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Asset Allocation Strategies – How to Decide Asset Allocation

Financial Planning

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May 11, 2019

Asset Allocation Strategies – How to Decide Asset Allocation

Don’t put all your investment in one basket. Make use of asset allocation and spread your investment in the various asset class. This is famous advice of Investment guru and stock market expert Warren Buffett. But unfortunately, people don’t follow this advice.

While taking a financial decision, most of the people are unpredictable. They take financial decision randomly or based on someone’s advice. They never plan their finance. The unplanned financial decision leads to a skewed portfolio consisting of only a few asset class or multiple asset class.

Remember – Buying too many assets or only a few assets can hurt your finances. You need to balance your portfolio to get better returns from investment.

In this post, we will take a look at various asset allocation strategies. We will also discuss about How to Decide Asset Allocation?

What is Asset Allocation?

Asset Allocation is an investment strategy of dividing investment among various categories such as equity, debt, mutual funds etc. The preliminary purpose of asset allocation is balancing risk and rewards. The asset allocation is done based on investor’s risk tolerance, goals and investment time frame.

Two individuals with the same goal may still have different asset allocations. The one with a higher risk-carrying capacity and long-term investment goal may decide to invest more money in equity. The other one with low-risk appetite or short-term investment goal may invest more money in a debt fund or fixed deposit.

There are three main types of asset classes – equities, fixed-income and cash. All these assets have different risk and return characteristic. You need to find out which asset basket suits you for which investment goal.

Why Asset Allocation is Important?

The investment without proper asset allocation is random investment. A random investment always leads to financial disaster. Asset allocation provides proper diversification to portfolio. When you diversify your portfolio across various asset class, you are reducing your risk. This is because when one asset class is not performing, it can be offset by performance of another asset class. In addition to reduction in risk proper asset allocation also offers better returns.

Here is detail about asset allocation strategy which is used by me for making investment.

How to Decide Asset Allocation?

Identify your financial goals

The first step in deciding asset allocation is identifying your financial goals and timelines. In other words, deciding the purpose of investment and time when you will need money. Some example of financial goals are –

Early retirement at the age of 50 years with corpus of 3 Cr.
A requirement of 50 Lakh Corpus for child education at the age of 42 years.
Required 50 Lakh for children marriage at the age of 48 years.

Once your goals are identified you need to decide how much money is required for investment and how much risk you can take for each financial goal.

If your financial goals are of longer duration you can afford to take higher risk and invest your money stock market. If your financial goals are short term you can go for low-risk assets such as bonds or fixed deposit.

Assess your risk profile

A second important aspect to consider while deciding asset allocation is your risk profile. You need to ask yourself what your risk tolerance is? If you are OK with taking a risk, you can go for risky investment options. If you are risk averse you can go for conservative investment options.

Determine your target portfolio

One of the simplest ways to determine your target portfolio is based on your age. Your risk-taking capacity will reduce with your age. The thumb rule of asset allocation says that individual should hold a percentage of stocks equals to 100 minus their age. This means if your age is 25 years you can keep 75% of money in stocks. If your age is 60 years it is advisable to keep only 40% money in the stock market.

Once you determine your target portfolio percentage you need to go for selection of investment.

Select your Investment

In order to select your investment, you need to be sure about the asset class, expected returns and lock-in period. Ideally, you should hold a variety of equity assets from small cap, mid cap, and large cap segment. These stocks should be from various industry sectors. If you are planning to invest in the mutual funds. Make sure to select a mutual fund from various segment such as mid cap, small cap, large cap, multi cap etc. Once you are done with an investment you need to go for the next step which is review and rebalance.

Review and Rebalance

In review and rebalance step, you need to review your portfolio performance. If your portfolio is not performing as per expectation you need to rebalance your portfolio. Make sure to perform this step time to time. It will help you in increasing your portfolio performance.

10 Latest Online Jobs from Home – Make 30K per Month

Money & Wealth

Shitanshu Kapadia

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May 9, 2019

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10 Latest Online Jobs from Home – Make 30K per Month

Online Jobs are gaining popularity nowadays. Many people in India and abroad completely rely on online jobs for living their life.

