Recurring Deposits are an ideal way to invest small amounts of money every month and end up with a large kitty on maturity. Read this article about compounding returns which guides you through how it may work wonders with your small investments over a long period of time.

We read it everywhere, on every single personal finance related blog, everybody tells us this – start investing in the early days of earning. But at times, we simply don’t make the move because the hassle of going to the bank and start any investment, be it FD or RD or any other form of investments for that matter. This post will make your life a lot easier!

Also Read: 56 Tips to Make your Money Work Harder For You

In this post, I am going to show you how to setup a Recurring Deposit using your Online ICICI Netbanking account from the comfort of your home and don’t have to go to your Bank branch. I myself am a bit lazy in these things and I started an RD deposit from my iPhone and it took me not more than 3 minutes.

So, lets get started and set up a Recurring Deposit for you!

Step 1 – Log in to your ICICI Online Net banking account

Step 2 – Once you are logged in, look for the option “Open a Fixed Deposit / Recurring Deposit” in the left hand menu of links and click on it. It will take you to “Service Requests” page. You can also directly click on “Service Requests” link in the left hand navigation on ‘My Accounts’ Page.

Step 3 – This link will take you to the “Service Requests” page. On the Service Requests page, click on “Click Here” button.

Step 4 – On the next page (“Requests” list page), click on the link “Open a Recurring Deposit“. You will be taken to the “Request for Opening RD” page.

Step 5 – On the “Request for Opening RD” page, select the account number from the drop down from which you want the RD amount to be debitted. Click on “Go”

Step 6 – Enter the below details on the next step – “Recurring Deposit Request Form” page:

• Amount of RD instalment – This is the amount which you want to be debited each month towards the Recurring Deposit
• Tenure of Deposit (Years) – This is the duration (in years) for which you want the money to be deposited towards the RD
• Tenure of Deposit (Months) – This is the duration (in months) for which you want the money to be deposited towards the RD
• Day of month when instalment to be debited – This is the date when you want the RD instalment to be debited from  your account. The 1st instalment will be deducted on the day you start the RD. The subsequent instalments (starting from 2nd instalment) will be taken on this date every month.
• Mobile No (You can provide either Email ID or Mobile No.)
• E-mail Id (You can provide either Email ID or Mobile No.)

Once you have filled in all the mentioned details, click on “Submit” button which is located at the end of the page.

Step 7 – Clicking on “Submit” will take you to the next page where you will be shown a summary of the RD transaction which you are about to complete. Once you are satisfied, you need to enter your internet banking transaction password and click on “OK” button.

If you have followed all the above points correctly, clicking on “OK” will take you to the confirmation screen and you are done!

The confirmation screen will give you a confirmation (Service Request) number starting with “SR___”. Keep this with you for future reference.

Also Read: How to get over the fear of Investing?

Once you see the confirmation screen with the Service Request number, the Recurring Deposit Account will be created within 1 working day and a standing instruction will be set up to debit installments from the selected savings account every month for the tenure and amount selected.

Below are some points which you need to keep in mind while opening a Recurring Deposit:

• Recurring Deposits can be opened for a minimum amount of Rs.500/- and in multiples of Rs.100/-.
• The first installment shall be debited on the date of opening of the recurring deposit account. Subsequent installments shall be debited on the selected day of the month.
• Make sure sufficient funds are available in your account before the debit date each month.
• To register a nominee for your Recurring Deposit account, you need to visit any ICICI bank branch and submit the nomination request form which you can get from the branch.
• Tenure of Recurring Deposit has to be in multiples of 3 months – minimum of 6 months and maximum of 10 years. For interest rates, you can refer to this link.
• On pre-mature withdrawal of the deposit, interest will be calculated at the rate applicable for the period the deposit has actually remained with ICICI Bank, less applicable premature withdrawal penal rate.
• Penalty is charged at monthly interest at the rate of Rs.12 per Rs.1000 for all delayed installments.
• On maturity, the funds will be credited to the Savings Account selected by you while opening the RD.

You can check the new Recurring Deposit(s) created using the ICICI Online Netbanking by logging in to your Online account and visiting My Accounts Page.

I hope this quick tutorial helps you in getting started with your first step towards early investment and enabled you to start a Recurring Deposit Account with ICICI Bank. If you face any issues whatsoever, feel free to contact me through the comments section below or via the Contact Us section of this blog.

The post How to Start a Recurring Deposit Using ICICI Bank Online Savings Account appeared first on Equitipz.

