@sdadwal Analysing our financial goals is the primary step in financial planning. Once we are clear of our goals, we can plan to save and invest in that particular direction. Providing good education can be an expensive thing in India. So, if we plan well in advance, we can manage to save for children education and our retirement needs also.
Posts made by Harleen
RE: Child Plans: How to plan for your Child's Education
RE: What is an IPO or Initial Public Offering?
Hi, Yes direct stock market investing and trading suits investors willing to take some risk. You can see huge fluctuations in stock prices owing to different factors. So, one need to be very cautious before stepping into the stock market. If you are not satisfied and wish to play safe only, then better look for risk free investment options.
How to Save and Grow your Money? Financial tips to follow
Looking at the rising cost of living and changes in lifestyle, we can't deny that earning and saving money is crucial. While money cannot buy happiness always but it can help to meet our financial requirements.
Important Financial Tips to Know:
Here are some financial tips or simple ideas to help you. If you plan wisely and systematically, then you can make your money work for you.
- Never Spend more than you earn, a golden rule to be kept in mind while incurring any expenses.
- Create a budget plan to guide you in your financial steps.
- Before you spend, pay off your loans. Firstly, clear debts with high interest rates like credit card bills.
- Whenever possible replace a high-cost loan with a low cost one.
- Investing in real estate is over-hyped especially when it is not for personal use.
- Retirement planning starts when you are young not when you are close to your retirement.
- Never underestimate the power of compounding, it's more powerful than anything else.
- Never underestimate inflation it can eat into your savings quickly.
- When your income increases do not increase your expenses in the same proportion.
- As with life so with your finances, always have long term goals. So, sit back and think about your future requirements and then set up your financial goals.
- Cash flow is important. Always keep an eye on it.
- Markets generally provide better returns in long term .
- If there is a market crash don't panic and go sell all your stocks.
- If you are married, discuss finances with your partner. Learn to manage your money jointly.
- Always have adequate health insurance. Health costs can leave a big hole in your finances.
- Do plan for a life insurance to safeguard your family.
- Do not invest in a financial product that you don't understand. Firstly, analyse all the pros and cons of investing in a particular option.
- Learn to invest in yourself and gain experiences. It could be in the form of education, sports, additional skills, as you like. They can make you more happy.
- Emergency funds are a must. Build a habit to put aside some of your savings as an emergency fund.
- Save before you spend, when you save just not save but invest wisely, when you invest do it for long term
- Don't forget to share these financial tips with your near and dear ones.
SIP vs PPF: Which is Better Long Term Investment Option? Comparison
Systematic Investment Plan (SIP) is a small and easy plan offered to interested mutual fund investors. SIP scheme is very much similar to recurring deposit scheme wherein an investor invests small amount of money on regular basis. The SIP scheme helps an individual investor to invest under in the Mutual Fund scheme in instalment instead of a lump sum of amount.
Let's check details on SIP vs PPF, a detailed comparison of these 2 popular long term investment options in India. We shall compare SIP and PPF with regards to various parameters.
SIP or Systematic Investment Plan (SIP):
SIP is a scheme brings the benefits of mutual fund to middle class individuals who have a smaller earning capacity and are not able to make huge lump-sum investment at a given time.
PPF or Public Provident Fund:
Public Provident Fund (PPF) Scheme was first launched in 1968. PPF is tax saving which was introduced by the Ministry of Finance (MOF) in India to help individual investors’ to save money as well as claim income tax benefits. The amount invested under the PPF scheme can be claimed as tax deduction under section 80C up to an overall limit of Rs.1.5 lakhs for the year in which investment is made. Also, the interest earned on deposits in the PPF account is not taxable.
The dual tax saving benefit of investment amount as well as interest earned makes the PPF Scheme one of the most tax efficient instruments in India.
PPF is a prominent scheme which encourages smaller earning individuals to invest under this scheme. PPF scheme is risk free and receives interest based on annual rate of return as prescribed by the government from time to time. Also PPF scheme is a very popular retirement savings scheme among Indians.
In current periods majority of the scheduled recognized banks like ICICI, SBI, HDFC and others provide PPF account opening facility to their account holders.
SIP vs PPF: Comparison based on Important parameters
Under SIP: One can invest on regular instalment basis. As such, there is no requirement of lump sum payment. Although, you can invest in lumpsum as well.
Under PPF: Under this scheme the investor has to make annual contribution. The investor can choose either the option to pay the contribution at different intervals or in lump-sum.
Under SIP: Based on the scheme opted under SIP, the tax benefit can be allowed or rejected. Various Mutual Fund Schemes are taxed differently based on whether they are Equity or Debt Mutual Funds.
Under PPF: Any amount invested under PPF scheme along with any interest earned on the investment can be claimed as deduction from taxable income up to a limit of Rs.1.5 Lakh under section 80C.
