Why is a credit card better than a debit card?

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Credit cards and Debit cards are the most powerful and useful financial elements of our life, which assist you in carrying your money securely. In addition to securing your money, these cards also help in using them anywhere. If you are out of cash, it provides you the convenience of making payments at any restaurant or in a multiplex. You can also withdraw cash using any ATM machine.

Nowadays, everyone desires to get some attractive offers and discounts on both online and offline purchases. But, with credit card you get attractive offers and discounts without even spending your money. When making payments with the plastic cards, either you have the money in your bank account to pay for your payments or you have insufficient money to make the purchase. With debit card, it is necessary to at least have the amount of money required to complete the transaction. But with credit card, you can make the transaction and your bank will make the payment on your behalf. The basic difference between a debit card and a credit card is where the cards pull money from. A debit card is linked to the individual’s bank account. On the other hand, a credit card is linked to the issuer or the bank that charges it to your line of credit.

Debit and credit cards come with several attractive offers and discounts on online and offline purchases. Most of you would be having at least one credit card and debit card in your pocket. But no matter how useful they are, or how much convenience and protection they provide, they have some important differences, which make credit card more beneficial than debit card.

Difference between Debit and Credit Cards

Debit cards come with the convenience of cashless transaction and relieve us from the stress of carrying cash. It also provides us the convenience of accessing your money through ATMs to withdraw cash if in need. Debit Card is linked to your bank account and is ideal for rapid and hassle free transactions. When you make any transaction using your debit card (online or offline), the same amount gets debited from your bank account instantly. Your bank will send SMS and email alerts to inform you about the transaction being made by you. It helps to keep a track of your spending.

Credit cards function differently than Debit cards. The Debit Card is linked to the cardholder’s bank account, whereas on the other hand credit card is linked to the bank that provided the card and offers you a line of credit. So, when you make any transaction using your credit card, you are not charged for the payment and your bank makes the payment on your behalf. But, the same amount will be charged to your credit card bill, which will be generated the next month and then you have to make the payment for the same.

5 Reasons Why People should use Credit Cards instead of Debit Cards

  1. Reward Points: With credit cards, you can get reward points that you can use to receive free gifts, vouchers, cash back rewards and much more. But, there are rarely any banks, which provide reward programs with any debit cards
  2. EMI: When making purchases using the debit card, you have to pay the entire bill amount at one go. Whereas, with a credit card, you get the convenience of paying your bill amount by converting your purchases into EMIs of up to 24 months. You do have to pay interest every month on the outstanding amount with some additional charges.
  3. Credit Score: Credit reports are based on the previous credit history that is tracked by credit bureaus. Credit card helps build your credit history, which makes it easy for you to get a loan approval in future. However, your debit cards are not tracked by credit bureaus. Thus, your debit card usage does not affect your credit score at all. Thus, using a credit card and making repayments on time can assist you to build a credit score.

The above-mentioned reasons will help you in making your mind why you should use credit cards instead of debit cards.


How we can invest in mutual funds?

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A mutual fund is one of the popular investment options where the Asset Management Company (AMC) collects the money from several investors and further invests it in different instruments such as debt, equity, money market and securities. The consequent profit, after deductions by the AMC, is circulated among the investors according to their mutual fund investment portfolios.

Even though mutual fund investments are subjected to market risks, more people are keen to invest money in it because it can provide good returns despite mitigating losses. What’s good about investing in mutual funds is that you need not have to be an expert on the market since investments here are made by a group of experts who decide how to invest, when to invest and where to invest.

So now that you know what mutual funds are, it’s time to understand how you can invest in mutual funds:-

  1. Asset allocation: To start with mutual funds investment, the first thing here is to understand what kind of portfolio you want. This step is also known as asset allocation. Always allocate your assets in a way that it forms a perfect amalgamation of high and low-risk funds. As a general rule, the amount of funds you invest to low-risk debt instruments should be equal to your age. This means, any individual who is 35 years of age, should allocate only 35% of their funds toward debt instruments. This will protect them against any risk in the remaining assets that they have invested in.
  2. Shortlist funds type: Shortlisting the fund type is considered an important part of mutual funds investment. Once you have allocated your assets properly as per your needs, the next step is to study and compare different type of mutual funds on the basis of their past performance and investment perspective. For this, you can refer to the shareholder’s reports and prospectus provided by the AMC. The prospectus will help you get complete information about different types of fund while the shareholder’s report will assist you in understanding the past performances and regularity of returns. Apart from the research work, you must also determine your financial goals and get answers to questions like Are you investing just to substitute your income or for retirement/marriage? What is the time limit of return you are comfortable with? While short listing funds type.
  3. Compare funds: Once you have shortlisted the funds, you should compare and pick the right funds. For example, when looking for a mutual fund,
  4. Check the past records of the funds from shareholder’s report or through online websites.
  5. Look for the top 5 funds in the asset class that match your financial goals, time frame, and risk profile.
  6. Check performance of the funds for a different time frame, such as 3 months, 6 months, and so on.
  7. Check for the fund managers profiles and asset allocators by going through the prospectus of that particular mutual fund.
  8. Understand how important the diversification is: However safe your mutual fund investment may appear, it may be risky at some level. Therefore, the best way to expand your investment is by allocating assets in instruments that are not completely correlated. Make sure that your mutual fund’s portfolio is a concoction of equity, mixed market, debt, gold and other types of funds to balance out the risk factor.