It is a known fact that everyone needs money to live their life and more than 50% of people struggles every day to make money. Unemployment, growing inflation, and declining salary are biggest concerns nowadays. Thank God, the Internet is at our rescue. We can easily make 30K to 50K per month by doing Online Jobs on the Internet.

Also Read – 19 Online Business Ideas for 2019

I have prepared 10 Latest Online Jobs from home which will help you to make at least 30K per month. These online jobs require 3-4 hours or daily working. You need not invest any money to start these jobs. I am sure, if you are looking for Online Jobs for whatever reason, you will find it one via this article. So, let’s get started.

Basic Requirements to Start Online Jobs

First of all, we will look at the basic requirements for starting online jobs or business from home. Once the basic requirement mentioned below are fulfilled you are good to go for an online internet job. So, here is a list of basic requirements to start online jobs.

A personal computer, Laptop or Smart Phone with an Internet connection
E-mail Account
PayPal Account
Personal Bank Account
PAN Card
Daily 3-4 Hours

Once the above requirements are fulfilled, you are good to go for Online jobs. Here are 10 Latest Online Jobs from Home, which will help you to make 30K per month.

10 Latest Online Jobs from Home

#1 Get Paid to Click

Get Paid to Click is one of the simplest ways to make money online. There are many websites where you can sign up and start earning money by clicking on the advertisement. This type of job is known as PTC (Pay to Click) jobs. You can make up to 30K per month via this method. Clixsense and Neobux are legitimate websites that helped me in making money online.

#2 Get Paid for Survey

You can also get paid for online survey. There are many companies who want to know about their products and services. They conduct an online survey to gather information. This information helps them to increase their sell.

#3 Make Money from Blogging

You can also make money from blogging. A blog is a place where you share your thoughts and ideas about your area of interest. When your blog posts get popular and attract traffic, advertiser will come forward for placing an advertisement on your blog. You can put a fixed cost advertisement or pay per click advertisement on your blog.

#4 Affiliate Marketing

Affiliate Marketing is one type of marketing where you refer someone to buy the online product. When that person buys a product based on your recommendation you will be paid commission. You can generate a lot of money via affiliate marketing. You can do affiliate marketing via e-mail marketing, social marketing or WhatsApp marketing.

#5 Work as a Freelancer

A Freelancer is a person who bid for projects/jobs that are available online. Once you complete the project you will receive the payment. There are websites like Elance, ODesk, Fiverr that provides online freelancer jobs.

#6 Earn Money via YouTube

YouTube Video Posting is one of the best online jobs. In this job, you need to make a unique video and post it online on YouTube Channel. Once your videos gains popularity, you can convert your channel as paid channel. You can even make money using YouTube AdSense channel partner program.

#7 Sell photos online

You can sell photos online and earn a lot of money. There are many websites such as Shutterstock, Fotolia that offers the facility of selling photos online. You can easily make 30K to 50K monthly via selling photographs online. Make sure photos which you are planning to sell are high-quality unique photographs.

#8 Buy & Sell Domain

Buying & Selling Domain or Domain Flipping is next unique online job. It is very simple way of earning money. However, you cannot expect regular monthly income via domain flipping. You need to be careful before selecting domain name, otherwise you will end up making losses.

#9 Content Writing

You can also start your online job as a content writer. In order to become a content writer, you need to be very good at writing unique content. Once you develop this skill you need to contact bloggers who are looking for a good content writer. As a content writer, you can earn 500 Rs to 1000 Rs per article.

#10 Data Entry Operator Jobs

You can find a number of data entry jobs online. These jobs are like typing document, converting physical document to e-document etc. Your pay out in this job depends upon your typing speed. If your speed of typing is very good you will be able to earn 10,000 Rs to 20,000 Rs per month by doing data entry jobs.

Over to You

I hope the above list will help you to start your online job. If you are already working on any of the online job mentioned above then share your experience in the comment section given below.

If you know any other online jobs do share with us so that we can include that in the list.

Best Investment Options in India

Investment

Shitanshu Kapadia

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May 5, 2019

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Which are Best Investment Options in India for 2026-27? Where I should invest my money for getting better returns? These are some common questions popping up in investors mind. In this post, I will try to answer these questions.

