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Zero Percentage Bank Loan

Tempted on seeing zero percent loans?

True, it isn’t easy to escape the attractive offer to buy a much sought after product on EMI basis. Of course, there is nothing wrong in going for it. However, beware of the underlying traps in these loans; what may look like a luring offer may end up emptying your pocket.

So, it is good to take care of few points so you better manage your money.

Increase in Spending Habit

When you receive offers such as ‘to buy a product for 50,000 through EMI option in 6 months’, you are definitely going to go for it even if you don’t have the cash in hand. Thus, these loans are sure to increase your spending habit.

Discounts May Not be Applicable

When you purchase a product in cash, you may receive an instalment of 2000 Rs. or 3000 Rs. as discount. However, when you pay in instalments, the price is calculated in MRP, as a result of which discounts may not be available. So, before taking up the instalment option, be clear about the amount to be paid.

Processing Fee

While making purchase in instalments, the customers will have to pay a processing fee. Before venturing into it, make certain on whether you need to pay any processing charges. Processing charges and the lack of discount options are the source of profit for the shopkeeper.

Do not Miss the Payment Date

Missing the payment due date means you will have to pay an additional penalty charge and added interest rate. Try avoiding this as by paying this extra amount, you will lose the advantage of zero percent loans

Tips to follow before you decide to follow zero-percent loans:

• Check the difference in the discount in MRP while making cash payments and other modes.
• Check whether you are receiving any discount in zero percent loans. If yes, these loans are indeed beneficial.
• Be clear about whether you have to pay any processing fee while taking up instalment option. If you receive the product minus the processing fee, then this zero percent loan is profitable. If not, zero percent loans are not very profitable.

As said above, there is nothing wrong in going for instalment option while purchasing a product. However, while doing it, make sure you don’t end up paying more.

Investors, new / existing, take note ! Here are some the salient points to take heed of while you are on this journey.

Investment is an essential part of one’s wealth creation journey. But there are a few factors that need notice of and regular monitoring so that the effort doesn’t go to waste later.

Here are some points to consider and take action on. Pronto !

1. Track every investment you make.

Once an investment has been made, regular monitoring of the value of the same must be done. We must check all the documents filed while making that particular investment. If there are changes in the documentation of these details, update them so that communication channels are clear for future purposes.

2. Check if you’ve filed or updated the right nominee

Let’s consider a simple scenario. You may have made your investments before you’d gotten married which means you didn’t have a nominee to begin with. Or you’d had your parents as nominees and now that you’ve expanded your family through marriage, your spouse may be more dependent on your investments in the present circumstance. If this is so the case, create a nominee or update it to present dependent.

3. Inform your family of your investments

If you’ve made any previous investments or are on the verge of making one, then you are responsible for informing your family on the same. Nothing related to your investments must come as a surprise to them. They mustn’t be rendered financially clueless or disabled in unfortunate times, in your absence.

Another scenario with the millennials and the new generation crowd is that they make investments and get information and updates on platforms like email and phone that are password protected. While this may keep one safe, if the higher purpose of this investment is for your family to lead a healthy financial life then sharing password details to the close one is essential. In case of one’s untimely demise, such information with come in handy for their confidant.

4. Create a will statement or a succession plan

A person may have all kinds of investments like land, buildings, real estate, market shares, mutual funds, bank fixed deposits etc etc. In such a case, it becomes imperative of us to create a succession plan or will statement that elucidates what we wish for the next of kin or family to inherit.

5. Update your will statement

While you were at it in your 40’s, it is essential to come back to it later because let’s face it, change is inevitable. Probably, you must have accumulated wealth over the years and so your will statement may look different if you’re to deal with it in your 60’s.

6. Update bank details of all investments made

All your investments/ insurances are linked to your bank accounts. But over the years, you may have made changes to these. You may no longer be using the services of some whereas new personal bank accounts may have emerged. Identify the obsolete ones and update your bank details in the documentation.

7. Update your communication address (online/offline) as when required

A transferable job is the trend these days in India. With every work transfer, an update on the address details must be made. If the institution/corporation needs to convey a message, they may do so to the old communication address (if not updated with each transfer) and you’ll never receive information on your end. Also, if email addresses have been changed in previous times, they need to be updated wherever required. This will help create an effective communication channel.