So now when you have made the mutual fund investment in the selected funds, it is also necessary to keep a track of the funds you have invested in. Even though your funds are managed by investors, having a thorough knowledge of your portfolio is important.

How to Make a Crore with Mutual Funds by Investing Rs. 4,000 in a Month?

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A vast majority of us wants to be rich but often wonder if their dream could be true someday. Well, the answer to this question is yes, all of us can become rich if we work towards it. But how can one make this possible? The answer to this is Mutual Funds. Investing in mutual funds can be your quick route to be rich. Most individuals prefer investing in mutual funds when they have a large sum of money to spare. According to them investing lump sum money in funds will help them achieve their financial goals faster. This is also one of the reasons why most people defer investing indefinitely. Contrary to their common belief, investing bit by bit can also help them achieve their goals without compromising on their other financial commitments that comes along in their life.

Investing a small amount of Rs. 4,000 every month in an equity scheme can help them create an amount of Rs. 1 crore in a period little over 15 years. To make this possible all you need is discipline, which nothing other than SIP (Systematic Investment Planning) can bring when you invest. But before we start discussing about the investment strategy, let us first talk a bit about savings and investment risks.

Savings and Investment Risks

Saving money is difficult especially in this modern setup where you need to maintain a lifestyle to fit in the crowd. So how does one save money? The answer is simple: save first and spend later. This way you can control your expenses, save more and accordingly invest money to reach your financial goals.

Before you start investing, understand that investments involve risks. Be it stocks, shares, bonds or mutual funds, there is always a certain amount of risk involved. Another important rule of an investment is that riskier an investment is, greater will be the potential returns. If you want to take high risk, it is better to start investing as early as possible. It is because young investors have fewer responsibilities and resultantly higher risk appetite and risk tolerance than investors in their mid-40s. Another reason for starting early is that when you’re young you get longer time to recover from losses.

How to make a crore with mutual funds investment?

With time due to inflation, one crore price has lost its charm but the amount still means a lot to several people. Now for those who are wondering how much they should invest to achieve this financial goal, the answer is that they can start with an amount as low as Rs. 4,000 per month investment for the first year. From the next year that is the second year, they can increase their monthly investment amount by Rs. 1,000. Let’s consider that they have taken an aggressive investment approach and managed to get returns of 10% per annum. In the table given below, we have explained how the SIP value is expected to grow over the next few years at a 10% rate.

Table1. Table showing year by year growth of an SIP investment that is increased by Rs. 1,000 every year*

Year SIP Amount/month Total Savings During the Year Total Investment Value at end of year
1st Year 4,000 48,000 50,658
2nd Year 5,000 60,000 1,33,220
3rd Year 6,000 72,000 2,52,447
4th Year 7,000 84,000 4,13,749
5th Year 8,000 96,000 6,23,262
10th Year 13,000 1,56,000 26,72,391
15th Year 18,000 2,16,000 74,65,602
20th Year 23,000 2,76,000 1,74,23,264

*Figures given in the table are suggestive and based on a constant growth at 10% per annum, which in real-life situation is not possible.

You can see in the table given above that you can definitely achieve the goal of becoming a ‘crorepati’ in 20 years. If you start with an amount greater than Rs. 4,000 then your dream of being a ‘crorepati’ can come true sooner.

Important Points that Can Get You Maximum Returns on Mutual Fund Investments

Besides SIP, there are other important points that an investor must consider to get the best out of their mutual fund investments:

  • Invest keeping your financial goal and risk appetite in mind.
  • Diversify your investment portfolio.
  • Put money in sectors that will outperform.
  • Start investing as early as possible.

