of 7.4%. To start a senior citizen savings scheme account, a deposit of at least Rs. 1,000 is necessary. [B-02] Summing up The purpose of this article is to comprehensively examine the senior citizen savings scheme (SCSS). You should choose wisely whether the senior citizen savings scheme is the right choice for you. The senior citizen savings scheme is an excellent option to assist seniors in maintaining a steady income. Guaranteed interest payments are available through the plan, and they can be gotten quarterly. For the period ending March 31, 2022, SCSS is providing an interest rate of 7.4%. To start a senior citizen savings scheme account, a deposit of at least Rs. 1,000 is necessary. Piramal Finance provides unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their own research. So, visit Piramal Finance to explore not only their products and services but also read more finance-related articles and blog posts.
08-11-2023
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Investment

Investing in National Pension Scheme is a good idea?

Are you interested in investing in the National Pension System but need some more information? Do you want to know what kind of NPS scheme returns are offered and whether you should invest in it or not? This article explores aspects of the National Pension System, its features, policies, investments, scope, returns and more. By looking in detail at NPS scheme returns, tax saving NPS and other aspects, you can find out whether this investment is a good idea for your specific financial situation and future. [B-01] What is the National Pension System? NPS or the National Pension System (NPS) is an initiative by the Government of India for the protection and betterment of the retired class. It promotes investment among the working class so that they can take out the corpus after their retirement. The National Pension System encourages you to invest in the scheme at regular intervals and in return, your money compounds at an interest rate. Over the years, this investment grows into a big amount and yields returns. The Pension Fund Regulatory and Development Authority (PFRDA) brought tax saving NPS schemes into action under the guidance of the Central Government for the social security of the retired class. When it was initially implemented, it was restricted to Government employees only. But after some changes were introduced, it was made available to all Indian citizens. Whether you are a Government employee or work for a private firm, you can invest in NPS voluntarily. Why Do People Invest in the National Pension System? There are many reasons people choose to invest in the National Pension System. The main reason is to plan a better life after your retirement. Pension is considered a source of regular income for retired people. Receiving an income in the form of a pension after retirement makes a practical difference in the lives of retirees and gives people confidence in their financial future. For example, a salaried individual can take a portion of their salary, which they regularly receive every month. This money is then invested in the National Pension System with the guarantee that the NPS scheme returns will be beneficial to them in the future. Early retirement is another reason. For those who plan to retire early, NPS scheme returns will help them in their early retirement plans by giving them financial security in their retirement years. What are the Benefits of Investing in NPS? There are several benefits of investing in the National Pension System. Some of these advantages include: Handsome Returns NPS, in terms of NPS scheme returns, is a profitable option to invest in and get better outcomes. It has an annual return of about 8 per cent to 10 per cent, which is attractive compared to other Government schemes. Unlike the Public Provident Fund, where the interest rate is not as good, the NPS scheme returns are favourable to its investors. Lesser Risks In terms of risk assessment, the National Pension System is better than other investment schemes. There is currently a 50% cap on equity exposure, which is a good percentage. This somehow stabilizes the risk equations and also means that the corpus, which you collect at the end, is free from market volatility. In addition, PFRDA has proposed to increase the cap on equity exposure to 75%. Highly Tax-Efficient NPS happens to be a very tax-efficient scheme where you can be exempted from tax to a fair extent. For the NPS tax saving scheme, the tax deduction goes up to Rs. 1.5 lakh and in some cases, it even touches the mark of Rs. 2 lakhs under section 80C. Forty per cent of the total money that you have saved is kept in the account as the minimum amount that you cannot withdraw. Out of the remaining 60%, 40% is tax-free and only the remaining 20% of this sixty per cent amount is subject to taxation. Highly Economical Among all the other investment schemes, the National Pension System stands to be a highly economical investment scheme. Even if you add a small amount of money every month to your NPS account, you can still make interest out of it. High Flexibility There is high flexibility in the National Pension System because of the reliable investment pattern and the diversity of investment options it provides. You can even optimise returns according to your convenience with the asset class and fund managers. NPS Scheme Returns There are good return rates for both Tier 1 and Tier 2 returns. Tier 1 return rates on all corporate, government and equity asset classes range from 12.5% to 14.5% for the first year, 9.27% to 10.15% for 5 years and 10.05% to 10.64% for 10 years of investment. Tier 2 return rates on all corporate, government and equity assets of the tax saving NPS scheme range from 12.7% to 16.4% for the first year, 9.55% to 10.17% for 5 years and 9.86% to 10.6% for 10 years of investment. In total, return rates change from time to time and depend more on the current market structure. [B-02] Conclusion The National Pension System is a beneficial initiative by the Government of India for the financial safety and security of the retired class. In addition, the good NPS scheme returns make NPS a profitable long-term investment option. Salaried people who want to prepare for their post-retirement life or who are planning an early retirement can invest in the National Pension System and benefit from the NPS scheme returns. For more information on the tax saving NPS and other aspects of the National Pension System, visit Piramal Finance. There are similar articles that focus on pension schemes and post-retirement financial planning that you will find interesting and useful.
08-11-2023
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Personal Loan

