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.

How to Get Secured Personal Loans Quickly?

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If you are in dire need of money and are looking to get a secured personal loan quickly, there are not many places you can resort to. This is because firstly applying for a secured personal loan can never be quick. Secondly secured personal loans also require you to provide a collateral – may be a home or jewelry, that you may lose if you default on the loan. Moreover, if you don’t have an asset to provide it as collateral, or you don’t want to get loan against your asset and keep it on stake, you’re ultimately left with limited choices that include:-

Title loan companies: – These companies provide a secured personal loan by claiming the car that you own. They keep the label while you can keep using your car. Depending on the year of purchase, condition and the type of your car, the amount of loan is settled – which is typically not more than half the price of your vehicle with the interest rate being 25%. These loans are mandatory to be repaid within 30 days or it can also be renewed for an additional term by paying the fees. If the borrower fails to pay off the loan or renew it, the lender can reclaim the vehicle. If the borrower still fails to pay off the loan and other charges associated with it, the lender has full authority to sell the car to make up for the loan amount.

Pawn shops: They also provide short-term, secured personal loans against your property but at a high-interest rate and fees. To initiate the loan process, you will have to display property; a broker at the shop will then evaluate and fix the loan amount that you can get, but it will be less than the actual value of your property. It is not just the property, Pawn shops also offer loan against jewelry, electronic equipment, and small piece of equipment, musical instruments, even motor vehicle but you cannot use the asset till the time you settle up the loan amount in full. The tenure of personal loans offered by the pawn shops is not more than one month and if you do not repay the loan on time and the asset is still with the lender, the broker has full authority to sell the asset to extract the loan amount.

Check-cashing stores: These also offer secured personal loans but in a different way. Firstly they offer loan amount in cash or advance, secondly, you have to give the lender a check for the loan amount as a security along with the lender’s fees. Thirdly, the loans offered by these stores are not more than $500. The lender will keep your check with him/her till the time you pay off the loan or renew the loan term by paying the fees. If you do neither of these things, the lender will deposit your check in the bank to extract the loan amount. In case your cheque is bounced, you will have to pay more dues to the lender and the bank as well.

Conclusion: These secured personal loans are intended to provide immediate funds to those in urgent need of money at a higher interest rate. The short term secured loans offered by these companies can help you a lot if you use this amount for the right purpose and pay them off on time. One word of advice: Always do a thorough grounding, and make wise judgment when getting a loan from these lenders.

Loan Against Property-Loan For Fulfilling Your Dream

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Wondering what is a loan against property? Loan against property is the amount of money borrowed from a bank or financial institution against your real estate assets. You give an assurance of repayment to the bank by putting forward your tangible asset like a residential property, commercial property or a piece of land. If you reside in a flat, you may take full advantage of the features of this loan. You just have to submit No Objection Certificate (NOC) from the society you live in. So, when you approach a bank for a loan against property, the bank calculates the net worth of the property you are putting forward and approves or disapproves the loan accordingly.
When taking a loan against property, you have to determine the EMI you have to pay monthly and the interest rate. The chief benefit of this type of loan is the lower interest rate. This sort of loan is advantageous in the context of interest rate, convenience in disbursal and also there is no prepayment charge. The kind of loan is as per the name, that is, it is the loan which is taken against the property put forward by the loan seeker. To calculate the EMI or equated monthly instalment amount, you will have to use loan against property EMI calculator. There are various perks associated with this sort of loan.
When should you consider loan against property?
Loan against property may be taken under various circumstances like when you are planning to expand the business, or for taking a vacation abroad or to arrange for an upcoming marriage in the family. Loan against gold can also be taken but a lot of people are not comfortable with parting with their gold jewelry. In such cases, they can put forward an asset that they are less attached with and find less risky in comparison to gold.
Perks associated with loan against property
It is easy to get loan against property than other sorts of loans. Besides this, the interest rate you get here is far more attractive than what you get in other kinds of loans. Even when you take the loan, your property will still stay under your name. In fact, it may be used for productive purposes. The loan seeker can get high loan amount as well depending on the property value.
Fulfill your monetary needs
The best part of loan against property is that the financial institution may accept commercial or residential property as collateral. On the other hand, the loan you take from the bank may be used as per your desire, that is, for personal or business purpose and whatsoever (except for illegal activities).
Easy repayments
If you want, you can pay the loan in lower EMI also. This is so because the interest rate charged here is competitive. It is important to choose an institution which is transparent in its policies. Learn about the details of the charge and make sure there is no hidden expense.
The benefit of customized loan option
If you are a self-employed person, you may take the benefit of custom loan options under loan against property. The institution will create an especially designed program for your purpose.
Loan against property is convenient
Loan against property or LAP is a convenient way of accessing funds. The rate of interest here is lower than any personal loan. Here you need to place an asset in the bank to take the loan. The asset will be kept as a security against which the loan is taken. The allotted period for the loan repayment is also longer. The EMI is lower in loan against property than other loans.
Importance of EMI calculator
When you are opting for a loan against property, you need to find out your affordability. It helps you to calculate the EMI or instalment amount immediately. The EMI calculator uses data from the amount of loan, the tenure or period, and the rate of interest. You may use the online EMI calculator to determine whether the loan EMI is affordable or not. Through this calculator, you also get to know the amount of interest you will have to pay throughout the tenure of the loan.
When you are taking a loan against property, it is important to use Loan against property calculator to find out the EMI. You can compare the EMI amounts among the financial institutions and then choose an institution. Go for the one which charges a lower interest rate.