In the old days, people spent all their working years waiting to retire at sixty, so that they could do what they always wanted to. In today’s times, thanks to the high stress lifestyle, people are looking for an ‘early retirement’ at age forty-five or fifty, tops. They want to enjoy life after that.

But what is even more stressful is the answer to the question – Do I have enough (money to live out my retired years)? Most people do not bother about this fact and are more concerned over other goals related to their children; those of you who have thought about this have never got down to calculating this number. And those that have tried to compute this number make it more of a thumb-rule guess and a miniscule number among them, actually take into account inflation. To cut a long story short, retirement corpus is hardly ever a properly computed figure.

Let us look at some important factors and their effect on the nest egg.

I. Not computing your current expenses correctly: This is the first step in the computation of the retirement corpus. If this is erroneous, so will be the end result. Hence, you could end with a corpus which is insufficient and runs short well before. This need not be in detail (though it is better if it is), but at least a broad outline under major heads should be computed.

II. Not accounting for inflation: Most of us forget that inflation is a ‘silent killer’. Due to inflation, the value of money goes down with each passing year. Also while computing expenses for the future, the amount needs to be inflated at an appropriate rate to get the exact number required. This is crucial especially in a country like ours, where food inflation especially, is running high. Hence, the amount required to meet one’s daily needs is going to continuously move northwards.

III. Overdrawing from your corpus: Once retired, one needs to adjust one’s lifestyle. Compulsive spending should be a strict no-no. Overdrawing in the initial years can lead to a shortfall in your corpus in the later years. Since this is a time when there is no earning it would be wise to make out a monthly budget and live within that, to avoid hardship in one’s penultimate years.

IV. No reserves kept aside for health-care: All computations done for determining your retirement nest egg are done without including health-care expenses. So it is essential to have a corpus / cover to take care of your medical expenses. With medical costs rising at almost 15-20 per cent per annum, these can take away a large chunk of your retirement corpus if you have not created funds for this separately.

V. Not accounting for growth in your corpus: It is a general belief that your entire retirement corpus should be put into fixed deposits or small savings schemes like Senior Citizens Savings Scheme or Post Office Monthly Income Scheme to secure the same. Sure, security of the corpus is important, but on the same hand growth is crucial too. Hence, even after retirement, a small portion of the corpus should be invested in asset classes which will provide growth – equity or equity based products. It is important even in one’s golden years to beat inflation and continuously grow the retirement corpus.

VI. Underestimating your lifespan: Most 30-something youngsters, when they think of creating a retirement corpus, do not think beyond 10-15 years of retired life. What they forget is that lifespans are getting longer thanks to advancement in medical science. Today, the retired lifespan has shot up to 25-30 years. This is approximately equal to your working lifespan. Further, this is a spending phase when there will be no earning. Hence it is vital to create a sufficient corpus which will last you for at least till age 85-90.

What is clear is that utmost care must be taken of the mentioned factors, while accumulating one’s retirement corpus. This is a goal which is common across the board for each and every person – rich or poor and is possibly the most ignored. Utmost care must be taken during the accumulation phase, firstly to ensure that a sufficient corpus is being created and then during the utilisation / distribution phase that it still continues to grow at a reasonable pace to last the investor’s lifespan.

This is a Guest Post by Manish Jain – he is a certified Financial Planner & member of The Financial Planners’ Guild, India. FPGI is an association of Practicing Financial Planners to promote professional excellence and ensure high quality practice standards.

The post Factors To Keep In Mind For Your Retirement Corpus appeared first on Equitipz.

IMPS – Interbank Mobile Payment Service is an interbank electronic instant mobile money transfer service which can be availed through mobile phones. IMPS service facilitates you to access your Bank Account and transfer funds instantly using your mobile instruments as a channel. This enables you to transfer funds in a secured manner with immediate confirmation features.

Also Read:

• Buy and Sell Mutual Funds Via mobile
• How to Track Markets on your Mobile Phone with Official Moneycontrol.com App

The beneficiary account is credited immediately when a Fund Transfer request is made through your Mobile phone / Internet Banking. This service is available 24×7, 365 days including Sundays and any bank holiday. A common infrastructure has been set-up amongst participant banks, in association with the National Payment Corporation of India (NPCI), to enable real time funds transfers across banks.

Main Features of the IMPS (Interbank Money Payment Service)

• No pre-registration is needed by the beneficiary (receiver).
• IMPS is a a real time transfer, so funds are credited instantly to the receivers account.
• Confirmation sent out as an SMS on the registered mobiles of both sender and receiver.
• No need to share account details.
• Fast and secure.
• 24 x 7, 365 days Money transfer system.