Important Things to Take Care of When Signing up for a Car Loan

Do you hope to someday get behind the wheel of a brand-new car? If your credit score and income are sufficient, purchasing a new vehicle should be easy to finance. Your overall borrowing experience and the amount of money you will ultimately be responsible for repaying can be significantly impacted, to a large extent, by your choice of car loan EMI. Are you considering purchasing a car, but would you like pointers on what to look out for before doing so? Let’s look at the top 10 suggestions for obtaining a car loan EMI. [B-01] Money-Interest Rates Auto loan interest rates typically range from 6.75% to 9% each year. A variety of criteria determines the interest rate that you pay on a vehicle loan, some of which include your home credit pay EMI, your income, the duration of the car loan EMI, the automobile category or model, and the amount of money that you put down as a down payment. You should examine the many offers for car loans accessible online and then get in touch with the most reputable lenders that provide such loans if you are seeking the cheapest rate possible. It is up to the individual lender to decide whether an auto loan should have a fixed or variable interest rate. A loan with a fixed interest rate might benefit you if there are indications in the market indicating an increase in interest rates. Looking at your credit report before asking for a loan You may qualify for a car loan EMI with a more favourable interest rate if you have a higher credit rating. Therefore, you should check it out before asking for a car loan. If your credit score is low, you can improve it. Repaying outstanding bills and lowering your credit utilisation ratio might improve your credit score. When your home credit pay EMI is acceptable, you may apply for a loan. Determine the Best Loan Term There is a possibility that extending the length of the loan will lower the car loan EMI, but this will come at the expense of paying more interest throughout the loan’s lifetime. If you can make larger payments every month, a shorter loan term may be in your best interest. The typical time for making payments on an auto loan is seven years. Applicants for loans who have difficulty making larger monthly instalment payment obligations (EMIs) or who need a lower car loan EMI to satisfy the bank’s loan qualifying conditions may opt for a loan with a longer duration. Fees Associated With The Loan While the interest rates on vehicle loans may be lower with certain creditors, the processing fees and other expenditures may be higher than with others. A lower interest rate on a car loan may not be worth it if the additional costs wipe out whatever money you save. Select a lending institution with low interest rates and minimal costs. Repayment terms Do you want to get out from under a car loan early? Be advised that your vehicle loan provider may assess prepayment costs if you pay off your loan early. Learn about any fees your potential vehicle loan provider charges if you pay off your loan early or make a prepayment. Pick a bank with the least expensive vehicle loan prepayment fees. Processing and service time Substantially reducing the amount of time spent filling out paperwork for auto loans is a priority. To get the most out of your loan, you should be able to monitor your account details and make payments online. All these details are crucial if you wish to apply for a car loan EMI. Some financial institutions may give you a loan approval in minutes, while others may take a few days. In certain cases, you may need the lender’s help long after the loan has been disbursed, whether for access to loan account statements or other perks like online banking. The debt will take a long time to pay off. You hope that time passes smoothly and without incident. Pick a bank whose customer service best suits your preferences. Size of the Loan and Down Payment Required Loan eligibility and down payment requirements might vary from lender to lender. Try to choose a car loan company with specific qualifying standards and a down payment that you can afford. Some loan companies will finance up to 100% of the car’s price in exceptional cases, while others will finance much less. It’s important to read the fine print of any loan deal A car loan has the potential to be very alluring, but you need to be careful to avoid getting stuck in the wrong loan package. If you want to avoid this, read all the fine print in the loan agreement. How often does the lender change the interest rate? What are the costs of your loan? Don’t be taken off guard; carefully study all the relevant material. Alternatives to getting a car loan Car loan EMI applicants may only sometimes meet the bank’s minimum standards. They shouldn’t be downhearted since they could yet have other options. They could choose fixed-deposit investments, loans against shares, loans against gold, or any other kind of secured loan to put down a down payment on an automobile. Inquire about the car manufacturer’s history with the lender Before signing off on a car loan EMI, determine whether the automaker has an exclusive arrangement with a certain lender. The banking and automotive industries regularly work together to provide customers interested in purchasing a certain automobile model with access to attractive loan products at streamlined interest rates and terms. Car loan EMI processing times, interest rates, and other perks might improve for you under certain circumstances. [B-02] Conclusion: Buyers should have a stable budget before applying for a vehicle loan. They need to look into the car loan EMI to ensure they can afford to pay it back. It’s a lot like investing in your lifestyle when buying a vehicle. Consequently, it is essential to choose a reliable, reasonably priced vehicle, suitable for one’s needs and has low maintenance. You can look for a cheap car loan EMI in several places today. For more information, connect with a reputed institution like Piramal Housing. Still, before you commit to anything, it’s important to consider the loan amount, choose the most convenient monthly payment plan, and evaluate the terms different lenders offer.
08-11-2023
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Know More

