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Building an Emergency Fund with Mutual Funds

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Building an Emergency Fund with Mutual Funds

Financial planning not only entails saving for long term goals like retirement, higher education of your children, etc but also preparing for short term goals like creating an emergency fund, to tackle unforeseen expenses. While most individuals use their current savings account as an emergency fund, owing to the ease of access to money, a disadvantage of doing so is the poor appreciation of money. However, mutual funds offer a better avenue to park savings for emergencies with high liquidity as well. Covered ahead is how to build an emergency fund with mutual funds in detail.

Why is it important to have an emergency fund?

There are many instances in life when we need emergency funds to tackle financial demands. It can be a job loss, medical emergency, car accident or breakdown, or urgent travel plan. This can be fulfilled either by borrowing money or by saving money.  A wiser move would be to plan in advance will plan to generate his emergency savings fund through savings done via investment. Investment helps to add an extra source of income for the investors.

Why select mutual funds for an emergency fund creation?

Investors can inculcate a good habit of making regular investments. Ideally, an emergency fund must have an amount six times. The conventional process of making an investment in savings banks and fixed deposit is a good idea, but the interest offered by the banks are meager. Besides, some traditional investment products will hoard the surplus amount with a fixed lock-in period on withdrawal. No investors will like to compromise on the liquidity aspect in case of an emergency fund.

Whenever an emergency scenario arises, one has to resort to availing loans or borrowing from friends and family. This is the situation that most people do not prefer to go to. If you are ready with your emergency kitty, it saves you from facing the dire consequences. Therefore, to park the surplus monetary resources, mutual funds can be regarded as the best emergency fund investment in India. It provides a lucrative option for contingency fund creation with overnight funds and liquid funds. The best emergency fund will act as a lifesaver and instill confidence in the investor by granting him the power to deal with the undesired event. Even if an individual is a frivolous spendthrift, it will ultimately develop an inclination towards savings.

Investors can consider schemes like liquid funds and overnight funds, which are debt funds and the money is invested in securities that have a maturity period of one day. Another best emergency fund investment in India is the liquid fund that is channelized towards debt and money market security and has a short-term maturity duration of just 91 days. The shorter investment period of these mutual fund schemes also keeps the investors insulated from both the interest risk and credit risk. The liquid funds earn better returns than most banks offer on a savings bank account. Alongside this, the investors have nothing to worry about the availability of funds and compromise on liquidity. The overnight funds have earned their name from the investment in overnight securities, and the liquid funds get their name from the liquidity offered in such funds. When compared to the debt funds and regular equity, it processes the redemption request more swiftly, and any request before 3:00 pm will help the investors to credit the redemption process in the registered bank account in the following working day.

What can be the ideal size of the emergency corpus with a mutual fund investment?

We have already mentioned that the ideal size of the emergency corpus needs to thrice-six times of the monthly expenditure of an individual. Some financial planners recommend that debt funds are the best emergency fund to build and manage this corpus. This allows the investor to create the corpus over a period of time. It can be gained through the routes of Systematic Investment Plan (SIP) or the lump sum investments. All you have to do is select the AMC of your choice, for instance, Kotak Mutual fund and then go through the overnight funds and liquid funds available under the selected AMC. The windfall gain will help to achieve the desired funds to create this corpus. The overnight liquid funds or ultra short-term mutual funds are indeed the ideal emergency fund India due to its liquidity aspect. Only 1-2 working days are required to process the money.

How to build an emergency fund with a mutual fund?

Investors can select from the range of mutual funds like debt funds, liquid funds and overnight funds. All these emergency funds India can be created through a regular contribution with SIP. The small quantities will create a steady savings plan over a time period and accumulate a sizeable emergency corpus. The reason behind opting for a mutual fund as an emergency fund India is the power of compounding within itself. The compounding phenomenon revolves around reinvesting the returns to generate higher return value.

A longer duration of investment means experiencing a better effect on compounding on returns.

Hence, investors need to stay focused on their financial goals for a longer time to get the rewards over the years. By this power of compounding, funds can grow exponentially and reap bigger benefits to the investment players. Generally, people make an investment in mutual funds through professional fund managers. For this purpose, they can invest in growth plans which automatically reinvest the returns. Moreover, investors can gain benefit from it if they start to invest at an early age to create a robust financial future that can even be used in contingency situations. For instance, Investors can purchase mutual funds schemes from AMCs such as UTI Mutual Fund and others that provide viable options for emergency fund creation.