Various Terms Related to IMPS

Remitter – Remitter (or sender) is the one who is sending the money.

Beneficiary – Beneficiary (or Receiver) is the one who will receive the money.

MMID (Mobile Money Identifier) – MMID is a 7 digit code issued by a participating bank to their Mobile Banking registered customers for availing IMPS service as a beneficiary. You will have different MMIDs for different accounts and you can link all of these to a single registered mobile number.

To Send Money Through IMPS

• Register yourself for mobile banking service with bank.
• Download Software (Application) for mobile banking (ensure the compatibility of mobile with the application) or use the SMS facility in your mobile if your bank provides IMPS on SMS.
• Get Mobile Money Identifier (MMID), User ID and MPIN from the bank.
• Enter beneficiary’s 10 digit mobile number and 7 digit MMID number followed by the amount you wish to transfer.

To Recieve Money Through IMPS

• You need to have a bank account to receive funds as this is a interbank facility.
• Link your mobile number to the account in the respective bank where you want the money to be credited.
• No need to register for mobile banking service.
• Get Mobile Money Identifier (MMID) from the bank.
• Share your Mobile number and MMID with the remitter. No need to share Account Details.

Which Banks Provide IMPS Facility in India?

The IMPS service was initially launched on a pilot mode with a few banks participating and is now open to the Indian Public since the official launch.

As given on the NPCI (National Payments Corporation of India) website,

NPCI has carried out a pilot on mobile payment system initially with 4 member banks viz. State Bank of India, Bank of India, Union Bank of India and ICICI Bank in August 2010.Yes Bank, Axis Bank and HDFC Bank have joined this pilot in month of September, October and November 2010 respectively. Interbank Mobile Payment Service (IMPS) public launch happened on 22nd November 2010 by Smt. Shyamala Gopinath, DG RBI at Mumbai and this service is now available to the Indian public.

Below are the banks providing IMPS facility in India:

• Andhra Bank
• Axis Bank
• Bank of Baroda
• Bank of India
• Canara Bank
• Catholic Syrian Bank
• Citibank
• Corporation Bank
• Development Credit Bank
• Dhanlaxmi Bank
• Dombivli Nagari Sahakari Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• Indian Bank
• Indian Overseas Bank
• IndusInd Bank
• Karur Vysya Bank
• Kotak Mahindra Bank
• Lakshmi Vilas Bank
• Oriental Bank of Commerce
• Punjab National Bank
• South Indian Bank
• State Bank of Bikaner and Jaipur
• State Bank of Hyderabad
• State Bank of India
• State Bank of Travancore
• Syndicate Bank
• Tamilnad Mercantile Bank
• The Greater Bombay Co-operative Bank LTD
• UCO Bank
• Union Bank of India
• Vijaya Bank
• Yes Bank

You can check out more details about the banks providing IMPS service here. The basic process of transferring the funds using IMPS is same for all the banks and you will get all the information at the individual banks’ site links I have shared above. Still, if you have anything specific queries related to your bank, please comment below and I will be happy to help you, or you can get in touch with your bank helpline.

Have you used this instant money transfer service? Do share your experiences and feedback with us in the comments section below.

The post IMPS – Instant Funds Transfer 24×7 Through Your Mobile appeared first on Equitipz.

You would like to read the below articles which will help you with this situation:

• The importance of Investing
• How to overcome the fear of investing

I am trying to analyse a few things in this article which you need to take care while investing and will take the form of strategies for successful investing:

Depending on your needs and individual goals, a particular type of investment may or may not suit you. Different people have different needs and hence, different people have different investment modes to suit their needs. It also depends on the stage that they are in at the moment in their lives.

Having said   that, each investment type has its own level of risk and reward. A basic rule of the thumb works out here which underlines that the greater the risk, greater is the potential reward. And vice versa.

One more important thing to take care of here is your own temperament – if you are the ‘too worrying’ type who is always thinking about only one thing – “My investments might occasionally go down in value,” you should have less risk investments on your portfolio.

Some Investment options – A Broad Description

If you talk about the traditional investment options,  Gold and Real Estate top the charts, the reason being that they are not liquid and are always in your possession in the physical form. There are other long term national forms of investment like PF, PPF, NSCs and Post Office Savings that help you save, besides offering tax benefits.

When it comes to real financial investments, there are three main asset classes: Cash, Bonds and Equities.

