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How To?

What is Retirement Mutual Fund and How to Calculate It

The word retirement suggests getting away from work and spending your life doing something you enjoy. However, that’s only a part of what retirement is. When people talk about retirement, they typically refer to the point when you stop working and take advantage of the benefits provided by your employer’s retirement plan. This is also known as an individual retirement account (IRA). Let us learn all about retirement planning and the best mutual funds for retirement. [B-01] What is a Retirement Mutual Fund? A retirement mutual fund, also known as an annuity, is a type of investment that pays you a regular monthly income. It’s one of the most common ways people use their money to ensure they have sufficient resources once they retire. Insurance companies offer two types of retirement mutual funds: defined-contribution and defined-benefit plans. Defined contribution plans let you decide how much money you want to invest each month. On the other hand, defined benefit plans work differently. Here, the company decides how much money it will contribute each month to the employees’ retirement pension plan. The amount is decided by the company’s board of directors. Different Methods to Invest in Retirement Mutual Funds There are two methods of investing in retirement mutual funds: Lump Sump Investment: It is also known as a big money investment or investing all the money at once. This method is preferred by those with a large sum of money and a high appetite for risk. Systematic Investment Plan With SIPs, investors invest a fixed amount of money monthly to accumulate capital. SIPs are advantageous to first-time investors. It is because they instill the habit of investing, which allows the money to accumulate gradually. It is a product that lets the wealthy invest money in the stock market without risking their finances. How to Calculate a Retirement Mutual Fund A retirement mutual fund is an investment option that acts as a retirement pension plan. When you invest in a retirement mutual fund, you buy shares of the fund. Funds offer diversification, which means your money is spread out over different investments (stocks, bonds, etc.). There are various steps involved in the process of calculating a retirement mutual fund: Step 1: The first step in calculating your retirement mutual fund is determining how much money you need. To do so, consider all your sources of income and social Security. You should also calculate your retirement expenses, like medical bills or travel plans. Lastly, consider inflation rates. Step 2: The second step is to determine how many years you have until you retire. This can be done by subtracting your current age from the years until retirement. Once you know this number, divide it by 100. Next, multiply it by your desired yearly contribution amount to calculate how much money you would need every year before retiring. For example, if you’re 30 years old with 20 years until retirement, divide 20 by 100 = 0.2 multiplied by desired yearly contribution amount = Rs 20000 per year or Rs 4000 per month. Step 3: Your desired yearly contribution amount should not exceed 15% of your gross salary. So, for example, if your gross salary is Rs. 1 lakh rupees per month, then the maximum you should contribute is Rs. 15,000. If you want to get additional tax benefits while investing in a retirement mutual fund, make sure to file your tax return correctly. Additionally, making contributions monthly instead of annually is good practice because it reduces the risk of underfunding your account. Step 4: The third step is choosing an appropriate retirement mutual fund. There are different varieties of how to choose a specific type, but they can be divided into three categories: low-risk, medium-risk, and high-risk. Low-risk funds typically have lower returns than medium or high-risk funds. But they don’t usually fluctuate too much. They tend to stay more stable over time. Medium-risk funds are somewhere between low and high-risk funds. High-risk funds are not recommended for people needing their money in the next few years or retirees whose nest eggs will last only ten years or less. These funds fluctuate significantly in price and could lose money even during economic growth. Step 5: Once you’ve chosen a fund, create an automatic withdrawal from your bank account. Fix it for each month and fill out the form at the financial institution where you’re opening the new account. Keep track of any taxes due on this amount through quarterly tax payments. Finally, set up auto withdrawal for all future contributions, so there is no lapse in retirement savings. In general, the higher the potential risk, the higher the potential reward; thus, someone saving for long-term needs may decide to go with a higher-risk fund, whereas someone closer to retirement may go for one of the low-risk funds. Advantages of Buying a Retirement Fund Here are the benefits of retirement planning: Planning for your retirement is a key aspect of a robust financial plan. A retirement fund helps you receive a steady income when you retire. It can be accomplished by investing in a retirement fund. Among the best benefits of investing in a retirement fund is the options it presents regarding the income stream you desire. Unlike an NPS product, where you’re required to invest in annuities, this fund will let you choose between pension-like retirement payouts or a lump sum payment. Retirement investments up to Rs. 1,50,000 annually are eligible for tax deductions under Section 80CCC. However, returns will be subject to taxes depending on your tax slab. [B-02] Summing Up A retirement mutual fund can be an investment vehicle that allows you to diversify your investments in stocks, bonds, money market instruments, cash equivalents, and other securities. A retirement mutual fund invests in the shares of many different companies, which reduces the risk for investors because the losses of any one company won’t affect the entire portfolio. To learn more about a retirement pension plan, visit Piramal Finance.

