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Lessons to Your Kids on World Savings Day

Kids Lesson Money

Today is world saving day this day is devoted to the promotion of savings all over the World. We all accept western culture and celebrate days like valentine day but unfortunately we don’t even remember World Savings Day in our country. This may be due to we are very busy or may be least interested in day like this.

In some country World Savings Day is always a day of great excitement, when Banks distributed free piggy-banks to children, and inspired them to set savings goals, instilling a sense of financial responsibility into their young minds.

Handing personal finances is a great life skill at any age, and kids that are taught to be financially responsible are generally better equipped to make better financial decisions later on in life, as well as establish good savings habits. Here are some ways to get your kids started on October 31st with some World Savings Day activities that will pay off big time for them.

Encourage your children to have a piggy-bank:-

We recommend encouraging your children to use piggy bank from the child hood. This will serve multiple purposes.

  • Your children will enjoy putting spare change or part of their pocket money into their piggy-banks.
  • It may be visual incentive to them of how much money they are accumulating.
  • It will cause good saving habit in to mind of child.

Open a savings account for your kids:-

Although your child is minor candidate you can open saving bank account on your child’s name. Ask your child to spend some time to visit bank and deposit small amount like 500 rupee every month in to this account.  Just keep them motivated to build up good bank account balance apart from depositing money to piggy-bank.

Tech them finance through Games:-

Game is best way to teach children’s. To teach finance you can go with same concept by playing related to finance. Games like “New Business” concept of dealing with money in this game will help children to grab attention over finance.

Teach them that reducing expenses makes goals come faster:-

Set goals in front of your child and teach them how to achieve it if you teach them about savings goals, they’ll probably learn this lesson on their own. It’s common sense, and kids are smart enough to figure it out: if I want to get to a goal faster, I have to save more … which means spending less on other stuff.

But it’s worth reinforcing with a discussion about spending and saving, and by talking to them about the decision they’re making every time they spend money.

Teach them how your money can make money:-

Teach your child that money placed in piggy bank will not grow but money placed in saving bank account will earn interest and can grow. Teach them about investment and show them how they can put their money in certain investments, and how those investments will grow over time.

Teach your kids what a budget is:-

Teach your kids what it means to budget by breaking it down to a level that they will understand. Maybe they buy lunch at the canteen two or three days a week? Set a budget for their lunch money, and demonstrate to them how spending less will add in to saving. Ultimately money saved is money earn.

Make it simple and easy, so they don’t grow up thinking that budgets are hard and onerous (like many of us grew up thinking). If they get into the habit now, it’ll pay off huge when they grow up.

Teach them about the dangers of debt:-

This probably isn’t a lesson they can understand when they’re 6 years old, but when they’re teen-agers, they can grasp the concept. You’ll need to discuss things like loans, credit cards and other debts.

Teach them that earning more money gets them closer to their goals:-

If you have a savings goal, you can reduce your expenses to get there faster … and you can also earn more money. They can start learning this lesson at a young age, by earning extra money. May be by doing small job part time of may be giving tuitions.

With a little imagination, and lots of positive reinforcement, your kids will soon be well on their way to becoming financially responsible, and learn a life skill that they will value for the rest of their lives.

So on October 31st, while you’re handing out candy to the kids, don’t forget to hand out some good savings advice too.

Best Way to Invest Your Diwali Bonus

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Diwali bonus

Mr. Rakesh, 30 Years old works with MNC has just received Rs 1,00,000 as Diwali bonus. Rakesh don’t want to waste this money he wants to invest this entire amount in to some value adding investment but he is confused about where to invest this money. So if you are confused like Mr.Rakesh we are here to help you to guide with best possible way to invest this bonus amount.

Best Way to spend Diwali Bonus:-

First thing you can do with this amount is you can reduce your liability, so if  you have loans like home loan, personal loan or loan against security than I advise you to simply pay this loan first.

Check if your life insurance & medical insurance need is fulfilled or not, if not you can use part of bonus amount for this and rest you can keep as Emergency Fund.

If you don’t have any liability than you can use following chart to decide your investment avenue according to time horizon, tax bracket and risk appetite.

Diwali bonus Investment

Remember your investment decision should also take into account your overall financial portfolio. If you have low risk appetite you can invest in fix deposit bur remember interest from this fix deposit is considered as your income and bank may deduct TDS. If your income does not exceed the tax exemption limit, you can get back deducted amount by clamming refund but it is better to submit a declaration under Form 15G. Senior citizens should submit Form 15H to Bank to avoid TDS deduction.

If you are investing for the long term, go for equity only if your allocation allows you to take that kind of exposure to the volatile & risky asset class.

It is always advisable no to invest lump sum amount directly in equity so you can plan to invest this money systematically.

You can also think of investing this money in Gold or Silver in systematic manner.

Please share how you are going to spend your Diwali Bonus?

Don’t opt for loan because of discounts

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discount

Festival season has started, banks has started giving discounts and various offers on loans. Buyers are always waiting for this discount season to get best bargains. This discount includes reduction in interest rate, waiver of processing fees and so on.  This year also several banks including SBI, ICICI Bank, HDFC,UCO bank, have lined up discount offers to attract potential buyers. Many buyers get attracted towards this offer and opt for loan because of this discount.