• Cash – Having cash at hand is good for an emergency fund or a short term goal like some vacation, but over the long term, this is not very good as you may find the returns to be quite disappointing over the long term which anyways does not make much sense taking into account the inflation.
• Bonds – Bonds can provide better returns compared to the cash lying in the bank accounts but cannot offer the same level of security as bank accounts. Although bond funds do not have as much growth potential as stock market investments, they tend to be less volatile and keeps your principal secured. Investors often opt for bonds when they need to reduce risk – mostly towards the years towards their retirement.
• Equities – Equities is a way of investing directly in   the markets and offer the best growth potential over the long term, but you also need to be aware of the face that there may be periods when your investments take a complete downfall.

As time passes by, checking your portfolio on a regular basis should be made a practice as it would help you to make sure that it still suits your long term strategy and if needed, you can make a change in your investments depending upon your situation.

If a particular investment has done remarkably well, you may find that it now accounts for a disproportionate share of your overall portfolio and it calls for a rebalancing. Also, you may need to keep changing the proportion of your investment modes from time to time to suit your needs and situations – for example, you can take more risk when you are young and have a risk taking capability, and then as you get aged and near your retirement, you can reduce the amount of risk you are exposed to.

You would also like to read: When is the Best Time to Invest?

The worst mistake a private investor can make is to be sucked into markets when they are high and the prevailing mood is the most optimistic, only to then get shaken out at times like this when prices are falling and the outlook is uncertain. It normally takes many years to recover from this experience.

Keep Your Cool – That’s the Key!

If you adopt a strategy for long term investments, and are confident about your long term strategy, you do not need to react to short term movements in the market which cause havoc all around. It is important to be patient with the stock market and to avoid knee-jerk reactions and rash decisions in response to bad news.

I hope this article helps you in deciding which category you fall in, identify your needs and invest accordingly.

Do share your experiences with the investments you have made in the past and your learnings from it, we would love to hear and get into a discussion with you and the other readers in the comments section below.

The post Best Strategies For Successful Investing appeared first on Equitipz.

Cautious speculations

As a first time investor in gold, there are some sectors of the market to be wary of.   You can speculate by investing in shares in gold mining companies.   On average the World Gold Council estimates that 2500 tonnes of gold are being mined annually, much of which is destined for the jewellery trade.   With such small amounts being introduced into the market each year it may seem attractive to buy shares in your very own gold mine.   However, this is a high risk strategy.   Mining operations can be affected by all manner of problems; from sudden unexpected nationalisation to war, famine and plague.   Geology can affect expected returns and for this reason alone, investment in gold mining operations should be only undertaken by the experienced.

Also Read: Why Should I buy Gold?

Bullion, coins and jewellery

Once mined, unlike most other commodities, gold remains in circulation.   Jewellery can be returned to the market, and gold bullion is held by Central Banks and investment companies.   For those new to investing in gold buying bullion, gold coins or even jewellery is probably the safest way to invest.   Gold has been subject to some record breaking highs recently – but there is always the danger that it can fall.   Over time gold will remain a viable investment – very much like property investment and possibly less risky.   By investing a section of your portfolio in gold you create a sound basis to your holdings.   Gold, unlike cash, is not subject to spectacular devaluations and inflation.   An ounce of gold at today’s prices (around £1000) will be worth the equivalent if not more in 20 years’ time, whereas the same amount of cash will most likely have devalued to the status of ‘pocket money’.   Gold coins may hold more attraction for some investors as they have the potential for a ‘numismatic’ value in addition to the face value of the metal – this simply means that the older and rarer the coins the higher the price.

Secure shopping

Buying gold online is relatively straightforward although a number of factors need to be considered.   Gold bullion can be sent direct to you and you can arrange your own storage.   There are additional insurance costs in this case – to ensure you receive the gold safely.   However there are numerous gold trading sites that can arrange storage for you.   If you are buying gold for the first time it’s worth considering the reputation and the guarantees offered by the site your purchasing from.   National mints that supply gold bullion and coins should offer some of the best security and guarantees on the market.   For the first time investor gold bullion should be the first option to consider.   Gold is a reliable way to protect wealth and to establish a strong basis to a portfolio.   While wars and economic troubles can see rapid rises in the price of gold, silver and other precious metals, the most common gold investment strategy is to retain ownership for several years – to protect cash wealth against devaluation and inflation.   Investing in gold is one of the oldest methods of wealth protection, and offers a level of security that is available in few other investments.

The post Stealing from the Gods – Quantative Easing the ancient Greek way appeared first on Equitipz.