08-11-2023

Home Loan

Types of Home Loans in India

Introduction to Home Loans in India The Indian housing finance market has evolved to offer a range of home loan products, catering to the varied needs of borrowers. Home loans play a pivotal role in enabling individuals to acquire, construct, or renovate properties, making homeownership more accessible. Standard Home Loan A standard home loan is designed to assist individuals in purchasing a residential property, whether it's a new construction, an under-construction property, or a resale. This is the most common type of home loan availed by homebuyers. Eligibility Criteria Eligibility for a standard home loan typically depends on factors such as the applicant's income, credit score, age, employment stability, and existing financial obligations. Lenders assess these parameters to determine the borrower's repayment capacity. Key Features and Benefits Loan Amount: Up to 75-90% of the property's value, depending on the lender's policies and the borrower's profile. Tenure: Generally ranges from 5 to 30 years, offering flexibility in repayment. Interest Rates: Can be fixed or floating, with rates varying across lenders. Tax Benefits: Borrowers can avail tax deductions on both principal and interest repayments under sections 80C and 24(b) of the Income Tax Act. Home Construction Loan Home construction loans are intended for individuals who own a plot of land and wish to construct a residential property on it. Unlike standard home loans, these loans cater specifically to construction purposes. Eligibility Requirements Applicants must own the land on which they plan to build and provide detailed construction plans, cost estimates, and necessary approvals from local authorities. Lenders evaluate the borrower's financial stability and the feasibility of the construction project. Disbursement Process and Stages The loan amount is disbursed in phases, corresponding to the progress of the construction. Common stages include: Foundation Level: Initial disbursement upon laying the foundation. Plinth Level: Subsequent release after completing the plinth. Roof Level: Further disbursement upon reaching the roofing stage. Completion: Final installment upon full completion of the construction. This phased disbursement ensures funds are utilized appropriately at each construction stage. Land or Plot Loan Land or plot loans are designed for individuals aiming to purchase a piece of land for residential construction. It's important to note that these loans are solely for purchasing residential plots and not for agricultural or commercial land. Eligibility Criteria Eligibility factors include the applicant's income, creditworthiness, and the property's location. Lenders may have specific stipulations regarding the commencement of construction within a certain period after purchasing the plot. Terms and Conditions Loan-to-Value (LTV) Ratio: Typically lower than standard home loans, often around 70% of the plot's value. Interest Rates: Generally higher due to the increased risk associated with land purchases. Tenure: Usually shorter, ranging from 10 to 15 years. Home Improvement Loan Home improvement loans provide financial assistance for renovating or repairing an existing residential property. This can include activities like painting, flooring, waterproofing, and upgrading fixtures. Eligibility and Documentation Homeowners with a clear title to the property are eligible. Required documents often include proof of ownership, income statements, renovation plans, and cost estimates. Benefits and Limitations Benefits: Enhances the property's value and living conditions; tax benefits may be available on interest payments. Limitations: Loan amounts are typically smaller, and interest rates may be slightly higher compared to standard home loans. Home Extension Loan Home extension loans are intended for expanding an existing residential property, such as adding new rooms, floors, or balconies to accommodate a growing family. Eligibility Criteria Borrowers must own the property they wish to extend and provide a clear property title. Lenders also assess income stability, creditworthiness, and detailed extension plans. Key Features Loan Amount: Based on estimated extension costs and borrower eligibility. Interest Rates: Comparable to standard home loans, but may vary across lenders. Tax Benefits: Interest payments qualify for tax deductions under Section 24(b). Flexible Repayment: Can be structured like a regular home loan, with EMI-based repayment. Top-Up Home Loan A top-up home loan allows existing home loan borrowers to borrow additional funds over and above their original loan amount. It is commonly used for renovations, personal expenses, or other financial needs. Eligibility Requirements Borrowers with an ongoing home loan and a good repayment history are eligible. The loan-to-value (LTV) ratio and outstanding loan amount play a role in determining the approved top-up loan amount. Advantages and Considerations Lower Interest Rates: Compared to personal loans, top-up loans have lower rates. Flexible Usage: Can be used for any purpose, including home renovation and medical emergencies. Tax Benefits: If used for home-related expenses, tax benefits may apply under Sections 80C and 24(b). Repayment Tenure: Typically aligns with the existing home loan tenure. NRI Home Loan Purpose and Target Audience NRI home loans are designed specifically for Non-Resident Indians (NRIs) who wish to buy property in India. These loans help NRIs invest in residential real estate without physically being present in the country. Eligibility Criteria for NRIs Must be an NRI, PIO (Person of Indian Origin), or OCI (Overseas Citizen of India). Income verification from overseas employers or businesses. Valid passport and work permit required. Key Features and Benefits Loan Tenure: Typically 5 to 20 years. Higher Interest Rates: Slightly higher than regular home loans due to associated risks. Repayment: Must be done through NRE/NRO accounts in India. Tax Benefits: NRIs can claim tax deductions on home loan interest under Indian tax laws. Pradhan Mantri Awas Yojana (PMAY) Loan Overview of PMAY Scheme Pradhan Mantri Awas Yojana (PMAY) is a government initiative aimed at providing affordable housing to economically weaker sections through subsidized home loans. Eligibility Criteria Applicable to first-time homebuyers from low- and middle-income groups. Must meet income criteria as per PMAY guidelines. Property must be located in an eligible urban or rural area. Subsidy Details and Application Process Interest Subsidy: Up to 6.5% under the Credit-Linked Subsidy Scheme (CLSS). Loan Amount Limit: Varies based on income bracket. Application Process: Apply through approved banks and financial institutions. Composite Home Loan Concept and Applicability A composite home loan combines the purchase of a plot and subsequent construction costs into a single loan. It is ideal for individuals who wish to buy land and construct a home immediately or within a set period. Eligibility Requirements Must own or be in the process of purchasing a plot. Construction must start within a specified time, typically within 2-3 years. Benefits and Limitations Single Loan Structure: Eliminates the need for separate land and construction loans. Lower Processing Fees: Compared to taking separate loans. Construction Delay Risks: If construction is delayed, lenders may impose penalties. Conclusion India offers a variety of home loan options catering to different financial needs. From standard home loans and construction loans to specialized products like NRI home loans and PMAY subsidies, borrowers have a wide range of choices. When selecting a home loan, it’s essential to consider factors such as interest rates, loan tenure, eligibility, and specific requirements like construction needs or property location. Comparing multiple lenders and understanding loan terms can help borrowers make informed decisions that align with their financial goals.