Employees Provident Fund: Scheme and Rates

An employee has to bear a lot of expenses. It becomes more significant for those who are the sole earning member of the family living with ailing parents and other members. Moreover, in times of emergency, it becomes essential to have money on hand. Hence, you will need to know about the employee’s provident fund, which can improve your finances. Let us learn what a provident fund is, its benefits, and its various schemes. [B-01] What is a Provident Fund? Before you finally sign the papers, you need a clear understanding of the Provident Fund. There are a few schemes and rates that will cater to your needs and help you plan your finances accordingly. The Employees Provident Fund was first introduced in 1935. It is currently managed by the Employees Provident Fund Organization (EPFO), which is administered by the Government of India. The Provident Fund is the amount you will be charged based on your salary. It can only be withdrawn after a certain period. The purpose of the provident fund is to help employees regulate their monthly income after retirement. The contribution criteria are fixed for all industries. The amount of the contribution is always rounded up for every employee, be it an EDLI contribution, a pension contribution, or an employee share. The actual percentage for the employee is derived from the pension contribution and EE share. The EE share is given as per the statute limits. Benefits of an Employee Provident Fund You need to know that provident donors have been made mandatory who will fulfil at least 15,000 thresholds of income. Under section 80C, an employee can get about Rs. 1.5 lakh of income tax exemption in a financial year if they get signed up with EPF. Here is why an EPF is beneficial to employees: Loan against PF. Having a PF account is a wise idea, as, during an emergency, you can get a loan against your PF account. Once the loan is paid, it will be credited within 36 months after the loan disbursal. Free insurer. In the unlikely event that the employer dies during the service, the individual becomes eligible for 6-7 lakh free insurance. Enhanced loan repayment. If you have an issue repaying the loan, having a Provident Fund account will be a wise idea. You can use your PF account to repay your loan. Schemes Under EPF Under the Employers Provident Fund Act 1952 in India, you are eligible for PF once you earn a certain amount. Whatever the case may be, there are a few schemes that you should be aware of: EPF Scheme 1952: Under this act, the person who maintains the EPF account will be able to use the accumulated money after retirement. Employees’ pension scheme: Under the employer pension scheme act 1952, the Provident Fund account becomes the only source of superannuation pension. Under this act, the widow or widower’s pension or orphan is payable. Employees’ Deposit-Linked Insurance Scheme, 1976: The Employees’ Deposit-Linked Insurance, or EDLI, scheme is the one that provides insurance benefits to the employer of an organization. Rate of Interest for EPF While you are halfway through this read, you should also know about the rate of interest on the EPF. The Ministry of Finance has decided on a rate of 8% for the financial year to be paid to the EPF account holder. However, you need to be aware of the specific rate of interest that will be deducted from your Provident Fund account. The employer will get as much as 12% of the salary contributed to the EPF account. In the case of a salary of Rs. 15,000, a charge of 8.33% of the salary will be deducted. Who Caters to Provident Fund? The first thing you will need to know is that the EPF is a government-funded retirement plan for salaried people. For that, you must know who caters to EPF accounts: To qualify for EPF, an individual must be at least 18 years old. The salary must be at least Rs. 15,000 so that a minimum of 8% can be deducted from the salary account. Other than this, the employer can also contribute Rs. 1.5 lakhs annually to the EPF account if one wants to fund it with their annual increment. Investment Schemes of the EPF The Employee Provident Fund is a venture plot in India that assists with getting retirement benefits. The plan is worked on by the public authority and has various investment schemes. It would help if you learned that investments made through a provident fund are non-taxable as per the government’s regulations. Moreover, the amount of interest you earn will be tax-free; hence, investing through a provident fund is a wise idea. Documents Required for EPF There are a few documents that you will be required to produce while signing up for an EPF account: The name of the applicant The PAN number of the applicant Any other ID proof, such as voter ID, a driver’s licence, or an Aadhaar card The employer also needs to provide address details There is also a requirement to provide proof of the address of the premises. The applicant’s contact information should include a working phone number and a residential address. You will need to show your monthly salary slips. You must provide all the above documents while considering signing up for the Employer’s Provident Fund. [B-02] Final Thoughts Now that you have a clear understanding of Provident Fund, you can read related blogs and articles on the Piramal Finance website. It is also suggested that you seek the assistance of a financial advisor who can guide you through the EPF application process and help you make sound financial decisions.
08-11-2023
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Mutual Funds

