CIBIL – India’s first Credit Information Bureau made CIBIL TransUnion Score available to banks back in Nov 2007 and to individuals in April 2011. Since then, CIBIL credit score has played a major role in the bank’s decisions of lending loans and issuing credit cards to individuals.

Founded in 2000, CIBIL has massively changed the way credit life cycle is managed  by both the loan providers and end-consumers. To know more information about CIBIL, how it operates, who owns CIBIL, and most importantly how to know if your name is in CIBIL defaulters list, check out this detailed article I wrote some time back…

Now coming to this latest development by CIBIL… the CIBIL Market Place!

CIBIL has launched a new portal called “CIBIL Market Place” which enables you to get personalized loan and credit card offers based on your CIBIL score a.k.a. selected banks and financial institutions will offer you the best Credit Card, Home Loan and Personal Loan Offers based on your eligibility.

What is CIBIL Market Place?

Market Place is the only online portal in India (still in beta version) that offers customized loan and credit card offers based on your credit eligibility. CIBIL Market Place allows you to compare interest rates, credit limits, annual fees and other features of offers presented by different banks and then apply for the offer as per your preference and need, all in one place!

As of now, CMP have started with only Credit Cards and Personal Loan offer, and will with time add more customized offers on Home Loans, Car Loans and Loan against Property as well.

Must Read:

• 8 mistakes to avoid when using a Credit Card

• How are interest- free days calculated for my credit card?

How CIBIL Market Place Works?

Below is a detailed illustration given on the CMP website which explains your journey through the whole process at Market Place.

To Summarize, here is how it works:

Step #1: Buy CIBIL TransUnion Score and CIR (Rs. 470/-) from here.

Step #2: Log onto CIBIL Market Place using Control Number and Score Value here. [Note: Please make sure your CIBIL TransUnion Score (including CIR) should have been purchased in the last 2 months to enable access to the Market Place]

Step #3: Choose required product from home loan, personal loan, credit cards, car loans etc.

Step #4: Compare lenders and products and choose any offer as per your preference.

Step #5: Rate your loan application experience on Market Place which can also help others make informed decisions based on how good or bad the user ratings are.

Main Advantages of Market Place:

• Check customized Loans and Credit Card offers based on your personal CIBIL score and other parameters.
• Access this portal anytime and from anywhere, giving you 24×7 access to the best available offers for personal loans, home loans, car loans and credit cards.
• Compare the best available offers and choose the one which best suites you.
• Apply for best-suited offer from the same place.
• Saves time for both consumers and lenders.

Conclusion

Presenting only eligible offers for different types of loans and credit cards based on a person’s CIBIL credit score is an innovative way to save time for both consumers and lenders. You not only get the offers that you are eligible for, but also get to apply for only the best offers in the market (based on your comparison!).

What do you think about Market Place – are you going to make use of it to get the best deals in the market personalised for yourself? Do share your feedback with us in the comments below…

If you are not a very high-risk taker, you might be a bit afraid while investing in Share Markets or Mutual Funds. In such a case, there are some other types of investment like Fixed Deposits, Recurring Deposits and some Post Office schemes which have proved to be a much safer call although they don’t give high returns as compared to stocks and mutual funds.

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.

‘Life begins at retirement’. How true!

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.

There is a good news for millions of small investors in India as they will be able to earn more from popular post office schemes like Public Provident Fund (PPF) and Monthly Income Schemes (MIS). The government has raised interest rates on these investments by up to 0.5 per cent and this comes into effect from 01 April, 2012.

As you might already know, the interest rates on EPF (Employee Provident Fund) was decreased by the govternment and to make up for it, the returns on other small saving schemes like PPF and MIS has been increased.

Also Read: The Benefits of Compounding Returns

This hike in interest rates on small savings schemes are a result of the recommendations made by Shyamala Gopinath Committee which had suggested linking of interest rates on small savings with that of the other instruments available in the market to make these equally attractive to investors. The panel had also suggested that the interest rates on small savings schemes should be revised annually.