08-11-2023

Mutual Funds

How to Apply for Mutual Funds

Mutual funds are a scheme to invest the money of a layman in various assets. The number of mutual fund investors has been growing at a surprising rate. The funds get managed by fund managers who are believed to be very experienced in managing different assets. So, here’s everything you need to know about mutual funds if you don’t know where to begin. [B-01] How do Mutual Funds Work? Mutual funds are a type of investment vehicle that uses the money contributed by many people to buy different types of securities. Most people think of a mutual fund as a way to invest. You can use it to buy stocks, bonds, gold, and money market funds, among other financial securities. A unit in a mutual fund gives you a small stake in each investment the fund owns. Mutual funds can be a great investment method if the investor doesn’t know how to invest and does not have the time to learn about investing. Why Investing in Mutual Funds is a Good Idea? Convenience Investing in mutual funds is easy – just hand over your money to these companies, and they will try to make money for you. You can finish the whole process without any paper from the comfort of your own home. Also, when you start investing, you can keep track of where your money is getting invested. Diversification Diversifying your portfolio is important to lower your risk. For those with little knowledge of investing, this is important to handle the bad performance of a single stock or industry. Mutual funds provide a lot of diversification. For example, you can buy up to 100 shares in a single mutual fund that tracks the S & P BSE 100 index. Money Management Mutual funds help you put money aside as investments regularly (as SIPs) or in lump-sum. Although actively managed mutual funds do not usually outperform the index in the long term, investing in “Direct” or passively managed mutual funds reap better returns without any effort, as they charge lesser management fees than “Regular” or actively managed mutual funds. Mutual Funds Types There are different types of mutual funds. Each type of fund tries to reach different goals. Most mutual funds are one of the following: Debt funds Fixed-income funds, also called debt funds, invest in corporate bonds, government bonds, and money-market instruments. Debt funds are a good choice if you want to make a steady income with almost no risk. Equity funds Equity funds put most of your money into stocks. The main goal of these funds is to grow their capital. But they are riskier because their returns depend on how the market is doing. Equity funds might be a good choice for long-term goals like saving for retirement or children’s marriage because the risk is spread out over a long time. Funds Determined by Structure Open-ended mutual funds These are highly liquid as the investor does not have to pay additional fees if they want to withdraw their money before a particular time. Closed-end funds have a set date when the investor can withdraw their money, and if withdrawn earlier, the investor has to pay a penalty on their investment amount, known as “Exit Load”. Periodic funds There are parts of interval funds that are both closed and open-ended. Investors can’t buy or sell units of these funds at any time. You can only buy and sell money at certain times or intervals that have already been set. Funds Determined by the Investment Goal Mutual funds can also be grouped based on their investment goals. Income funds As the name suggests, the goal of income funds is to give investors a steady income stream. These are debt funds that invest in things like CDs, bonds, debentures, commercial papers, and government securities, among many other things. Low-risk investors can use them to make money in the short term. You could also invest in duration funds based on how long you plan to invest or how much risk you are willing to take. These open-ended debt investment vehicles buy debt and money market securities. Growth funds Capital growth is the main goal of the growth funds. These funds put much money into stocks, especially in growing markets. If you want to invest in them, you should have a long-term plan because they might be risky. Stay away from growth funds if, for example, you are getting close to retirement. Tax-saving funds Based on Section 80C of the Income Tax Act, tax-saving funds offer tax rebates that help save money on taxes. When you invest in these funds, you can get tax breaks of up to Rs 1.5 lakh per year. Tax-saving funds might be a good choice if your main investment goal is to save on taxes. Equity-linked savings scheme (ELSS) funds are a type of tax-saving fund. Liquid funds If liquidity is a big concern, overnight funds are an interesting option. These are open-ended debts. The best mutual funds invest in assets due to be paid off in one day. This makes overnight funds very easy to use. These funds have very little risk because changes in interest rates don’t affect them. Investors who want to spend a lot of money away for a short time can look into overnight funds. How to Apply for Mutual Funds? Investing in mutual funds is easy and simple. Follow these steps to start investing in mutual funds: Step 1: Open an account with a mutual fund. Step 2: Finish the paperwork for KYC Step 3: Fill in the information asked for. Step 4: Decide which funds you want to invest in based on your financial goals. Step 5: Choose the right fund and send the money there. Step 6: Give your bank a standing order if you use a SIP to invest monthly money. [B-02] Conclusion A well-known financial saying says that if you want to get rich, you should be able to make money even when you’re sleeping. Investing in the best mutual funds could be a simple way to reach this goal. If you put money into mutual funds every month, your corpus grows. Your investment may start small but may grow significantly over time. Figure out your goals, choose the right funds, and start investing. You can get more information at Piramal Finance if you want to learn how to apply for mutual funds.

08-11-2023

How To?

How to Start an EV Charging/ Petrol Pump Business in India?