What works better for ELSS mutual funds – SIP or Lumpsum

At the end of the fiscal year, are you hoping to save on taxes? Investing in a lump sum is the best choice for you. At the start of the fiscal year, are you considering investing? Want to spread out your investments over the year to decrease risk? Want to invest in various NAVs throughout the year to get your units at a better average price? Your best option is to invest in a SIP. ELSS scheme investments might not always be appropriate for SIPs or lump sums. You learn which ELSS scheme is better for your mutual fund scheme, the advantages of SIP and lump sum, and which approach is more appropriate for your circumstances in detail here. [B-01] SIPs or lump sums depend on when and why you invest in an ELSS scheme. Only lump-sum investments offer tax-deductible contributions at fiscal year-end. However, at the start of the fiscal year, you can make a significant investment or spread out your contributions through a SIP. The ELSS scheme has stock-like growth potential and tax advantages. An SIP-invested ELSS scheme has two benefits. First, mutual fund scheme investing throughout the year decreases risk. Second, rupee cost averaging allows you to invest at several NAVs during the year and get a higher average unit price. Finally, ongoing, low-cost investments are cheaper than one big one. Invest an amount equivalent to your ELSS scheme budget. Today’s ELSS fund investment is locked in for three years. Each SIP instalment is locked in. If you invest $1,000 a month for a year, you can’t cash out until the final SIP payment is received and held for three years. The benefit of lump-sum investment in ELSS scheme mutual funds: It’s possible that you should invest a large sum all at once if you run a seasonal firm. Investments could be split between top mutual funds to invest a lump sum and a systematic investment plan (SIP) or both, depending on how much money is coming in each month. In this way, you can invest without worrying about accruing debt. Mutual fund scheme Investing the full amount eligible for the Section 80C tax benefit at the start of the fiscal year is preferable because the money will be in the market for a longer period. Greater returns can be obtained by mutual fund schemes investing over longer periods. The benefit of SIP investment in ELSS scheme mutual funds: If you receive a regular paycheck, a SIP could be a great choice for you. This helps people learn to invest responsibly. It’s crucial to time the market well when a mutual fund scheme invests a sizable chunk of money. If you invest in an ELSS scheme via SIP, though, you won’t have to worry about trying to time the market. Due to only a small amount being required regularly, SIP investments ensure that you won’t experience financial hardship while investing. Which method of investing in ELSS scheme mutual funds is most advantageous? When you invest a large sum of money in an ELSS scheme, you are essentially buying a certain number of units at the current market price. The fund’s NAV is the determining factor in your return (NAV). When a mutual fund scheme invests a large sum all at once, it’s best to do so in a market with lower volatility, where you may still expect significant returns even though dollar-cost averaging won’t help you. The adaptability of cost averaging makes SIP investments a good choice even in times of severe volatility. When the NAV is lower, it’s possible to buy more units, and vice versa. Each instalment will be invested for a different period and will earn a different amount because the investments are spread out across the whole term. Via ELSS scheme: lumpsum or sip? The level of risk is the primary differentiator between the two strategies. Capital is safer in SIPs because you’re only a mutual fund scheme investing a part of your total investment. We recommend that experienced investors invest all at once. A SIP is a terrific approach for a first-time investor to develop a consistent investment routine. If you’re going to put down a sizable chunk of money, do it when the time is right. The timing of the market is irrelevant when initiating SIPs. The lock-in period for SIPs is normally 3 years and matures in phases, but the lock-in period for lump sum deposits is unlocked all at once after 3 years. An ELSS scheme investment made with a single lump sum payment would expire after three years, but an SIP bond would mature in instalments (based on the number of months invested) after the same period elapsed. [B-02] Summing-up: The purpose of this article is to give a comprehensive examination of which mutual fund scheme is better. The decision to invest in an ELSS scheme in a lump amount or over time (SIP) relies on your financial status, cash flow, market volatility, risk appetite, and timing. While paying off a big debt or taking advantage of luxury needs might sound worthy, it is also important to be aware of the other side of the coin. Apply for a top mutual fund scheme, compare interest rates and features across banks, and get the best deal. Investment Reliable does not offer financial advice, but we do provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their research. Also visit, Piramal Finance as it has more in-depth, educational, financial-related articles
08-11-2023
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FD