Changes in Interest Rates of Small Savings Schemes

MIS and PPF

• Interest rates on MIS increased by 0.3 per cent from earlier 8.2% to 8.5%.
• Interest rates on PPF increased by 0.2 per cent from earlier 8.6% to 8.8%.

Term Deposits

• Interest rates on Term Deposits of one and two years increased by 0.5% each to 8.2% and 8.3%, respectively.
• Interest rates for three year Term Deposits increased by 0.4% from 8% to 8.4%.
• Interest rates on five-year Term Deposit increased by 0.2% from 8.3% to 8.5%.
• Interest rates on Five-year recurring deposits increased by 0.4% from 8% to 8.4%.

Senior Citizen and NSC

• Interest rates for Senior Citizens Savings Scheme (SCSS) increased by 0.3% to 9.3% from 9%.
• The National Savings Certificates (NSC) having maturity of five and ten years increased by 0.2 % each giving 8.6 % and 8.9 %, respectively.

*The new rates come into effect from April 1, 2012 and will remain valid for the entire 2012-13 fiscal.

I believe that this hike in the small savings schemes from the post office will continue to attract more investors and the banks will have to increase the deposit rates to attract investors.

What do you think about this hike in the interest rates on the office. Does this attract you enough to start a small savings scheme with the post office? If you are still thinking about making your first inverstment, you may like to read about the importance of investing and how to get over the fear of investing.

Also Read: How Rs 1 Lakh Grows to Rs 50 Lakhs in 25 Years?

With a lot of technological advancement around us, there are many services launched to make our lives easier. That said, today I am going to tell you about a new way to transfer instant funds from one bank account to the other. If there is some urgency, and you want to make that emergency transaction for the funds to be transferred to your loved ones instantly, you have come to the right place. So, read on…!!

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.

As you grow old and start earning, one of the most important thing that can come to your mind is how to start investing. As you start realizing the importance of investing, there is one thought which is always pondering over your mind – which I call The “What if” situation – the fear of losing money instead of getting returns.

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.

Gold has always been popular in troubled times.   During the Peloponnesian War (around 431 BC) between the Athenians and the Spartans, the Athenians melted down the gold from the statue of Athene in the Parthenon in order to issue an emergency gold currency.   It’s a fashion that has continued ever since.   Recent economically choppy waters have seen record rises in gold prices. Central Banks have their own reserves of gold and although not adverse to selling it from time to time the current trend is for them to purchase, keeping the prices high and returns good for investors.   However, despite its reputation as the investment of the wealthy, gold is accessible for investors of any level.

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.

Choosing a financial advisor is an important step, for most people, to creating more wealth and financial security. Whether you’re a minor investor who just wants to keep your assets safe or have several thousand dollars to invest so that you can watch them grow, a financial advisor can help you do these things. Remember, a financial advisor is not an insurance salesperson or a stock broker, but is rather a person who will help you create an overall financial plan for your current needs and where you want to go with your finances.

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.

ULIPs - many of us have heard of this term and want to learn more about it but have been unable to get the proper information as to what ULIP is all about,  who regulates them (there is a conflict between IRDA and SEBI as who is going to regulate ULIP)

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.

Some of the greatest minds in the world have marvelled over a simple, but extraordinary forceful concept – the power of compounding. Einstein called it “the greatest mathematical discovery of all time” and “the eigth wonder of the world.” The economist John Maynard Keynes described the “awesome power of compounded interest”.

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?

When should you start considering financial planning? Many young people cannot see the point of insurance and investments, because they feel they don’t need them, or they believe there is plenty of time left. It is only when we see what benefit, we could have had if we had invested those small amounts regularly, do we see the great loss from not planning ahead. Financial planning, insurance, good lending and investments should start as young as possible. Here is a general guide for your young people, from income protection insurance, through to simple saving.

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.

This post is submitted by our Guest Blogger 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.

Have you very often faced a situation where you needed cash urgently but there was no help in sight? If your answer is a yes, then you should perhaps start thinking about setting up an emergency fund. Yes, you always knew its importance, now it’s time to create one for yourself. Be it an urgent need for cash or pulling yourself out of debt, it is always wise to be prepared for emergencies.

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