How to Find Best Investment Options?

How to Find Best Investment Options? Which one is the best investment option as per you? Well, an answer to this question varies based on person to person. Let’s try to do one small exercise. Take a quick break of two-minute and answer one simple question. Which one is the best investment option as per you? Your answer could be –

Stock Market
Fixed deposit
Mutual Funds
Real Estate

Your answer could be fixed deposit, mutual funds, the stock market or real estate. Whatever be your choice one thing is sure that while making a choice you must have considered your goal, expected returns, investment horizon, and associated risk factors.

So, in order to find out the best investment options for yourself, you need to consider the following factors.

Also Read – 10 Best Investment to get regular monthly income

#1. Financial Goals & Expected Returns

The first thing you need to consider before finalizing investment option is your financial goals and expected returns. The financial goal means the purpose of investment. Some examples are retirement corpus, children education, buying a house, etc. Once you decide your goal you need to find out the investment required for every goal. Once you have this information on your hand it is very easy to select an investment option.

#2 Investment Horizon

The second thing you need to consider is the investment horizon. You want money in the short term or your goal is far away and you can stay invested for a couple of years. Remember the best investment options for the shorter duration is different compared to the long term.

#3 Risk Factors

The third most important factor for consideration is the risk factor. The risk-taking ability and capacity to withstand losses differ from person to person.

For example – If you have recently started job and you don’t have much liabilities your risk taking capacity is higher. If you are in the middle age or retirement age your risk taking capacity might be lower.

Based on these factors I have divided Best Investment Options in the following categories –

# Best Investment Options for Salaried (Low & Medium Risk)

# Best Investment Options for Businessmen (High Risk)

# Short Term Best Investment Options in India

# Long Term Best Investment Options in India

Best Investment Options in India

# Best Investment Options for Salaried (Low & Medium Risk)

#1 Bank Fixed Deposit

Bank Fixed Deposit is one of the most popular investment options for salaried. Bank Fixed deposit offers moderate returns. You can expect 6.5% to 8% returns from bank fixed deposit. Fixed deposit is available in cumulative and non-cumulative options. The interest income is taxable. If you are in the highest tax bracket, the post-tax return will be very low.

Expected Returns – 6.5 to 8%

Time Duration – 7 Days to 10 Years

Risk – Low Risk

#2 Public Provident Fund

Public Provident Fund is the next best investment option for low and medium risk investors. PPF is safe and secure investment options and highly preferred by salaried people. The return from public provident fund is completely tax-free. However, PPF has lock in period of 15 years. If you are looking for long term investment option you can invest in PPF.

Expected Returns – 7.5 to 8.5%

Time Duration – 15 Years

Risk – Low Risk

#3 National Pension Scheme

National Pension Scheme is gaining rapid popularity nowadays. This is mainly due to tax benefits. NPS offers two choices. Auto and Active. Under Auto, the funds get automatically invested in various assets, whereas in Active investor need to make the choices. The Lock in period in NPS depends upon age of investor.

Expected Returns – 9 to 11%

Time Duration – Long Term

Risk – Moderate

#4 Tax Saving Deposit

Tax Saving FD is another best investment option for salaried. Tax saving FD offers moderate returns. However it is considered as one of the safest option for investment. Tax Saving FD comes with lock-in period of 5 years.

Expected Returns – 7.6%

Time Duration – 5 Years

Risk – Low

#5 ELSS

ELSS (Equity Linked Saving Scheme) is next in the list of best investment options of salaried. ELSS offers higher returns compared to other tax saving instruments. You can invest in ELSS via SIP route with minimum monthly SIP of Rs.500. Lock-in period of ELSS is 3 years.

Expected Returns – 11-13%

Time Duration – 3 Years

Risk – Moderate

#6 VPF

A salaried people can also invest in EPF via Voluntary Provident Fund. VPF is an extension of the EPF. VPF falls under tax exempt category. It is safe investment option. Withdrawal from EPF is allowed under various conditions.