Under SIP: Systematic investment plan (SIP) is subject to market fluctuations as any other investment scheme. But, SIP plan safeguards an individual from market peaks and drops as the investment amount is spread over the period of time and not accumulated in one go. This investment scheme allows oneself to average out the net impact of market crunches if any.
Under PPF: As PPF is an government investment scheme thus there is no major risk of investment losses under this scheme.
Lock In Period:
Under SIP: The lock-in depends on the scheme opted.
Under PPF: The lock-in period for all the funds invested in the PPF scheme is 15 years. But, the investor can continue the scheme for further 5 years without making any further investment.
Withdrawal of Investment scheme:
Under SIP: There are no lock-in period for majority of the schemes and thus amount under SIP mutual funds scheme can be withdrawn easily as decided by the investor. You may incur mutual fund exit load though.
Under PPF: The PPF account cannot be closed before 15 years of period from the date the account was opened. However, the investor, if wishes then he or she can withdraw amount earlier subject to certain conditions.
Note: Withdrawal can be made only under restricted scenario like medical condition , higher education or other reasons as specified by the government.
SIP vs PPF: Conclusion
PPF is low risk–low return investment scheme governed by government policy. Whereas SIP Mutual Fund schemes are high risk–return investment. It’s always better to have a balanced combination of both the investment schemes. You can enjoy a perfect balanced combination of risk-return and liquidity of funds as per your risk profile.
SIP vs PPF: Summary view
Based on individual capacity of risk taking and liquidity crunch, one can opt a preferable ratio of investment and invest in both the schemes.
Hope you understand the major differences between SIP and PPF. Where do you prefer to invest PPF or SIP in mutual funds? Do share your feedback.
RE: What is SIP in mutual funds? What are benefits of SIP investment?
Yes, you can invest small amounts in mutual funds. But, remember these investments are not risk free. You should invest as per your risk taking capability only. Otherwise stick to safe risk free investing options only.
RE: What are the best stock market apps for beginners in India?
Yes, that's a good and a popular one too. All have their own preferences as per requirements.
RE: What is ULIP? Full form, ULIP Meaning, Features & Benefits
@prateek Rightly said! But, to some extent. Insurance should never be mixed with investment. However, one must not ignore the importance of health and term insurance as well. Both, insurance & investment have their own special place in our financial life and none can be ignored.
The motive to have insurance should be to safeguard you and your family by taking an adequate risk cover. Whereas your investment strategies must be focused on generating good returns & growing your money in the long run. What do you think? Did I point out correctly? Any add-ons you wish to make to it.
Debit card vs Credit card: What is the difference between Debit & Credit card?
We all are fond of using debit cards and credit cards as well. But, have you noticed what's the exact difference between a debit card and a credit card in general? Let's look for some key differences between these two instruments.
Debit card vs Credit card:
Which funds can be used? Debit card allows you to use funds available in your savings/current account only. While Credit card can be used upto the credit limit sanctioned to you in your credit card account. The lender sets a specific credit limit over which you cannot use your credit card.
Interest: Interest is charged on the outstanding balance in your credit card account. You are basically using the lender's money to make payments. This is not applicable in a debit card.
EMI facility: Your credit card shall offer you an EMI facility whereas a debit card doesn't give such an advantage.
Repayment: You have to repay the credit that you have utilised while using your credit card. You need to clear your credit card bill in time to avoid any interest charges. However, when you use a debit card, that's basically your own money in your bank account. So, nothing to repay in that case.
From safety point of view, what I feel is that using a credit card is still better than a debit card especially while making online purchases.
What other key differences can you spot between a debit card & a credit card? Do jot down your observations here.
RE: Why is the Value of Indian Rupee Falling against US Dollar? List Reasons
@ishu Indian rupee has been on a slippery slope in the past few months. The Indian currency crossed the 70 mark and just neared the 75 mark in the recent days.
Some of the major reasons in the rupee fall against USD are:
Spike in the Oil prices: Rising Global Crude oil prices is surely a point of concern. India has to spend more dollars to meet its fuel needs, almost 80% of which is met through imports. This financial stress is a crucial factor in the falling of INR. The rise in crude oil prices has actually pulled down the rupee and pushed up dollar demand.
Strengthening Dollar: The USD in itself is strong currency and further getting stronger. This makes rupee look even more weaker against USD.
Global trade factors also impact the performance of rupee against dollar.
The spurt in Dollar has weakened not only Indian currency, but various other Asian currencies as well.
RE: What are best investment options for salaried person in India?
@ishu Yes, PPF is one of the favourite investing alternatives in India. I have seen most of the salaried persons opting for PPF as a long term investment option. In fact, it's good for one's who don't want to take any risk and look for fixed returns only.
Mutual funds & ELSS have some risk attached to them. So, we must firstly analyse our risk horizon before diving into any particular investment option.