These points must have driven home the most important point for investors and that is documentation, updation and transparency are key factors to track every now and again when it comes to your investment. Nothing else matters as much for a fruitful wealth creation journey.

Choosing the Correct Investment

‘A minute to learn, lifetime to master’ applies well for investments. Before embarking on a journey to be an investor, it is worth taking few days to research and comprehend on the chosen scheme and its fundamentals.

Rushing into it without understanding one’s own requirements and goals may backfire and fail the whole purpose of an investment.

The three factors to be considered before choosing an investment are the time at one’s disposal, risk capacity and returns.

The first two are the deciding factors in determining the final output, returns.  Understanding these three factors helps in identifying the correct investment. While choosing an investment, follow the following tips.

• Invest in savings account or FD liquid fund if the time span is short. Savings provide 3 percent interest while FD provide 6 percent interest.
• Invest in debt or debentures which provide give 9 percent interest if you have a time span of 1 or 2 years.
• Choose equity or gold if you have more than 7 years at your disposal.

In savings or FD or debts or debentures, the fluctuations as well as growth will be less. Whereas in equity or gold, the returns depend on the market growth though there is every chance of getting higher returns.

So, it is important to understand one’s own risk capacity and time span which becomes the deciding factor in ensuring returns. Lower the risk, lesser will be the returns. If one need higher returns, he or she must have the capacity to take more risks too.

There is nothing like the best product. It differs based on investor’s risk taking capacity, time span and the desired goal.

Money Management

Ever wondered about the inability to save money despite being handsomely paid? Do not be worried as the attitude towards money is reflective of one’s personality and there are more like you.

Based on one’s approach towards money, financial experts have categorised people into three – spenders, savers and investors.

Spenders

The spenders, once they receive the salary use the money for their expenses and save the surplus amount. For example, those who mainly make their payments through credit card use the salary received for credit card payments.

If you are a spender, read our do’s and don’t’s with money to avoid financial pitfalls.

Savers

The second category of people save a specific amount from their earned income after which the remaining is spend in meeting monthly expenses.

Savers can take their game to the next level by knowing how to choose the right investments for them.

Investor

Investors are the real wealth creators. Once they’ve received their salary, they invest a specific amount in an asset class with a high growth potential. The rest of the money is used for expenses.

Take for instance a case where someone buys 1 gram of gold every month.  If he/she continues to do this for 10 years, they will have 120 grams of gold in their possession which will be a huge asset considering the soaring gold price. They are the example of an investor we are talking of here.

Likewise, investors identify the most suitable investment option based on the requirement and time span which he or she plans to invest. This helps them attain financial freedom.

If you are salaried, it is important to understand the category you belong to. Do not worry if you are a spender. Manage your spending habit and try being a saver which is the first step to be an investor. If you are a saver, identify a good investment option and multiply your money like an investor.

Set a Goal Before You Invest

Investments get a huge hug these days though people seldom approach it with the transparency it deserves. Most of them jump into it without realising what they are diving into.

Remember, a lack of vision or a will spoils the entire process of investment defeating the purpose behind it – financial freedom.

Even if you are financially stable, setting a goal before you invest helps you gain better stability of your finances. If the investment is done in alignment with the goal, investor will have a clear answer on why he/she is investing which is very important.

Into the Future

Take for instance the case of a 30 year old man having a two year old kid. While investing, he must set the goal of 15 years when his two year old kid will be taking up a professional course. For example, if the course requires 10 lakhs to complete presently, calculate how much it grows into after 15 years, considering the education fluctuation growth is 6 percent.

This enables him to calculate the amount he should raise after 15 years for his kid’s education.

Investing in products such as SIP (Systematic Investment Plan), gradually increasing the amount on a monthly basis, helps in reaching the target money easily in 15 years.

Investments during the period of financial stability with a specific purpose or goal in hand helps you become confident to take risks in future such as venturing into business. This is why it is always important to invest based on a specific goal. If you are finding it difficult to materialise this financial planning all by yourself, you can always seek the help of a professional who will help you invest based on the set goal or the target money.

Investments for the sake of it do no good. So set a clear goal and seek financial freedom.