Expected Returns – 8.5-8.66%

Time Duration – Long Term

Risk – Moderate

# Best Investment Options for Salaried & Businessmen (High Risk)

#7 Stock Market

Stock Market is best investment option for high risk investors. Invest in stock market if you are comfortable losing as much as 50% of your capital. A stock market investment require lot of knowledge. You need to analyse stock thoroughly before making investment. You can take help of stock market expert for identifying best stock for investment.

Expected Returns – 6-15%

Time Duration – Long to Medium Term

Risk – High

#8 Mutual Funds

Equity Mutual Fund is comparatively safe and convenient way of investing in equity stock market. Mutual Fund generate higher returns in the long run. You can invest via SIP or lump sum in equity mutual funds. Minimum monthly SIP in mutual fund is Rs.500.

Expected Returns – 9-15%

Time Duration – Long to Medium Term

Risk – High

#9 Initial Public Offer

Initial Public Offer (IPO) is high risk high return investment option. The best part is your money will remain block for 7 to 15 days. A good IPO can fetch very good returns at the long run. You have to be careful in making selection of IPO, otherwise you are likely to lose money.

Expected Returns – 10-20%

Time Duration – Long Term

Risk – High

#10 Real Estate Commercial

Commercial real estate property provide capital appreciation and rental income both. This option is likely to provide higher capital appreciation due to growing demand of office space. Investment required under this option is very high. You need to be careful in selecting location, building quality, market space rent and supply demand while investing in commercial property.

Expected Returns – 12%

Time Duration – Long Term

Risk – High

#11 Gold

Gold yellow shining metal is considered as safe heaven by many investors. In last few years, gold has given consistent returns to the investors. If you are planning to invest your money in gold, it is recommended to invest via Gold ETF or gold bonds.

Expected Returns – 10%

Time Duration – Medium to Long Term

Risk – Moderate

#12 Company Fixed Deposit

Company Fixed Deposit is one of the very good investment option for high risk investor. Company FD provides higher returns compared to bank FDs. You need to be careful in making selection of company fixed deposit. Make sure to check rating and past performance history before selection.

Expected Returns – 10%

Time Duration – Medium to Long Term

Risk – High

# Short Term Best Investment Options in India

#13 Liquid Mutual Funds

Liquid Mutual fund is low risk investment option. It is short term investment option and provide higher liquidity. These type of mutual fund invests your money in bank FD, T-bills, commercial papers etc. with maturity period of less than 91 days.

Expected Returns – 6.5%

Time Duration – Short Term

Risk – Moderate

#14 Recurring Deposit

Recurring deposit is type of fixed deposit where money can be invested in small proportion on monthly basis. The return generated by recurring deposit is almost same as that of fixed deposit.

Expected Returns – 7%

Time Duration – 3 Years

Risk – Low

#15 Ultra Short Term Debt Mutual Funds

Ultra Short Term Debt Mutual fund is debt mutual fund. Ultra short term debt mutual fund invests in fixed income instruments with liquidity and short term maturities. Ultra Short Term Debt Mutual Fund is one of the best investment option for shorter duration.

Expected Returns – 7-9%

Time Duration – Short Term

Risk – Low

#16 Monthly Income Scheme Post office

Monthly Income Scheme of post office is one of the safest investment option. If you are looking for regular monthly income you can plan to invest in MIS. It is popular investment option for retired or old age person.

Expected Returns – 7.7%

Time Duration – 5 years (monthly income)

Risk – Low

# Long Term Best Investment Options in India

#17 Direct Mutual Funds

Direct Mutual Fund is best investment option for person looking for capital appreciation and wealth generation. The expense ratio of direct mutual fund is very low. You can invest in direct mutual funds via CAMs or other mutual fund platforms.

Expected Returns – 16-18%

Time Duration – 5 years

Risk – Moderate

#18 Real Estate Residential

Real Estate investment is another long term investment option. If you have surplus money you can invest in residential real estate property. You can get rental income as well as benefit of capital appreciation.

Expected Returns – 11%

Time Duration – Long Term

Risk – High

#19 Blue Chip Stocks

Investment in blue-chip stocks is one of my favorite investment options. You can invest in blue-chip stocks for a longer duration. This option is likely to give you higher returns. Blue Chip stocks pay a regular dividend as well as provide capital appreciation. If you have surplus money it is highly advisable to invest in blue-chip stocks.