In most conversations, technological innovations like electric vehicles are becoming more popular. India evaluates the likelihood of a viable future that follows the 4th industrial revolution, which explains this. The installation of charging points is changing the landscape for the industry that operates gas pumps in India. It will be the same as opening a filling station in India, where there are endless economic possibilities. Charging bases are anticipated to expand in the upcoming years and take a sizable chunk of the world market. [B-01] Requirement of a charging point Petrol pump businesses are progressively converting to digital technology to stop the circle of rising pollution and reduce the consumption of natural assets. This increases CO2 release in our atmosphere. Our nation is currently experiencing a surge in electric vehicles. The total number of registered EVs across all sections touched 3.13 lakh units in 2021, as per the data from the Union Ministry of Road Transport and Highways. It continues by predicting that the EV sales registered in 2022 will reach 1 lakh in only 2 months. The nation wants to have a share of 30% in the electric vehicle (EV) sector by 2030, as per the NITI Aayog study. These data collectively indicate India’s steady progress in the direction of an EV revolution. Let’s define the charging point’s services first to get things started. Urban streets are filled with motorbikes, scooters, and various electric vehicles. Till recently, home charging was the default for electric vehicles. A specialized charging point is not available everywhere, though. However, petrol pump businesses are now setting up charging points in parking areas or on the highway to enable charging services as technology develops. Charging station’s start-up cost Capital and functioning expenditures are the two types of expenses that determine whether a corporation will be financially viable. Any petrol pump business’ ability to survive depends heavily on its ability to cover its operational costs. There are essentially no set operating costs when it comes to charging stations. The Government of India has ruled that if the infrastructure for charging stations complies with “Ministry of Power” requirements, no authorization is essential to instal it. For this reason, it is not essential to seek a specific permit to transport, or anything else to recharge electric vehicle batteries. Because of this, the cost of installing EV charging points is restricted to the price of the chargers, electricity, software, infrastructure, marketing, and labour, as well as maintenance. The average cost to create an EV charging point is expected to be anywhere around Rs 1 to 50 lakh. It depends on the kind of chargers installed, according to experts. Standard costs include, for instance, the price of a new electric connection, civil work, technicians and labour, marketing and advertising, site contract, and software and integration for EVSE administration. EV chargers types Fast Chargers All around the nation, these are rapid chargers for EVs and are typically placed alongside major highways. An EV can be swiftly recharged using the device’s high-power direct current (DC) output. Vehicles with large battery capacities that support quick charging can be charged with fast chargers. The fast charging option is therefore unavailable for vehicles 2 and 3-wheeler vehicles. The power of these machines typically is between 15 kW to 150 kW. The EV’s ability to charge within a certain amount of time, however, is also a factor in rapid charging. These can be put in place in areas where high power is available. Slow Chargers Slow charging is provided for EVs by AC chargers. These low-power slow chargers are simple to install in any household complex because they need less power. However, they take an average of 6 to 14 hrs. They are more manageable and less expensive. These kinds of chargers are typically used by 2- and 3-wheeled electric vehicles. Requirements for Installing a Charging point AREA: The location is crucial if you want to operate a Charging or petrol pump business. Which area should I choose? First, select shopping centres in the neighbourhood that have theatres for movies. Because patrons spend at least three hours viewing the movie and one hour at the food court when they go to the movies. Within 4 hours, their automobiles have received a 70–80% charge. Customers will profit from this because it will save them time, and when they return, their vehicle will be fully charged. MANPOWER: One skilled worker and one unskilled worker are required for this firm. Power: To set up this plant, you will require a connection with a capacity of roughly 50 KW. Marketing: Initially, how are you promoting this company? In essence, this is online marketing that makes use of blogs, advertising, YouTube, Facebook, and Linked In. LICENSE: What sort of license, if any, is needed to launch this firm, if we’re talking about licenses? The fact that a license is not required is both a very excellent and significant benefit for this firm. A license is not required for establishing these stations, as per the Ministry of Power. [B-02] Summing Up A charge business is possibly a hugely lucrative venture today. It requires little in the way of startup capital, business experience, or time commitment. It offers a rapid return on investment. It will consume less fuel and produce fewer pollutants. So the charging point can benefit the environment. Establishing charging or petrol pump businesses is therefore advantageous for the economy and also to sustain the emerging trends. We do not provide financial advice. We provide unbiased information and assessments on trading, investing, and other financial topics. Before making a purchase, always conduct your research. For even more comprehensive, interesting articles on money, go to Piramal Finance.