Are My Personal Finances in Order?

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Now-a-days, people have stepped into a digital scale where they keep a track of just about everything, be it your health, or finances. So if you are the one who is looking to find out whether your personal finances are in order or not, we’ve enlisted four signs that can help you know your financial well-being.

  1. Emergency funds: Families or individuals who do not have emergency funds face a lot of emotional/mental stress in case of urgent need of money. They may face the unexpected expense and might end up signing up for a personal loan from banks to fulfil their obligations. This can lead to a cycle of debts and make it difficult for them to save in future. Thus a person with stable financial status will never have to go through this situation. Their emergency funds with help them come out of the sudden crisis with ease. Ideally, you should have 6 months of your take home pay saved. The more dependents you have, the larger an emergency fund cushion you should have.
  1. Debt to income ratio (DIR): Finding out your debt to income ratio is worth in every sense as it can affect your future financing because banks usually gauge how well you manage your debts before approving your personal loan application. To pin down your debt-to-income ratio, add up your monthly debt payments and then divide the sum by your monthly gross income. If the result is 25% or less of your total income, understand that your finances are in order. However, if the DIR is more than 50% of your monthly income, it needs to be reduced at the earliest to keep your personal finances in a healthy state.
  1. Credit Score: Your loan eligibility is greatly associated with your Credit score. The higher the score, maximum are the chances of you getting a personal loan and vice versa. As per the current rule, if your credit score is less than 750 out of 900, you’ll not be considered eligible for a loan. Other factors that can lead to personal loan application rejection include: if you have made too many inquiries or have availed too much credit in the recent past and if your repayment burden is already high. To keep a tab on your personal finances, it is wise to maintain good credit behaviour with your existing credit by making timely payment of all your credit card EMIs in full each month and make timely repayments on your existing personal loans or other loans.
  1. Savings for retirement: Understand that your personal finances are in order, if you have enough retirement savings. To determine if you are on track, look at the percentage of your annual income you will be able to replace in retirement. This little calculation can help you get financially healthier in future. If your retirement savings is less than 40% of your current income, it is advised to start saving more every month. In case you are left with less money to save in a particular month, don’t hesitate, just save whatever you are left with.  To some people, it may sound impractical, but saving a little amount can also be helpful, especially if you begin to save in your early 20s. By 30 years of age, you must save at least 10% of your income and by 40s; your savings should be at least 50% of your monthly income. Retirement savings make you financially stable even in your older age.

These are quite a few things that can help you calculate whether your finances are in order or not.  Savings is necessary, no matter how little your income is. Start with small steps, chip away at your debt and boost your savings. It will make you a more secure person who is happier and lively.