Expected Returns – 12-18%

Time Duration – Long Term

Risk – High

Best Cash Credit Loan Working Capital Loan – Features & Comparison

Personal Loan

Shitanshu Kapadia

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April 30, 2019

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Best Cash Credit Loan Working Capital Loan – Features & Comparison

A cash credit loan is taken by business owners or company to fulfill their working capital requirements. Working capital requirements include payment of labor wages, raw material purchase, managing supply chain, logistics, etc. This loan is also called as Working capital Loan. Bank provides cash credit loans to the company based on creditworthiness and reputation. This is generally measured by current assets and liabilities of the company. If you have established your business and you are in need of money, here is complete information about cash credit loan.

Also Read – 10 Best Instant Personal Loan Apps for Quick Cash Requirement

What is Cash Credit Loan?

A Cash Credit Loan is a short-term loan extended to a company by bank. This facility allows businessmen to withdraw money from a bank without keeping a credit balance. This facility is granted against security. The security can be in the form of the following.

Raw Materials
Finished Goods
Stock in Trade
Any other collateral

The borrowing limit is decided based on creditworthiness and collateral. The interest under this loan is charged only on the withdrawal of money and not on the withdrawal limit. This facility is generally extended for a period of 12 months. Multiple withdrawal within withdrawal limit is possible in the span of 12 months.

Key features associated with Cash Credit Loan are given below.

Key Features of Cash Credit Loan

Borrowing Limit – This limit is decided on the borrowing power or creditworthiness. A loan withdrawal is allowed up to borrowing limit.

Interest on running balance – Interest is charged on running balance only and not on the entire borrowing limit.

Collateral Security – This type loan is secured with collateral raw material, finished goods, fixed assets, property etc.

Minimum Commitment Charge – A minimum commitment charge is interest amount required to be paid by the borrower irrespective of credit usage.

Credit period – Credit period in these types of loan is 12 months. Once this period is over bank re-evaluate borrowing limit and make the changes.

Example of Cash Credit

Company XYZ is a television manufacturer. They purchase raw material and convert it into finish goods. The finished good is not getting sold immediately. So, a company’s capital is stuck in the form of inventory. To run the business company avail facility of credit on their finished goods. This short-term loan facility is known as Cash Credit.

Advantages of Cash Credit Loan

Few advantages of Cash Credit are given below.

It can act as a very good source of working capital financing.
This type of credit is available easily at any bank.
Cash credit provides flexibility as loan withdrawal can be done many times up to borrowing limit.
The paid interest can be deducted from tax. This gives additional benefit in terms of taxes.
Incase loan is not utilized only minimum commitment charges needs to be paid

Best Cash Credit Loan – Working capital loan Comparison

A comparison of few famous bank offering Cash Credit Loan is given below.

Banks	Interest Rate	Maximum Loan Amount
ICICI Bank	8.75% to 16%	Up to 5 Crore
HDFC Bank	Contact the Bank for details	10 Lakhs to 25 Lakhs
Bajaj Finserv	From 18% p.a onwards	Up to 30 Lakhs
IDBI Bank	9.65% to 14.15%	Varies based on requirement
Mahindra Finance	Contact Finance Company for Details	Up to 25 Crore

Things to consider before availing cash credit

The rate of interest at which this loan is offered is the first point of consideration.
You should check eligibility criteria and maximum permissible loan amount before applying for a loan.
Bank charges processing fee for giving loan. You should look at applicable charges on loan.
Check for the restriction placed by the lender on the loan amount to be spent. It should match as per your requirement.
Make sure to check your credit score and creditworthiness before applying for a loan.
You should also look at the requirement of documents and speed of getting loan approval.

Conclusion

Cash Credit Loan is a very good option for businessmen. However, the rate of interest in cash credit is very high. These types of loan can be availed easily by an old reputed company. However, for a new company it will be difficult to get such loans. Cash Credit can be a temporary option for fulfilling working capital requirement. But you can not rely on this option for the extended period of time.