08-11-2023

Business Loan

Top reasons why you should know about business loan interest rate in 2022

Are you thinking of taking the next step and starting a venture of your own? While you plan your business strategy, the first step is to research the business loan, its interest rate and the source to get the loan. Don’t worry, we have researched for you and have analysed the various business loans that you can avail of for your venture. [B-01] What is a Business Loan? A business loan is a fund lent out to a company for a specific purpose that would help to run the business. It could be capital to start a business or funds to meet operational expenses. The loan is available to sole proprietors, privately held companies, partnership firms, self-employed persons as well as small and medium shopkeepers. There are several sources to apply for a loan. Lenders are willing to give loans as long as you pay them back on an agreed schedule, with interest. Types of Business Loans There are several types of business loans available globally. We are listing the ones available in India. Working Capital Loan – It is the loan given to businesses to meet their operational expenditures. Owners can use the fund to pay salaries and vendors or to purchase inventory and stocks. This is generally a short-term loan and hence interest rate is high. The amount of loan taken is generally up to Rs. 40 lakh payable within 12 months. Term loan – A business term loan is availed for a pre-defined period and may be unsecured or secured. The repayment tenor ranges from 12 months to 8 years, depending on whether the term is short, intermediate, or long. The amount for collateral-free business loans can go up to Rs. 2 Cr. A business line of credit – It is a revolving credit where you can take out funds as and when you require within the limit predecided by the lender. Equipment Finance or Machinery Loan – Equipment finance is used mainly by large enterprises majorly engaged in the manufacturing sector. If you are availing of equipment finance or machinery loan you can also enjoy tax benefits. The interest rate, loan amount, and repayment tenure offered vary from lender to lender. Point-of-Sale (POS) Loans – To reduce the cash crunch in your business, you may avail of the POS loan which comes at a steep interest rate as it is for a very short period. Now that we know of business loans and the various types, let us look closely at the prevailing interest rates. Business loan interest rates Business loan interest rates are generally of two types – Diminishing Rate of Interest and Flat Rate of Interest. a. Diminishing or Reducing Rate of Interest – The loans that you take are repaid in equal instalments called equated monthly instalments – EMI. The amount of EMI depends on the principal amount of the business loan, the rate of interest and the tenure of the loan. In this method of ROI, the interest is payable for the outstanding amount of the loan for each month. It means the interest keeps on decreasing as the tenure progresses and the loan is regularly repaid. The formula for calculating the rate of interest for the Reducing Balance Method is Amount of interest for each instalment = Applicable rate of interest * Remaining loan amount Let us explain with an example. If you take a business loan of Rs. 10 lakh at a 10% interest rate, for a 5-year tenure, then the EMI amount would decrease with every month’s repayment. In the first year, you would pay Rs.10,000 as interest on your principal. But in the 2nd year, you would have to pay Rs. 8,000 only for interest as the principal amount has now been reduced. This is a simple calculation to explain, in reality, the interest portion varies every month. b. Flat Rate of Interest – The other method to calculate your interest component is the flat method. The interest amount is predetermined in the beginning and you would have to pay the same amount throughout the tenure. This interest amount is significantly higher than the diminished interest. The formula for calculating the fixed rate of interest is Amount of interest for each instalment = (Original Loan Amount * Number of Years * Interest Rate per annum ) / Number of Payments. In the previous example, the interest amount was decreasing with every payment. But in this method, you would have to pay a flat Rs.10,000 every year as interest. The business loans interest rate broadly ranges between 15%-24% p.a. The final rate of interest is dependent on various factors like the borrower profile, credit score, financial statements, business stability, industry outlook and various other risk assessment parameters. Facts on Business Loan We have collated the salient features of a loan by comparing all the available options in the loan market today: Loan AmountRs. 50,000/- to Rs.50,00,000/-TenureMinimum of 12 months to a Maximum of 120 monthsBusiness Loan Interest Rate10% to 21%Loan Processing Charges2.50% of the loan amount subject to a minimum of Rs. 1,000/- & Maximum of Rs. 75000/-PrepaymentNo pre-payment can be done until repayment of 6 EMIsPre-payment chargesUp to 4% on the remaining amountCharges for late payment of Business loan EMIUp to 3% per annum on EMI / Principal overdue Top factors affecting the business loan interest rate Finally, let us look at the top factors affecting the interest rate of a business loan. Please note, the rate of interest varies from borrower to borrower depending on each person’s financial credibility. [B-02] Credit score Business experience Type of Business Revenue and Turnover Collateral Repayment History All of these factors contribute to the rate of interest that you can bargain for yourself. Hence it is of utmost importance to understand the various interest rates for different types of business loans. For more information and consultation on business loans please visit: https://www.piramalfinance.com/

08-11-2023

Personal Loan

Should You take a Personal Loan to Repay Your Debts?