It is better to select mutual funds plans like liquid funds and overnight funds. The combination of these with debts funds renders it a risk-free option. Investors can invest in these plans by making a consistent contribution with SIP over a long term to obtain benefit from compounding effect as well. The better potential returns along with liquidity the aspect, leave no doubt that these plans are undoubtedly the best avenues for the investors. In the wake of the emergency, the funds developed through mutual funds will provide the much needed monetary cushion.

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Now Atal Pension Yojana is More Beneficial 36 Lakh New Accounts Added

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Atal Pension Yojana

The online Atal Pension Yojana (APY), a lead pension plan of the government to cover the workers in the unorganised sector, has crossed 1.9 crore subscriber mark, This has been brought forward by the pension regulator which is Pension Fund Regulatory and Development Authority (PFRDA).

Under the APY, there is a guaranteed minimum monthly pension for the subscribers going between Rs. 1000 and Rs. 5000 every month. The advantage of minimum pension would be guaranteed by the Government of India (GoI). GoI will likewise co-contribute half of the subscriber’s contribution or Rs. 1000 for each annum, whichever is less. Government co-commitment is accessible for individuals who are not covered by any Statutory Social Security Schemes and isn’t income taxpayer.

The essential purpose behind the uptick in enrollment was the accomplishment of targets dispensed to banks for the opening of new APY accounts, it said in a statement which goes as follows:

“In this budgetary year, the reaction towards the enlistment of APY was overpowering, and more than 36 lakh Atal Pension Yojana accounts have been included till October 31, 2019, showing the development of 33 per cent in contrast with 26 per cent development during the relating time frame, last financial,” PFRDA said.

The PFRDA is controlling APY. Out of the 36 lakh new APY accounts, 27.5 lakh were sourced by public sector banks, 5.5 lakh accounts by regional rural banks and around 3 lakh accounts by the private sector and payment banks.

Among public sector banks, State Bank of India contributed about 11.5 lakh increments in APY accounts pursued by Canara Bank and Bank of India. As far as average account per branch, SBI sourced highest APY accounts pursued by Indian Bank and Bank of India.

Among RRBs, Baroda Uttar Pradesh Gramin Bank, Dakshin Bihar Gramin Bank and Andhra Pradesh Grameena Vikas Bank sourced a maximum number of APY accounts, though as far as average accounts per branch Tripura Gramin Bank, Maharashtra Gramin Bank and Baroda Uttar Pradesh Gramin Bank topped the list. This is a boom in e-governance services.

In the payments bank classification, Airtel Payments Bank has sourced around 1.8 lakh APY accounts so far in this monetary, against the yearly focus of 50,000 APY accounts.

Under private sector bank class, HDFC Bank was the top contributor regarding a number of enrollments while Karnataka Bank was the best performer as far as average account per branch.

The PFRDA has made sure to grow the subscribers base under APY by focusing on 2.25 crore individuals by March 2020, who have a place in the unorganised sector and are not secured under any social security scheme, the statement said the following:

“There is a long way to go as currently there are around 45 crore people in the unorganised sector. However, with the government support the target of providing pension coverage to these many people can be achieved, albeit with other government social security schemes,” it added.

The pension sector regulator has been arranging different promotional campaigns and town corridor gatherings for the promotion of APY through banks and taking it to the next level and contribute towards making India a pensioned society.

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Bitcoin

Blockchain Technology: The New Arsenal to Solve Banking Problems

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Blockchain Technology -- The New Arsenal To Solve Banking Problems

Banking and finance industry is neck –deep in problems. From frauds, credit risks, to data breaches, the industry is reeling under mounting pressure to increase customer satisfaction, outweigh competition, and improve its bottom line.

The invention of Bitcoin, cryptocurrency, was a trendsetter in the banking industry. Bitcoin allows peers to share currency across a network, without the need of a central bank. It made banks realize the usefulness of cryptography, transparency and more. Since 2008, when Bitcoin was introduced in the market, it has grown in value. At the time of writing this article, it is valued at $7,107.98

According to a report, 90% of European and United Sates banks experimented with blockchain-based solution in 2018.

Combining banking and blockchain

Blockchain, the technology underlying Bitcoin, is a promising technology for the industry. Blockchain poses solution to resolve several operational challenges, making them more efficient, faster, and result driven. Characteristically, Blockchain facilitates transparency, security, and immutability. Meaning any record on a network will be visible to the people on the network. Secondly, records on the network will be secured, eliminating possibilities of data theft and other data breaches. Further, data modification is an intensely scrutinized process on blockchain. Therefore, data remains unchanged until a consensus is delivered.