Which is a Better way to Invest in Mutual Funds: Lump Sum or SIP?

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People who want to increase their money over a period must invest in mutual funds. In this type of investment a good number of investors pool their money to purchase securities. It is quite popular amongst investors as it yields high returns. Whether investors are seeking for capital gains or want regular income, in mutual funds, they get a wide range of schemes to suit their requirements.

When it comes to investing in mutual funds, a common question that troubles a lot of investors is that whether they should deposit their money in bulk (at one go) or on schedule in one of the best SIP plans. To understand which mutual fund investment method is best for you, we need to first understand both investment strategies.

Systematic Investment Planning (SIP)

If you have financial constraints and cannot deposit a lump sum amount for fund investment, choose SIP. The SIP investment method is available for mutual funds, gold funds and ETFs (exchange-traded funds). In this investment method, a fixed amount of money is periodically (monthly or quarterly) deposited in the chosen mutual fund scheme. To reap the benefits of SIP, it is advisable to invest in the best SIP plans for a long term of at least five years. To learn other benefits of SIP, read below:

  • Brings discipline: A large number of people make investments in mutual funds and fail due to the lack of discipline. Especially beginners find it difficult to regularly invest lump sum amount of money in fund schemes. With the help of SIP, the regularity in making an investment can be done easily.
  • Rupee cost averaging: Rupee cost averaging is an investment strategy that eradicates the need to track the market. All that investors need to do is to regularly invest a pre-decided amount for a long period. Since in SIP the amount of money invested is constant, it allows investors to buy more units when market rates are low and vice-versa, thus, saving investors from the mistake of investing during market peaks and exiting during market lows by reversing the trend.
  • Low investment amount: If investors choose to deposit in mutual funds through SIP, they can begin investing with an amount as low as Rs 500 per month, thus, giving an opportunity to investors from all financial backgrounds to participate and invest in the market. This also ensures that their monthly budget is not strained while staying invested in the market for a long time and yielding great returns.
  • No entry or exit load: In mutual funds, many fund houses waive off entry or exit load when the investment is done through SIP investment method. This lowers the cost of your investment. In mutual funds, the exit load is usually levied to discourage investors from being in and out of schemes. However, the exit load is usually charged if you redeem units within a year of buying the units.

Lump Sum Investment

In lump sum investment, investors deposit the entire amount in mutual fund scheme at one go. Investors who have great knowledge and understanding about market’s current valuations and behaviour choose to make lump sum investment in mutual funds. It is best to invest in lump sum amount when:

  • The market valuations are low.
  • Market’s or a specific stock’s price-earnings ratio is low.

The above two points also hold true for SIP method of investment but in SIP the fund manager takes care of such things.

Which one is better: Lump sum or SIP?

The main purpose of making an investment is to increase money. An investor should invest money in those avenues where he/she can churn out maximum returns. When it comes to mutual funds, investors must closely study whether their funds are aligned with their financial objectives or not. They must not choose a fund scheme or an investment method because of other people but because this is what fulfils their requirements.

When it comes to deciding which investment mode (lump sum or SIP) is better, it is difficult to say as a direct comparison between the two is not possible or fair as both have their own pros and cons. Also in deciding which method of investment is better a lot of other factors come into play – the most important factor being the investor’s requirements and circumstances. For a beginner or a salaried person, SIP is a safer way to invest as it inculcates discipline to invest regularly without having much to worry about market valuations. People who closely follow market and have experience about it can invest their money at one go (lump sum). Therefore, before making the final call weigh all pros and cons and see which one out the two fits your requirement.

What You Can and Cannot Find Using the Personal Loan Calculator

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Are you planning to get a personal loan to fund your daughter’s wedding? You can consider getting it either through bank or NBFCs (non-banking financial institutions). Both these platforms offer personal loans at attractive interest rates. But before you apply for it, you must calculate your loan eligibility and EMIs in advance to plan your expenses wisely. Here a personal loan calculator can be best put to use.

A personal loan calculator is a useful online tool that enables you to plan how much money you should borrow as a loan based on your repayment capacity. By using this tool, you can also calculate the monthly loan EMIs and the interest rate that you would be paying to the bank/NBFC within a stipulated period of time to settle the loan. You can make as many searches you want using this tool with the different loan amount, loan term and interest rates to reach out the best loan scheme that matches your requirements and budget.

Here’s a complete list of what you CAN find and what you CANNOT find using the personal loan calculator.