Also Read: 7 Reasons to be Your Own Financial Advisor

Before you choose a financial advisor, read through these ten tips, which will make it easier:

1. Avoid those who charge commissions

Financial advisors who charge a commission are more likely to push you to purchase certain products. They may care less about what’s good for you and more about their own bottom line. If you see that a financial advisor gets even part of his or her income from commissions, look elsewhere for a better advisor.

2. Look for CFP certification

Always go with financial advisors who have a current CFP – Certified Financial Planner – certification. This is the highest-quality certification that can only be earned by pasting the Certified Financial Planner Board of Standards. Plus, to keep the CFP current, financial planners must engage in continuing education, which keeps them up-to-date on the latest developments so that they can help their clients more effectively.

3. Ask for recommendations

As with most things, it’s a good idea to choose a financial planner based at least partially on recommendations. At the very least, getting recommendations can give you a place to start. Your best bet is to ask for recommendations from people who are in a similar life situation to yours, as different financial planners will have different specialties. Start with colleagues at work or friends who have a similar lifestyle to yours.

4. Ask specifics about the pay structure

It’s not enough to know that you want to avoid those who earn money from commission, though this might seem a little cheaper to you up front. You really need to know exactly how the pay structure of a financial planner works. The most common are flat fee, hourly, and percentage-based. At first, it’s probably best to start with a flat fee or hourly rate. At some points, turning over 1% or so of your annual assets to your financial planner can be beneficial, but this may also lead to an advisor who makes decisions based on her own bottom line rather than on what’s best for you.

5. Find a fiduciary planner

A fiduciary financial planner has basically promised to always act in your best interests. Non-fiduciary financial planners usually hold to the sustainability standard, which means they can get you products that are good for you, but aren’t necessarily in your absolute best interest. If your financial planner isn’t going to always, 100% of the time advise you in a way that’s in your best interest, run the other direction.

6. Use a background check

Getting a background check on a potential financial planner is a great idea, particularly if you don’t have recommendations from other long-term customers you know and trust. Also, check to see if the CFP certification for that financial planner is current by finding out who administers the credentials and calling or emailing the administrator to see if the credentials are valid.

7. Avoid those who make too-good-to-be-true claims

If your financial advisor claims to be able to beat the market every time, they’re giving you a too-good-to-be-true promise and they probably aren’t telling the truth. A financial advisor may be able to show evidence of beating the market average often, but no one can guarantee you that this will happen all the time, so if you’re getting guarantees like these, find someone who is more reasonable.

8. Get details about experience

Just because a financial planner has a CFP or another credential doesn’t necessarily mean they have great experience – it just means they studied hard enough to pass the credential test. Before you decide to work with a financial planner, get as many details about that person’s experience – from the planner and from other clients – as possible. You don’t necessarily have to work with someone who has decades of experience (you might not be able to afford this person!) but you do want to leave your finances in the hands of someone who is reasonably experienced at giving sound financial advice.

9. Find a planner who agrees with your basic financial principles

Even if you’re just starting out, you probably have at least some basic financial principles in mind. For instance, you may be willing to take on a little bit of debt, or you might wish to live basically debt free. A financial planner who essentially agrees with the things that are important to you – or who can at least convince you otherwise using well-supported arguments – is your best bet.

Paying for a financial planner

If you can’t pay for a financial planner up front, Ashyia Hill from CreditDonkey says, you could always ask if they’ll take credit card payments. As long as you can charge flat fee or hourly payments to a low interest credit card and pay them off within a few months, you’re better off hiring a financial advisor now than waiting until you have cash in hand.

Whether you’re twenty-five or fifty-five, working with a financial planner can hugely benefit your financial life. This is because financial planners can help you make the best financial choices without your having to spend hours researching the latest developments in various markets.

This is a guest post by  Ashyia Hill who writes at CreditDonkey. If you also want to Write for EquiTipz, please read more details here.

The post 9 Tips to Remember When Choosing a Financial Advisor appeared first on Equitipz.

What are ULIPs (Unit Linked Insurance Policies)?

ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. (Remember that in a Unit Policy, the investment risk is generally borne by the investor.)

In other words we can say that it is a goal-based financial solution that combines the safety of insurance protection with wealth creation opportunities.

How the ULIP works?

In ULIPs, a part of the investment goes towards providing you life cover. The residual portion of the ULIP is invested in a Unit fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by you.

What is a Unit Fund?

The allocated (invested) portions of the premiums after deducting all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund.

What is Unit?

It is a component of the Fund in a Unit Linked Policy. (It is almost same as that of Mutual Fund).

What Types of Funds does ULIP Offer?