Not only this, blockchain has ushered in a revolution, marking entry of new job roles like blockchain engineers. The number of jobs software engineers with blockchain development skills has increased by 517% in the past year, according to Hired.

How does blockchain benefit banking and finance industry?

Banking and finance remains a sophisticated industry with complex processes. Blockchain presents a solution to simplify those processes, streamline operations and make them more convenient. Blockchain clearly has a promising side to it for banking and finance sector.
Blockchain is beneficial to banking and finance for the following reasons –

1. Security — Data security is a primary concern in retail as well as commercial banking. Banks have multiple levels of security layers – front office, middle office, and back office. Data is passed through these layers. Still chances of servers being hacked are still there. With blockchain, this problem is eliminated. As every time data is accessed, it is recorded. Further, chances of being hacked is reduced drastically.

2. Accessibility – To access data at a bank, there are multiple levels which are processed by legacy systems. With Blockchain’s decentralization, it would be easier to access information. This will make the process of accessing information faster. Whether this will lead to any monetary benefit or not can be answered after a period of time.

3. Auditing – Auditing is an expensive and time-consuming process, where compliance officers and executives decide which information to keep and what to share with regulatory bodies to suit the bank’s narrative.

With a decentralized database, government and regulatory agencies can see exactly what the bank has done. As modification of data isn’t permissible on blockchain, it would compel banks to stay honest and ethical in their approach to work.

4.  Jobs – Working with blockchain-based solutions requires a particular set of skills, except banking. These skills are hard to come by unless you are taking a blockchain certification or a course. So blockchain is driving an all-new workforce toward banks. People who are equipped with the skills can find opportunities at banks.

Perhaps, Bitcoin, the first of blockchain-based financial entity would continue its legacy and we will see new trends set banking and finance sector on a progressive path. Let’s wait and see what the future holds for blockchain and BFSI.

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Finance

Personal Loan for the Self-Employed with Great Benefits

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Personal Loan for the Self-Employed with Great Benefits (1)

Are you in need of the funds to fuel the dreams? Regardless of the need is, a personal loan could make your life a bit easier.

A personal loan is a multi-purpose loan, there are no confined boundaries of its usage. You can also use the personal loan for the purchase of electronics, to fund the child’s education or wedding, as a short-term loan for the equipment purchase or working capital for your business, for a medical emergency, or any other emergency.

Now a day almost all lenders offer personal loans to the self-employed individuals, quite easily. Some of the best personal loan banks are mentioned below:

  • Yes Bank: This bank is among the most popular banks in India. It has made a strong niche in the financial market. One can easily apply for a personal loan online or can make a personal loan application at a YES BANK branch as well. A wide range of personal loans are offered to the self -employed by Yes Bank. The maximum loan amount of Rs. 40 lakhs at an attractive rate of interest can be availed by Yews Bank. 
  • HDFC Bank: The bank offers the maximum loan amount of Rs. 40 lakhs. One can choose the loan repayment tenure from the flexible tenure ranging from 12 months to 60 months. HDFC Bank provides funds in one go with the flexible repayment options at the pocket-friendly EMIs starting at Rs. 2187. A self-employed can apply for a personal loan via HDFC Bank Net Banking or online on the HDFC Bank website.

Reason for availing a personal loan for self-employed professionals

Self-employed professionals can need a personal loan for any reason, just like people those are a salaried employee. For example, a self-employed person might need to finance a new laptop, especially if he/she works online. New laptops can be expensive, so a personal loan might be an option to consider.

But laptops aren’t the only equipment a self-employed person may need a loan to finance. An ample number of self-employed people work in other professions, like:

  • Landscaping
  • Design
  • Construction

These fields have various equipment needs, and if you are equipment breaks down and you can’t afford the repairs or replacements immediately, a personal loan might be a good option in this case. 

It is obvious, depending on the city or town you live in, a car might be a necessity for the work or home life. We’ve all struggles with cars at one point or another, whether it’s an accident or some kind of engine failure. When a car does not work properly, it can disrupt the entire schedule, both professionally and at home. A personal loan could be an option to consider if you need some extra funds to get yourself aa new car.

However, since they are self-employed there are some rules and conditions applied to the approval of a personal loan. This could include the requirement of a high credit score. Here are some tips that may help a self- employed individual to get a personal loan.

  • Have a good credit score

It is best that you timely pay all your debts like credit card bills, etc. Having small credits such as car loans that are being repaid on time can be in your interest. The good credit score is considered a minimum score of 750.

  • Efficient business plan 

If you looking for a personal loan to establish or expanding a business then have a convincing plan ready. An excellent way to convince the lender about your ability to repay the amount is to present them with a realistic plan. As when a lender is sure that your business plan has the potential, then only they will show an inclination towards approving the loan amount.