Starting offer discount SBI has slash processing fees on home loan and car loan by 50%, while ICICI bank has reduced interest rate on housing loan. ICICI bank is now offering floating rate home loans at 10.25% up to Rs 30 lakh and at 10.50% for amounts above Rs 30 lakh and up to Rs 3 crore until the end of the calendar year. This rate is around 0.25% to 1% lower than the normal rate on housing loans.

HDFC has also followed ICICI and reduced home loan rate to 10.25% up to Rs 30 lakh and   10.5% for loans above Rs 30 lakh.

While UCO bank has come up with combo offer on taking both car loan and home loan. They have waived off processing fees on home loan. Union Bank of India’s also offers processing fee waiver for home and vehicle loans.

Similarly, Bank of Baroda has slashed interest rates on home loans by up to 1.50% and auto loans by up to 1.75% in addition to waiving off processing charges.

Corporation Bank is offering a concession of 0.25% on interest rate for vehicle loans, if the borrower avails of both home and car loans. Processing fees are also waived off.

This discount offers are available only for limited period for the most of the banks. SBI’s reduction in processing charges will be valid till December 31. During the period, SBI will charge a minimum of Rs 1,000 and a maximum of Rs 5,000 as home loan processing fee.

This discount offer tempt customer to buy home loan or car loan. Remember that taking loan is binding yourself in liability. With this loan you have to pay EMI for several years.

Moreover if you default on making EMI payment it will have its own consequences including affect on your credit report.

If you can afford and you are in genuine need of home for living than you must take home loan as home is appreciable asset and home loan provides you added advantage in terms of tax benefit.

However, ensure that you borrow within your means. For instance, do not opt for a 3-BHK when a 2-BHK is all you need, simply because of your higher loan eligibility. A larger loan translates into a higher EMI, and you may find it difficult to bear this burden for 10-15 years.

Cars or two-wheelers, are depreciating assets and auto loans do not fetch any tax relief either. Hence, stick to the one that fits into your budget rather than the one you have always dreamt of.

It is not advisable to opt for a loan just because of discounts in the rate of interest or concession in processing charges. Technically processing fees discount or interest rate concession would cost you few thousand rupees, whereas the loan that is to be repaid runs into lakhs of rupees.

So don’t get illogical by purchasing these loans because of discounts.

You can become Crorepati from your salary

crorepati

People say that it is not possible to become Crorepati from your regular income but if you plan your investment correctly you can even become crorepati from your salary.

All you need to consider is three main aspects:-

  • Amount of your investments
  • Rate of return
  • Time Frame

You need to maintain discipline with your and investment to get this big return. You must be wondering that what amount you need to invest in order to become crorepati. Well this depends on return provided by investment class you have selected.

Amount of your investments:-

Following table can be used as a ready reckoner to achieve approximate target of 1 Crore , for different time period and different returns assumed. This table can help you in deciding monthly saving/investment required at every month to reach at goal of 1 Cr.

Investment required   per month to become Crorepati

Time Frame (Years)

Time frame (Months)

6%

10%

15%

18%

25

300

14,425/-

7,600/-

3,152/-

1,808/-

24

288

15,589/-

8,450/-

3,666/-

2,161/-

23

276

16,871/-

9,426/-

4,268/-

2,585/-

22

264

18,300/-

10,531/-

4,973/-

3,092/-

21

252

19,875/-

11,781/-

5,800/-

3710/-

20

240

21,620/-

13,201/-

6,771/-

4,436/-

19

228

23,570/-

14,819/-

7,915/-

5,322/-

18

216

25,770/-

16,670/-

9,265/-

6,391/-

17

204

28,253/-

18,797/-

10,870/-

7,686/-

16

192

31,075/-

21,255/-

12775/-

9,260/-

15

180

34,302/-

24,110/-

15,045/-

11,179/-

14

168

38,024/-

27,451/-

17,785/-

13,531/-

13

156

42,355/-

31,392/-

21,092/-

16,430/-

12

144

47,445/-

36,086/-

25,130/-

20,028/-

11

132

53,500/-

41,739/-

30,097/-

24,533/-

10

120

60,820/-

49,640/-

36,291/-

30,238/-

09

108

69,810/-

58,258/-

44,135/-

37,560/-

08

96

81,115/-

69,180/-

54,250/-

47,131/-

07

84

95,715/-

83,387/-

67,630/-

59,940/-

06

72

1,15,265/-

1,02,534/-

85,920/-

77,628/-

05

60

1,42,730/-

1,29,582/-

1,12,080/-

1,03,160/-

Rate of return:-

Rate of return determines how fast your money should grow. Higher the rate of return more money you will make after stipulated time. However higher returns comes with risk, hence you need to decide how much of risk you are willing to take. Low risk investment will provide less return.

According to expert you should distribute your investments in high-risk investments such as equity and mutual funds and low-risk investments such as bonds, gold and fixed deposits to get the best results. This way, even if one asset class suffers, the other will make up for the losses.

Time Frame:-

Investing for longer period means that your invested money will be reinvested which will add higher returns to your account. So starting early and stay invested for longer period will always help.

For 6% return you can invest in insurance. For 10% return you may select Fix Deposit as investment option. For higher return say 15-18% you can invest in stock market or equity based fund.

Start early and invest regularly and you can be Crorepati.