Everything You Need to Know About: What Is an FD and Its Working

At some point in your life, your parents must have told you to invest in fixed deposits. But have you ever wondered why? What is so special about them? In this article, you will learn about fixed deposits, the type of investment they are, their pros and cons, and whether investing in FD is the right thing for you. [B-01] What is a fixed deposit? A fixed deposit is a type of account you open with a bank or NBFC (non-banking financial company) that offers a fixed interest rate for setting aside a certain sum of money for a particular term. An FD is sometimes called a CD (certificate of deposit) or TD (term deposit). An FD is essentially an investment account where you, as an investor, have to invest money for a set period, and in exchange, the institution will offer you a fixed interest rate depending on the amount you deposit and the time you choose to keep the money invested. These two conditions make up a fixed deposit. How does a fixed deposit work? When you go to a financial or non-financial institution that offers fixed deposit accounts, you will be given certain pre-determined options in terms of how much money you can invest, how long you need to hold that money in the account, and how much interest you will get on it. For example, let’s consider an FD that offers 7% interest per year with a set holding period of 700 days. Let’s say you invest Rs. 1 lakh in it. Then, after the 700-day maturity period, you would have roughly Rs. 1.14 lakh. Note that a fixed deposit is generally a one-time payment that you make at the beginning of the term. You may or may not have the option to invest more later on, depending on the type of FD. Some institutions offer systematic deposit plans for their FDs. You should also not withdraw the money before maturity, as you will not get the promised FD interest rate. So before investing in FD, ensure you have enough liquid cash for your other needs. This way, once you start an FD, you only have to withdraw it after its maturity period unless there is an absolute emergency and you need the funds back. Pros & Cons of a Fixed Deposit PROSCONSIt is a low-risk form of investment as compared to many other types of investments available in the market. Since a fixed deposit is a type of investment that is less risky than other forms of investment, the returns are also lower compared to investments in something like equity stocks. It has a much higher rate of interest when compared to a savings or current account with a bank.You may lose the interest you accumulate partly or entirely over time if you decide to withdraw the money from the FD account prematurely. The amount you lose will depend on the cycle during which you withdraw the money.Even though you should not withdraw the money you invested in FD before its maturity period, you can easily withdraw the money at any time you need it. Features of a Fixed Deposit Before you start investing in FD, here are some things you should know about it: A secure form of investment: A fixed deposit is a secure form of investment, as the FD interest rates set at the beginning of the tenure are exactly the returns you will get, even if the rates are lowered later on. This makes it a much safer bet to invest money in than other market-led instruments, such as stocks, which are much more volatile. Compounding interest: People consider many factors before investing their money in an FD. One of them is known as the frequency of compounding. Regular FDs accumulate the fixed interest rate only once a year. But some FDs accumulate interest twice a year or more. This means you earn interest not just on your principal amount but also on your interest amount. Flexible term periods: A great thing about investing in FD is that you can decide how long you want to keep your money in an FD. Remember that the longer you hold your money in a fixed deposit, the more returns you will get due to the compounding effects of the interest rate. Fixed interest rates: – Most types of investments that promise high returns are often volatile, and the rate of interest is subject to change. But unlike other forms of investment that may or may not give you the predicted or promised returns, an FD will always give you a fixed return as promised at the beginning of the tenure of your fixed deposit. Get a loan against your FD: Another benefit of having an FD is that you can take out a loan against it if you need money urgently. Rather than breaking the tenure and withdrawing money from the fixed deposit account, you can simply use your FD as collateral for a loan. Should You Be Investing in FD? You should invest in a fixed deposit if you want to safeguard your money for the future and earn assured returns on it. But to grow your money faster, look at investing in other avenues, such as the stock market. Once you have earned profits through other investment forms, choosing a fixed deposit to safeguard your money is a wise choice. [B-02] NOTE: The information above is not financial advice, and you should always do your research and consult an expert before investing. Piramal Finance is one of India’s leading financial services companies. To learn more about how we can help you make better financial choices, check out our products and services on our website.
08-11-2023
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