  • Maintain the financial records

The majority of professionals, as well as the business owners, often find themselves lost, when it comes to the tracking of their expenses and revenues. Make sure that you are not among them and maintain your account books meticulously. Personal loan lenders may need to go through the credit or financial history, before approving the loan amount.

  • Pay off the existing debts

If you want a lender to see you as a responsible borrower then practice the financial discipline. Pay off all your existing loans before applying for a new personal loan. This will show your ability as well as willing to repay the debts. Getting rid of all the existing debts and the payments of the timely bills, both will have a positive impact on the credit score.

Eligibility Criteria of a Personal Loan for Self-Employee

Do remember that the personal loan eligibility criteria will differ from lender to lender. Following are some general eligibility criteria:

  • Age requirement: The minimum age required is 21 years at the time of loan application and a maximum of 60 years of age.
  • Minimum Profit After Tax: For the Proprietorship Firm/Self-employed Individuals the minimum profit should be Rs. 2 lakhs and Rs. 1 lakh for the non-professionals as per latest audited financials.
  • Stability: In the current business for at least 2 years.

Documents Required for Personal Loan for Self-Employee

Below are the documents that are commonly requested by the banks and financial institutions in the country along with the personal loan applications:

  • Identity Proof: Applicants can submit their driving license, passport, voters ID, PAN card, etc.
  • Proof of Address: Applicants can submit their utility bills, ration cards, license and leave the agreement, valid passport, sales tax certificate, etc.
  • Last 6 months bank statements of the applicant’s current account 
  • Qualification Proof (like highest professional degree will have to be submitted)
  • Last 2 years income tax returns 
  • Proof of profession continuity 
  • Age Proof 
  • Address proof of the applicant’s office
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Business

What Value Do I Have as a Private Equity Professional

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Typically, if a question is being asked about the daily responsibility of private equity professionals, this would be the answer, “buying and selling companies.” Getting into a private equity firm is not easy. But when it comes to job employment and big fat money, private equity firms hold a good reputation.

The value you add as a private equity professional

Essentially, there are four basic things for you to do on a daily basis: –

  1. Sell off portfolio companies at a profit.
  2. Raising money – you can raise money such as limited funds, endowments, and retirement funds from limited partners and insurance companies.
  3. Managed investments
  4. You need to source, diligence, and close certain deals to acquire companies.

 

  • Sell off portfolio companies at a profit

This is perhaps the end game for a private equity firm where it needs to exit their portfolio companies at a profit. The exit generally takes place within three to seven years after the original investment takes place. However, this does not necessarily mean the duration will take this many years, it all depends on the strategic circumstances.

Main sources of exit include: –

  • Growing revenue during the holding period
  • Cost-cutting
  • Selling the company at a considerably higher than the original acquisition
  • Paying debts that were used initially to fund the transaction

 

  • Raising money

This is normally carried out by senior partners in a private equity firm. Although, at a certain point in time there may be a designated team that works within the larger funds. This takes place every four to five years where the senior professional will go knocking door-to-door of international investors such as banks, insurance companies, pension funds or companies with high net worth individuals to help them raise money for their next fund.

  • Managed investments

When a company gets acquired, it needs to be managed until it gets sold off. This takes a couple of years’ time. However, a private equity professional is not involved in the day-to-day running of the company that they buy. But they need to keep a check on the performance and stay involved in making strategic decisions.

Other firms have specific teams who are responsible for managing these investments.

  • You need to source, diligence, and close certain deals to acquire companies

When these private equity firms analyze companies for acquisition, they need to take care of things such as what the company does, consider things such as the kind of industry the company is in, the role of the senior management, and the latest final performance of the company, and exit scenarios, etc.

A great amount of deal can come out successfully if the deal is made between a reputed partner firm or through professionals who reached out to potential clients through cold calls or investment banks that are representing the company.

Private equity qualifications include at least a bachelor’s degree in fields such as finance, statistics, mathematics, accounting, or economics.

A fact every private equity professional must know, most of the firms buy 100% ownership of companies in which they put in their entire investment. As a result, these companies will be in total control of the firm once the buyout is done.

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Wear Off Your Financial Stress with SBI Personal Loan for Govt Employees

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sbi personal loans

Are you a government employee looking for a personal loan?

Money plays a very important factor in everyone’s life. It decides the quality of life we spend, the food we eat, and the lifestyle we are living for. To earn money and materialize our desires, we work hard. We do jobs of every kind. And in today’s era, we also look for side hustle through which we can make money. To make our finance stable, we opt for government jobs. Sometimes, it isn’t enough. Sometimes, we need more money to finance things that we really need. For such time, State Bank of India (SBI) lends personal loan at low-interest rates. 