Paying debt regularly is your responsibility but sometimes the pile is so huge that it becomes difficult to manage everything. Do you want to repay your debt by applying for a personal loan? Do you want to know whether you should apply for a personal loan to just repay your debts or not? If yes, then keep reading this article to know the pros and cons and take an informed decision. [B-01] What is a personal loan and what is the purpose of applying for it? A personal loan is a financial aid in which you borrow money from a lender for a set period and in return, the lender charges you a rate of interest. You can use this borrowed money to buy a new house, finance a marriage, plan a family trip or simply meet high-end expenses. This loan is solely for you if you want a lump sum amount to invest in something and then repay it in the form of instalments. There are many reasons why you might consider applying for a personal loan. The first reason is to fulfil your dreams or desires which you had for a long period. It would be buying your dream car, financing your child’s higher education, etc. But for repaying your other debts as well, like a home loan, you can think of taking a personal loan. What are some of the benefits of applying for a personal loan? There are numerous benefits of applying for a personal loan in India: Low rate of interest: Banks often charge you a low rate of interest on the loan amount to ensure that you easily pay the debt. The rate of interest starts from 8.5% per annum and goes up to 35% per annum, depending on your credentials, credit history, and the bank you prefer. Quick disbursal: Just after you get the approval from the bank, you get the loan amount in your hand instantly. As soon as you get the loan, you can start using the money as per your requirements. The long tenure of repayment: The tenure of repayment is often long, which ranges between one year to six years. So, you get ample time to repay your personal loan according to your convenience. Some banks allow more but mostly it depends on your credentials and the offers. High loan amount: The loan amount is also quite on the higher side, which is often about 30 to 35 lakh rupees. In some cases, even the limit can cross 40 lakh rupees if you have a very good credit score. While taking a personal loan, banks check your credit score and if you have a credit score of about 750 or more, then you will have a higher personal loan amount at a lower rate of interest. Payable instalments: The equated monthly instalments or EMIs are often very less and easily payable as the rate of interest is low. This is another advantage of applying for a personal loan because it addresses your convenience. Zero to minimal processing fee: The processing fee is also negligible and there are no other extra charges like stamp duty, prepayment charges, statutory charges, etc. Should you take a personal loan to repay your existing debts? To just answer this question in a single word, it is “yes”, but there are other aspects to it as well. Debts can mount over some time and without you even addressing they can sum up into a huge pile. Over time repaying all of that money might put you in a tight spot. So, to avoid all these odds you can consider applying for a personal loan. As the rate of interest would be low and the tenure of repayment will be long, it could be a good strategy. However, make sure you check the following points to decide whether you should opt for a personal loan or not: If you have maxed out your credit card: Because of wrong anticipation or a series of expensive months, you might have reached the maximum limit of your credit card. If that is the case and you need some urgent money, consider taking a small amount of personal loan. Try not to take a huge loan amount for any reason because this is also a form of debt. If you have borrowed from your relatives: You might have borrowed a lump sum amount of money from your relatives which you have to pay back. In that case, you can give a personal loan a go. Try to apply for the exact amount that you have borrowed, do not apply for a huge amount unreasonably. Other forms of loan: You might have urgently borrowed money from a lender or from an informal source that charges you a high rate of interest. Now, with time it might bank on your shoulder and you want to get rid of it. So, in that case, as well, you might consider applying for a personal loan. But make sure the loan amount doesn’t exceed what you need. [B-02] Conclusion Yes, you may take a personal loan to repay your existing debts but there are other things to keep in mind. If the existing debt is from an informal sector or you took it on an urgent basis, then you should apply for a personal loan. But, if the debt has a low-interest rate and isn’t causing much trouble, then you shouldn’t because a personal loan is also a debt and it won’t do any good further. So, decide what type of debt you want to clear and then think of taking the loan. You can use a personal loan calculator to estimate the interest rate and the tenure. Piramal Finance has a lot of engaging and informative content on similar topics. You may visit the link today for expert suggestions and opinions on personal loans.

08-11-2023

How To?

How to Apply for the Atal Pension Scheme

To aid its citizens who are employed in the informal economy, the Government of India introduced the Atal Pension Yojana (APY) Scheme in its 2015-2016 budget. The retirement plan prioritises ensuring low-income workers have secure financial futures in old age. [B-01] Things You Need to Know About the Atal Pension Yojana Scheme Here are some details regarding the programme that you should be aware of before applying: The maximum monthly pension is Rs. 5,000. The age range allowed is between 18 and 40 years. You have to make payment for at least 20 years. The retirement age is 60 years. You can choose from five different monthly pension amounts. Funding for the programme also includes contributions from the Indian government Interest in APY is guaranteed. The Pension Fund Regulatory and Development Authority manages the entire programme (PFRDA). The APY programme is an opt-in retirement savings plan. Downloading the Atal Pension Yojana (APY) Form If you’re interested in signing up for the Atal Pension Yojana (APY) Scheme, you can do it in several different ways. The application is available at the local branch of any of the participating financial institutions. If a participating bank’s website allows it, you can download and print the form from there. Pension Fund Regulatory and Development Authority’s website features a downloadable application for an APY account. The Atal Pension Yojana Application Procedure This is what you need to know to reap the Atal Pension Yojana’s benefits: The APY programme is available at all government-owned financial institutions. These financial institutions allow customers to open APY accounts. Bank websites also have the necessary account opening forms. The application is available for download by interested parties. Telugu, English, Tamil, Marathi, Kannada, Odia, Gujarati, and Bengali versions of the application form are also available. You must present a completed application to the bank. A working mobile phone number is required. You must also provide a photocopy of your Aadhaar card. When your application is accepted, you will be notified. Application for the Atal Pension Yojana Scheme The Atal Pension Yojana Scheme application form is easy to complete once you have obtained one. Fill in the Bank’s Address. The paperwork must be addressed to the Branch Manager. Simply contacting your bank will allow you to speak with a customer service representative who can provide you with the name of your Branch Manager. Input your bank’s full name and location. Provide Financial Information. Please use only CAPS LOCK for this form. Initial steps include giving over your banking information. Fill in your bank account information, bank name, and bank branch. Fill in General Information. To specify your gender, please select “Shri,” “Smt,” or “Kumari,” as appropriate. Indicate your gender by selecting “Shri” if you’re a male candidate. If you’re a woman and you are married, please check the “Smt” box. If you’re a single female applicant, please select “Kumari.” If you are married, your spouse’s name is required. Fill Nomination. Next, you’ll be able to nominate someone and specify your connection to them. In the event of your death, the pension will go to the person or organisation of your choice. In the case of a minor candidate, please include their birth date and the name of their legal guardian. You must also say if the candidate has additional social security systems and is a taxpayer. Fill in the Pension Information. Pension contributions can be made in increments of 1,000, 2,000, 3,000, 4,000, and 5,000 rupees. The amount you need to put into the pension each month will be calculated by the bank, so you can leave that field blank. It will be determined by various factors at registration. Complete Authorization and Declaration. Enter the time and location and put a thumbprint in place of a signature. By signing below, you confirm that you have read and fully recognize the policies and conditions of the Atal Pension Yojana Scheme. Also, you are declaring your eligibility to participate. By signing below, you confirm that the information you have provided is accurate. You promise to notify the bank immediately if any of the details you have supplied need to be updated. Additionally, you confirm that you do not participate in the NPS (National Pension System) and do not have an account there. If you deliberately give false or inaccurate information, you would be held responsible. Wait for Acknowledgement from the Bank. The final component of the Atal Pension Yojana Scheme application is for the bank to complete. It is named “Acknowledgement – Subscriber Registration for Atal Pension Yojana (APY)”. It confirms that the bank will subscribe to the Atal Pension Yojana for you. The bank representative will complete the form after it is submitted. Applying in Person at a Bank Your current bank is the best place to apply for this programme. The Atal Pension Yojana Scheme forms are available at most bank branches. The documents can be obtained in many different languages, including English, Hindi, Bengali, Gujarati, Marathi, Telugu, and Tamil. Anyone can request a copy of the form in his or her preferred language. The bank requires a completed application. The bank account you have will serve as a copy of your KYC documents. You will be notified via your cell phone number through a text message after your application has been processed and your account has been opened. [B-02] In many ways, your bank is the best way to apply for the Atal Pension Yojana Scheme given that your account details are already present and will be easier to link. Hope this blog has provided some much-needed clarity and will make it simpler for you to make the right choice. Learn more about Piramal Finance and the products and services they offer on their website for more information.