Most insurers offer a wide range of funds to suit one’s goals:

• Investment objectives
• Risk profile
• Time horizons.

The following are some of the common types of funds available along with an indication of their risk characteristics:

Investment returns Guaranteed in ULIP?

One of the reasons people find to stay from ULIP is that, investment returns are not guaranteed in a ULIP. The investment risk of the portfolio is borne by the policy holder. Depending upon the performance of the unit fund chosen, the policyholder may incur gain or loss on his investment.

The Charges in ULIP?

ULIP which are offered by different insurer have different charge structures, following are the different types of fees and charge :

Premium allocation Charge

This charge normally includes initial and renewal expenses apart from commission expenses. It is basically a percentage of premium appropriated towards charge before allocation the units under the policy.

Mortality Charge

This is the charge to provide the cost of insurance cover under the plan. It also depends upon the age of member, heath, and amount of coverage.

Fund Management Fees

These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV) .

Policy/ Administration Charge

These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate.

Surrender Charge

A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

Fund Switching Charge

Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge.

Service Tax  Deductions

Before allotment of the units the applicable service tax is deducted from the risk portion of the premium.

How much of the premium is used to purchase units?

As I mentioned above, the full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges, fees and deductions.The total monetary value of the units allocated is invariably less than the amount of premium paid because the charges are first deducted from the premium collected and the remaining amount is used for allocating units.

What is Net Asset Value (NAV)?

NAV is the value of each unit of the fund on a given day. The NAV of each fund is displayed on the website of the respective insurers.

Basic Terms Used:

Free Look Period: The policyholder can seek the refund of premiums if he disagrees with the terms and condition of the policy, within 15 days of the receipt of the policy document. The policyholder shall be refunded the fund value including the charges levied through cancellation of units subject to a deduction of expenses towards medical examination, stamp duty, proportionate risk premium for the period of cover.

Top up: One can invest additional contribution over and above the regular premiums as per their choice subject to the feature being available in the product. This facility is known as “TOP UP” facility.

Switch: This  option provides for shifting the investments in a policy from one fund to another provided the feature is available in the product. While a specified number of switches are generally effected free of cost, a fee is charged for switches made beyond the specified number.

Partial  Withdrawal: This  option facilitates withdrawal of a portion of the investment in the policy. This is done through cancellation of a part of units.

Additional Information

One has to verify the approved sales brochure for:

• all the charges deductible under the policy
• payment on premature surrender
• features and benefits
• limitations and exclusions
• policy lapse and its consequences
• Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council

At last, the information which is provided by the insurer to the insured consist of following:

• An annual report covering the fund performance during previous financial year in relation to the economic scenario  market developments etc. which should include fund performance analysis
• Investment portfolio of the fund
• Investment strategies and risk control measures adopted

Author Disclaimer: The above material is provided for general information only and does not constitute legal or other professional advice.

The post All you wanted to know about ULIPs Unit Linked Insurance Policies appeared first on Equitipz.

The Concept of Compounding

The key to this concept is the way in which, given enough time, even apparently trivial amounts of money can turn into sizeable sums. In other words, the longer you invest for, the more you benefit from the “snowballing” effect of achieving growth not only on the original amount you invested but also on all the growth it has achieved in the earlier years.

Example

Lets’ quote an example which will show how much growth you might achieve with a monthly investment over 10, 20 and 30 years. For example, if you invest Rs.1000 a month in a fund that grows by 8% on a monthly compunding basis you will have Rs. 184,166 after 10 years. The benefit of Compounding is evident when you look at the returns over a period of 30 years – they are far more than eight times the value of a 10-year investment. In fact, the final value is nearly Rs. 15,00,000.

The powerful effect of compounding is another inportant reason why it actually makes sense to maintain a long term strategy, rather than changing your investments in response to the short term Market Movements.

Also Read: When is the best time to invest?

So, are you taking the full advantage of this miracle? If yes, then which channel have you invested your money to see the compounding magic work wonders for you?

The post The Miracle of Compounding Returns – The Eighth Wonder appeared first on Equitipz.

Financial planning

Financial planning sounds such a big and complicated term. In reality, it is about using your money sensibly. Financial planning can just mean making up a monthly budget and sticking to it. Financial planning implies a sensible use of your money. Money will work to your benefit if you can accumulate it. You will be able to lend more if you have gained that trust.