SBI Personal Loans are designed by keeping government employees in mind. If you’re government employee, you can avail SBI Personal Loan for govt employees of up to Rs. 15 Lacs for a maximum tenure period of 4 years. In this post, you are going to learn about the benefits of SBI personal loan for government employees

SBI Personal Loan Online 

SBI Personal Loan is a type of unsecured loan. The best thing about this loan is that you can apply for it online. Due to the decision to make personal loan online, SBI attracts many loan customers. From the customer’s point of view, applying for SBI personal loan become easy after SBI took the decision to digitise itself. 

SBI Personal Loan for Govt Employees – Everything You Need To Know

State Bank of India lends SBI Personal Loan to government employees of up to Rs. 15 Lacs. As the name suggests, SBI Personal Loan for Govt Employee can be availed by those who are working under state or central government. Those who are working in Public Sector Undertaking (PSU) Banks can also avail this loan. This loan can be used for various purpose. Below, we have mentioned a list of reasons for which you can avail personal loan online

  • For wedding
  • For travelling
  • For renovating your house
  • For your child/s education
  • For medical emergencies

SBI lends personal loan under various government schemes. It also lends pension loan to government pensioners at a low-interest rate. From now on, let’s understand why sbi personal loan for government employees is the best option for government employee. 

Features of SBI Personal Loan for Government Employees

  • SBI Personal Loan Amount up to Rs. 15 Lacs
  • Personal loan at a low-interest rate
  • Exclusive offers on loans for central/state government employees and PSU employees
  • Low processing fee, absolutely zero processing fee for defence personnel

SBI Personal Loan Interest Rate 2019 for Government Employees

For those who have already made up their mind for not taking personal loan due to its interest rate, we are going to change your mind here. Unlike other personal loan, SBI Personal Loan for Govt Employees can be availed at a low-interest rate. The interest rate on this loan goes as below as 11.90% per annum. With interest rate as low as SBI personal loan interest rate, you can relax about the repayment of loan. 

Other Important Facts about SBI Personal Loan

SBI Personal Loan Interest Rate 2019 for Government Employee11.90% onwards
Minimum term Loan Amount₹ 25,000
The maximum term loan amount24 times of monthly income with the upper limit of Rs. 15 Lacs
Overdraft minimum amount₹ 5 lakh
Overdraft maximum amount24 times of monthly income with the upper limit of Rs.15 Lacs
Minimum NMI₹ 5000
EMI/NMI Ratio<50%
Repayment Tenure5 years or remaining service period, whichever is more
Interest for Penalty2% per annum
Prepayment Charge3% of the prepaid amount
Processing Charges1% of the loan amount + applicable tax

 

What are the schemes in SBI Personal Loan Scheme 2019?

For now, there are 3 schemes for SBI Personal Loan. These are –

SBI Pension Loan – Under this loan scheme, pensioners and family pensioners can avail personal loan on the behalf of their pension. Those who used to be government employee can avail this loan to meet various financial requirements.

SBI Xpress Credit – Those who maintain an account with SBI and draw salary in their SBI account can avail SBI Xpress Credit to enjoy the freedom of instant funds. This loan type is multi-purpose in nature. It means you can use it for any valid reasons.

SBI Xpress Power – This is just another personal loan from SBI. Under this scheme, a personal loan can be availed by those who don’t have salary account in SBI. Terms and overdraft facility are also available in this loan scheme. 

Eligibility Criteria for SBI Personal Loan for Govt Employees

These are the eligibility criteria for SBI personal loan for government employee –

  1. Those who are employee in central/state government or in PSU banks are only eligible for SBI Personal Loan for Govt Employees.
  2. Age of the applicant must be in between 21 and 58 years. 
  3. Those who are earning monthly income of more than Rs 20,000 can avail sbi personal loan online.
  4. To be eligible, one needs to have at least 6 months of experience in his/her current organisation. The total work experience of the applicant must be more than 3 years.
  5. Those who are having a credit score of 700 or above can avail this personal loan without any hassle. 

Documents Required for SBI Personal Loan

  1. Duly signed application form with passport photo
  2. Identity Proof- PAN Card/Voter ID Card/Passport/Driving License, etc.
  3. Processing fee cheque
  4. Latest bank statements and passbook statements
  5. Authorised salary certificate and latest salary slips

To avail more benefits on personal loan online, apply for personal loan with us.

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