08-11-2023

Mutual Funds

How to Use Mutual Fund Investment for Financial Planning

Many people find finance fascinating, particularly those working in other unrelated fields. People get fascinated by the simple idea that their money can work for them. However, it’s more challenging than it seems. To get better outcomes, you have to plan finance and then make investments. The first requirement is that there must be enough funds and other resources to enter the markets. It would be best if you could find some specific investment opportunities. Making profits from those opportunities requires complete research, analysis, and discipline. According to Economic Times reports, mutual fund investors earn 6.5% annually. It may vary based on the period of the investment they made. Mutual Funds are expected to hit $100 trillion by 2028. Many people today might have the money, time, and other resources to get ahead in such activities. It’s better that you do proper research to plan your financial strategy and invest in mutual funds for better returns. Let us briefly learn about mutual funds to boost personal financial planning. [B-01] What are Mutual Funds? A mutual fund is people pooling money together for a specific period and investing in various securities. You can buy mutual fund ‘Units’. Units of a mutual fund scheme represent investors’ share of holding in the scheme. The stakes are selected based on personal financial planning and the scheme’s investment goal in mind. It is something you buy with money gathered from other investors. A fund manager manages and invests the gathered money in financial assets like stocks, bonds, etc. A team of experts monitors the mutual fund and gives financial advice to the investors. The Securities and Exchange Board of India (SEBI) is the administrative body over Mutual Funds in India. It has appointed the Association of Mutual Funds in India (AMFI) as a primary regulator of mutual funds. AMFI is a non-profit organization that monitors mutual fund operations in India. Types of Mutual Funds There are several types of Mutual Funds that attract investors. Mutual Funds are classified based on asset class, speciality, structure, and returns. The types of Mutual Funds in India are listed below- Growth Funds These schemes primarily invest money in equity stocks to provide profitable returns. They are considered ideal for investors with long-term investments. Investors usually need a 5 to 10-year investment period and risk-bearing in growth funds. Equity Funds These funds make investments in equity stocks and company shares. Equity funds are considered to be having a high risk-to-reward ratio. The size of the equity fund is predicted based on Market Capitalization. Equity Mutual Funds are classified by Investment Strategies. The results of those techniques are reflected in the equities they own. Index Funds These are funds that invest in securities. They usually represent a specific index to predict the movement and returns of the index. The market will exceed any individual investment over the long term. Index funds aim to match the risk and return of the stock market. Money Market Funds These funds invest in ready-to-trade securities, such as Treasury bills and commercial papers. Money market funds are also known as secure investments. They are ideal for those searching for immediate but reasonable returns. The terms “money markets” and “cash markets” refer to financial markets. A high level of risk often characterizes these types of funds. Real Estate Funds These are the investment funds that finance businesses in the real estate industry. These funds can be used to purchase real estate, build homes, plan finance, or hire property managers. However, real estate funds give a more relaxed return on investments. Debt Funds These investing firms invest in debt-related securities. For instance, fixed-income assets, government bonds, and corporate debentures. In Debt Funds, however, no tax is subtracted from the source. Therefore, debt funds are low-risk investment options in personal financial planning. Benefits of Mutual Funds Risk diversification to several investment classes Professional Management of securities Monitoring by experts Higher Liquidity Multiple modes of investment Encouragement for future investments Tax Benefits Operational Transparency Systematic Investments. Mutual Funds as an Investment Tool An asset management company (AMC) creates a mutual fund by combining investments from multiple sources. These can be different individuals and business investors with similar goals. A fund manager professionally manages the pooled investment by purchasing shares in the stock market. It helps maximize returns for the investors while following the fund’s investment goals. Fund Professionals with a proven track record of managing assets and complete market knowledge are fund managers. Investors make a profit from regular dividends, interest, and capital growth. They reinvest their profits by growing asset values or by financial advice from experts. Moreover, investors receive a consistent income through a dividend option. Factors You Should Consider Before Investing Investment Goal – Observe and define your financial goals and objectives. Making a Choice – Choose a low-risk type of fund from the various types of Mutual Funds if you are a beginner. Expand Portfolio – Invest in more than just a single mutual fund. Expand your portfolio and improve returns in case one of the funds underperforms. Updated Documents – Keep your KYC and mandatory documents updated timely. It will eliminate the chances of money laundering and fraud. Financial Advice – Always seek financial advice from professionals if your confidence and investment knowledge seem insufficient. [B-02] Conclusion Mutual funds come in a wide variety. An investor can systematically purchase them after doing proper research. It helps the investors to get benefits in the long term. Recently, many new mutual funds have been developed, offering profitable options for all kinds of traders. However, it is important to know that mutual funds are subject to market risks. Understanding the market risks associated with mutual funds is essential to avoid following the crowd. You should plan finance and make an investment strategy. It will help you choose the right fund to invest your money in. Piramal Finance gives you efficient and the best financial advice at your request. Contact Piramal Finance to seek assistance from experts regarding stocks, mutual funds, and personal loans.