Savings

A standard rule for general long-term saving is simple. It should be 10% of your income. This is not saving for any particular purpose, it is purely long-term savings. This money should never be used for any purchase that is not another long-term investment, such as buying a house. If you are saving for other items, such as a new TV, you should save separately for that. Consistent saving, and consistent increases in your monthly bank balance, will put you in favour with your bank. And there are a lot of consequences to that. Read: The Miracle of Compounding Returns

Credit

We all need to get credit in our lives. Starting of small, and getting a good reputation, is the name of the game. There are too many ways to get credit, and you should be very careful about this. There are many better ways to get that new home entertainment system than signing up for a two year contract. The best initial credit to get is a credit card. And only use this when it is beneficial to you, and always make the payments back so you do not get charged interest! (Read: How are the Interest- free days calculated for my credit card?)

Must Read: 8 Mistakes to Avoid When Using a Credit Card

Before too long, you will be able to get a personal loan. We all need a car, and getting a car loan, or personal loan to fund that purchase, will put you in good stead for the biggest investment in your life, your mortgage and your home. (Read: Should I prepay my loan or Invest that money?) The early you can get a mortgage, and afford it, the better. It is easy to get side-tracked with so many offers of credit. Remember, what ever you get now, you have to pay more for later. You should choose wisely.

Future

When we are young, it is too easy to think that we do not have to think about the future, and we have plenty of time. Even if you are single, your funeral could be rather expensive. Manage future protection with the size of your life insurance and other policies. In today’s volatile business market, none of us can afford not to have income protection and health insurance. Because you are young, and your policies will be cheaper, the best choice is to manage your cost of coverage. Invest step by step. You can increase these policies over time. It is best to get your foot in the door early. Insurance and even a small amount of superannuation, even at a young age, is very important.

The key to making the most out of the money you earn is a little patience. Spread your money evenly so you are covering all your bases, and by the time you are in your 30s, you will find that you are well on your way to a successful future. That is when it will really count.

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Perhaps, the saying “prevention is better than cure” applies most aptly to a financially strapped situation. Read on to know how you can bail yourself out of such an emergency.

1) Begin with a small savings account: Whoever told you that emergency fund account got to be started big was utterly wrong! The idea is to start small. Open a savings account and deposit whatever you can regularly. The important thing is to make a habit of contributing something towards it frequently.

2) Go the traditional way: Isolate the emergency fund and make it your most important priority. Use every cent to boost your emergency savings. After paying off your bills each month, determine to set some money aside for your emergency account. A decent fund is generally equivalent to 3 to 6 month’s worth of expenses.

3) Try the frugal path: You longed for that $150 jeans at the supermarket? Well, drop the idea for the time being. Yes, curb your unnecessary expenditure and use the money to make your emergency fund healthier. Purchasing things like video games, gadgets, magazines etc. should never be on your priority list.

4) Add it to your list of bills: It takes determination but treating your emergency fund as your bill would greatly help to increase your savings. Imagine it is your payday when you have to clear your bills before you can take care for other variable expenses. The increment in your savings this way would help you to stick to your decision.

5) Make use of financial windfalls: If you have been lucky to receive a tax return or a bonus from work, don’t get tempted to spend it all at once. Instead, make use of such windfalls to fill up your emergency fund. You might want to spend a part on yourself, but make sure that the rest of it makes it to your fund.

Also Read: The Importance of Investing

6) Use a piggy bank: Get a piggy bank or anything good enough where you can safely keep your money. Whenever you get a chance, put something into this piggy bank. For example, at the end of the day you can empty your purse of all the change and use it to fill your piggy bank.

7) Sell sell sell! : Make a list of all the items that you own and get rid of the clutter from your house once in a while. You might want to sell these off on eBay or some other website. Save your earnings from these for your emergency fund.

8 ) Most importantly, stay focused: Most of the times people give in to their temptations. To save your money, you have to sacrifice on little pleasures like eating out, going for movies and the like. You can stay focused by looking at the positive aspects of your doings. Overcoming temptation makes you stronger. Also, giving in to such allurements once in a while doesn’t harm and, in fact, helps you to stay focused.

So, stop making excuses and get geared to start an emergency fund from today itself. This is the best way to be prepared for a rainy day. Sure, you do not want to rely on credit cards for emergencies and push yourself all the more into the hole!

Also Read: 8 Mistakes to Avoid When Using a Credit Card

This post is submitted by Shaun Nichols. Shaun is the founder of debtconsolidationdetails.com where he writes articles on debt consolidation and other aspects of personal finance. Click here if you also want to write for EquiTipz.

The post Top 8 ways to Build Your Emergency Fund appeared first on Equitipz.

The problems can range from real nuisances to quite genuinely baffling situations where they may be wondering whether they need a financial adviser or an astrologer.