Here’s what you CAN find using a personal loan calculator :-

  1. Whether you are eligible to apply for a loan or not.
  2. Your monthly loan EMIs payable during the tenure.
  3. The interest rate you would be paying on the loan (it varies across banks in India and also on your profile & the principal amount you are likely to borrow as loan).
  4. Amortization table displaying periodic loan payments along with the principal and the interest amount that comprise each payment till the time the loan is paid off at the end of its term.

Here’s what you CANNOT find using a personal loan calculator :-

  1. Whether your loan application will be approved or not.

    Banks/NBFCs also provide a pre-payment facility for customers wherein they can pre-pay the loan amount at one go. It is a very useful window with which a customer can save a lot of money that is otherwise spent in paying higher interest (in unsecured loans) and continued EMIs throughout the loan tenure.

An online calculator comes to rescue to those loan applicants who wish to get a loan after proper planning and research. Getting a personal loan without considering your repayment capacity will result in increased EMIs that would disturb your finances in the long run. This is why you must instigate a thorough research on the list of personal loans offered by the banks and NBFCs.

In addition to this, you must also check out the interest rates offered by several banks on a personal loan, consider choosing your loan term wisely, and always borrow the amount that you can easily repay. A personal loan is one of the best solutions to meet immediate money requirements as it involves minimal documentation, quick money disbursal, and pre or part payment facility that will help you save big in the long run. So why wait! Apply for the loan today to meet unexpected money related problems.

An important point to note: A personal loan is an unsecured loan and that is why would involve higher interest rates as compared to other types of loans. So choose the lender that offers you loan at rates that suits your requirements. You must also improve your credit score to easily qualify for a personal loan. You can find personal loan calculators on the bank’s official website and also on the several third-party websites. However, to get the most accurate results, you must always use online calculator of the particular bank from where you are planning to get a loan.

5 Steps to Calculate Gold Rates

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The significance of gold in India has grown by leaps and bounds in the heart of Indians and homes alike. Gold, in Indian history, is more than an investment. It is an integral part of Indian culture and traditions as gold jewelry is passed on from generations to generations to keep the family legacy alive. Also, gifting gold is considered auspicious in India. In addition to this, many people in the country find gold as a safe investment and use it during financial crisis.

Although the price of gold is displayed at every jeweler’s shop in India but to be sure of the price of gold jewelry and coins simultaneously, it is wise to first calculate the rate of gold  by following the five steps mentioned below in this article:

  1. Determine the current value of Gold: This is important because there is a formula that should be used to calculate the per gram value of gold. However, the only variable in the formula is the current value of gold that you can find using the internet. Note that gold rates that you see online are for 24 carat of gold – the purest form of gold. However, for gold jewelry, 22 karat gold is used.
  2. In the second step, divide the current gold rates in dollars per ounce by 31.1 to get today’s gold price per grams. Let’s suppose, if today’s gold price is $1600/ounce, then present gold rates will be $1600 divided by 31.1, which will be equal to USD $ 51.45 per gram.
  3. Categorize your gold in Karat to access its value: This means, keep all the gold coins on one side whereas the jewelry, and other items on other respective sides. You can use a magnifier to see the mark on the gold. In case it is not visible, you can even do the acid test or Skey test to check the gold karat, whether it is 18K, 22K or 24k. Once the assessment is done, keep the gold coin and jewelry in a separate group.
  1. For each group including the coin and the jewelry, divide the karat by 24 and then multiply it by the current gold rates per gram. For example, if you have 10k gold and the value of gold on that particular day is USD $1600/ounce or USD $ 51.45 per gram, then the price of your scrap gold will be 10k = 10/24 = .4167, that means USD$51.45 x .4167 = USD$21.44 per gram.
  1. To calculate the price of gold jewelry, the following formula can be used:-

    Gold jewelry price = (Gold price/gram) * (weight in gm) + (making charges) * (Weight in gm) + GST

So if, the price of 22k gold is 2350/gram, the purchase weight is 2gm and making charges is, let’s suppose, Rs. 200/gm, then the price of gold ornament will be =2530* 2+200*2 =5660 +GST (3%) = Rs. 5828.

In India, the demand for gold is escalating and so is the price. Therefore, to invest in the finest gold or to sell gold for maximum returns, it is good to do a bit of ground work. Note that, not all jewelers in the country offer gold at similar rates because of the making charges (that varies from one shop to the other), and discounts (that many gold sellers offer from time to time to clear the stock). Also, some shopkeepers buy gold in bulk at a lesser price and thereafter sell it at a reduced rate too as compared to other shops. Therefore, it is wise to do some research on gold rate and the type of gold you want to invest in.