08-11-2023

Home Loan

Should you opt for a fixed-rate or a floating-rate home loan?

Buying a house is like a dream come true for many people and with it comes a lot of responsibility. One of the important responsibilities could be repaying your house loan at regular intervals. But what’s more important is what kind of interest rate you prefer so that the repayment doesn’t bother you at all. Whether it is a fixed rate of interest or a floating rate of interest, you have to decide which one to pick. In this article, we will assess both sides, see their pros and cons, balance it out, and let you decide which one is better between the two. [B-01] What is a fixed rate of interest when it comes to a home loan? A fixed rate of interest means that the interest rate the lender charges you remains constant throughout the repayment tenure. This means if the bank charges you a 10% interest rate on your home loan for 20 years, the interest rate remains 10% throughout 20 years. There is always an option for you to set a fixed rate of interest for 3, 5 or 10 years but that cannot be frequently done. This is one of your rights that you can exercise if you find the interest rate not so compelling. There are both advantages and disadvantages of a fixed rate of interest and boils down to an individual level. What are some of the advantages of a fixed rate of interest? There are numerous benefits of having a fixed rate of interest for a home loan. Sense of certainty: A fixed rate of interest for a home loan gives you a sense of certainty. You are well aware of how much you are going to repay for the rest of your tenure. This gives you a lot of confidence as you know how much to save for the next instalment. Better planning: Since you know that the interest rate is fixed and you have to pay a certain amount, you will easily be able to make smart financial choices. You can plan your budget accordingly, and save your money efficiently. Resistant to a sudden increase in market rate: This is another advantage of preferring a fixed rate of interest for a home loan. You are completely immune to a sudden upsurge in the market rate. In the case of tomorrow, the market rate suddenly goes up, your interest rate remains constant. So, you now don’t have to pay any extra amount in the form of EMI. When should you prefer a fixed rate of interest for a home loan? Here are some of the instances to consider fixed-rate loans: If you are comfortable with the EMI: If you are comfortable with the current instalment you are paying, then you should stick to a fixed rate of interest. If this amount doesn’t bother you and you feel satisfied with how much you are paying, then there is no reason to choose anything over a fixed rate. If the unpredictability of the market bothers you: In case you feel that the market rate is not constant and might increase shortly, then to prevent this you should stick to a fixed rate. Suppose, you are paying 15% interest which is fixed throughout the tenure and suddenly you sense that the market rate is going to be 20%, then it is worth staying where you are right now. If you see that the interest rate has been constant all the time: If you see that the interest rate is not changing much and has been constant for a long time, then you should consider a fixed rate of interest for a home loan. Now that you have read about the fixed rate of interest, let’s see the other side of the story. What is a floating rate of interest when it comes to a home loan? Unlike a fixed rate of interest, the floating rate of interest is variable and changes according to the market rate. It is therefore also called the “variable rate” of interest or “adjustable rate” of interest. So, if the market rate increases in the future, then the interest rate is also going to increase and vice versa. The reset period for the floating interest rate depends on the option that the bank provides you and the date you apply for it. It could be quarterly, half-yearly or even yearly, depending on what date you apply for. Suppose, the interest rate changes every quarter, then if you apply in January, the interest rate changes in May. What are some of the benefits of applying for a floating interest rate? Unexpected gains: You can have unexpected gains because of market fluctuations and this will be profitable for you. You have a better scope of gaining if the market rate constantly goes down and decreases than the base rate. Lower rate of interest: If you ask from the point of observation, floating rates are lower than fixed rates in most cases. The difference is about 1% to 2.5% approximately. This isn’t always a sure thing, but most of the time, the floating interest rate is slightly lower than the fixed interest rate. If the market rate is constantly decreasing: You might see a trend in the decrease of the market rate which is why you might prefer considering a fixed interest rate. When should you consider taking a floating interest rate? If you predict the market rate to be decreasing: If you predict that the market rate is going to decrease in the future, you should go for a floating interest rate. If your fixed rate is on the higher side: If your fixed interest rate is high, you should consider changing to a floating rate. [B-02] Summing it up Whether you should go for a fixed rate or a floating rate, depends on the market rate. If you predict the market rate to decrease in the future, you should go for a floating rate. If you are comfortable paying at the present interest rate, then stick to a fixed rate. Do you like reading articles and blogs on topics like loans, SIPs, mutual funds, MSMEs, financing, etc.? Well, then you should look for Piramal Finance where you find ample information regarding these topics.

08-11-2023