Some things, like home insurance, may be basically simple in themselves, but in combination with other financial issues, can be absolute pests if you don’t know how to manage the combination of expenses.

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The basic answer to dealing with personal budget issues is summed up in one word – “Planning.”

The best thing you can do for your personal budget is to get ahead of the problems.

It is possible to avoid problems entirely simply by navigating around the irritating issues and creating a working cost base oriented to essentials.

It’s ironic that quite a lot of problems people have with their personal budgets aren’t really the result of lack of care or extravagance. They’re much more likely to be the result is simply not understanding some of the issues involved in budget spending, or miscalculation.

Personal budgets can be complex, and unless you’re living in a cave, learning to manage budgets can be quite an ordeal.

Also Read:

• The Importance of Investing
• Importance of Long Term Investments

Personal budget basics

The only real way to manage the personal budget is to lock down expenses:

• You really do need to plan your expenses in advance, and as far as possible stick to the budget.
• Saving a bit of money wherever possible is also a good way of making sure that your budget isn’t going to fall to pieces on you.
• If at all possible, try and pay unavoidable and essential expenses in advance, preferably including a discount if you can.
• Put aside a little money around for spending and just having fun. This is also useful if you find something you really like that might trash the budget.
• Look for better deals, always. Whatever you buy, whatever you’re paying for, it usually is possible to get things cheaper with a bit of effort.
• Save unnecessary fees paid on financial transactions. Moved overseas and transfer money to India? Look for the best deals for sending money to India and you could save as much as 5% on every single transfer.
• Keep credit card spending firmly under control. Credit cards can be like financial ulcers, needing attention all the time and costing you money, usually at the times when you don’t want to be spending anything. Read: 8 mistakes to avoid when using a credit card
• Always try to get the best value out of your spending. Bulk buying, buying quality things that will last a long time and similar buying patterns all add up to considerable savings over time.

Dodging the minefield

As you can see, there’s a pattern in personal budgeting!

The idea is that all your spending, saving and budgeting is properly integrated. That way you don’t get surprised by expenses, which is the real minefield zone.

It’s easy enough to dodge spending by anticipating situations and making provisions in advance and create spare resources. The likely difficulties are when sudden expenses arise, and you do have to be prepared for those.

Savings and squirrelling away can provide a useful buffer which prevents the live budget going off the rails. Think of these savings as your personal budget’s “contents insurance.”

The post Getting through the personal budget minefield, one step at a time appeared first on Equitipz.

Also Read: 7 Reasons to be your own Financial Adviser?

ETFs as investments

The major benefit of ETFs is that they provide real value while also providing investors and funds with some shielding against the effects of individual stock movements. ETFs usually have quite conservative weightings of holdings in their portfolios, and a single stock taking a hit won’t have wide “collateral damage” to the holdings on that basis.

Conversely, investing on an index basis can provide massive upsides. The commodities markets, tech, aerospace, and other indices are typically prone to big moves, and if an entire index jumps, so does the ETF holding value. You only need to remember the big moves in tech stocks, oil, metals and others to see the major benefits in this sort of holding structure.

The portfolio approach to ETFs

Most investors, even the best, get at least a bit singed on the stock market at some point. Many don’t like or need to be waiting on stock moves to see returns on their investment portfolios. That’s where the ETFs come in. The stock market rat race is fine for day traders and institutions, but for managed funds and private investors, it’s not necessarily the place for peace of mind.

More to the point, it’s also not the best place for making actual money. The 2008 crash vividly defined the limitations of the conventional investment market. It also defined the worries of investors. The ETFs took their own hits, but they also recovered pretty quickly, and in some cases they actually took over as preferred trading entities. Huge numbers of ETFs were traded in the early recovery in 2009, and they’ve maintained a steady rate of growth.

Also Read: Market Fall – How To Recover Losses?

A typical ETF portfolio is based on a “spread”. The portfolio is spread over a range of indices, for example:

• Dow blue chips
• Energy and oil
• Tech stocks
• Mining
• Food
• Gold and precious metals.

As you can see this is strategic investment rather than the conventional form of market investment. The investment in 5 indexes can be made through share trading on the market or by prospectus. Each ETF also pays dividends, and they also do stock splits. (Like normal shares, they have their “X date” for dividends and entitlements.)

If you’re looking for investment options, the ETFs may be exactly what you need. It’s a good idea to research the different funds and get a good level of orientation to how the ETFs operate in the market, and look at relative performance. Talk to your fund manager if you need specific professional guidance in this type of investment.

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