Author: Chillmaadi Admin

Healthy financial conditions will open multiple options for you to utilize your money and take decisions accordingly. Based on your options, choices, and finances your life goals will be impacted. So, it is always advisable to consider various parameters while making any decision.

Similarly, when a question comes on decisions of spending or saving, a question that many people would like to ask is “Should I prepay my home loan or invest for retirement?”

Trying to decide between eliminating debt (Home Loan) and investing in the future is a difficult decision.

No doubt clearing a home loan with prepayments will reduce your burden but on the other hand, saving for investment also lets you enjoy life without any worry. So, both the options for your benefit but the matter are what to choose?

Let me help you to give a glance at the benefits available under both options.

Prepayment of the loan will not only help to reduce your burden but also gives you the benefit of saving tax.

As per current income tax laws, you can avail of the deductions for the payment of principal amount under Section 80C up to the amount of Rs. 1.5 lakh and the interest portion of the EMI paid for the year can be claimed as a deduction up to a maximum of Rs 2 lakh under Section 24.

So, if your annual interest outgo is higher than Rs 2 lakh, it makes sense to prepay the loan and save on future interest payments.

Alternatively, Investment instead of prepayment of home loan should have opted only when the after-tax return from the investment is likely to be higher than the effective cost of the housing loan. Although, there are several risk-free, tax-free debt options such as PPF, SIPs, Mutual Funds, Sukanya Samruddhi Yojana and listed tax-free bonds, which offer higher annualized return than the cost of EMIs.

Moreover, in case you are looking for long term benefits and also a risk-taker, you can also consider investing in equities, which will provide you higher returns in comparison with the expense of EMIs. Usually, investment in equity funds provides you with returns ranging from 8 percent to 15 percent (Higher than other investing options).

So, generally, we can sort out such a decision by comparing the opportunity costs. In simple words, opportunity costs compare the return you will get when you invest the lump sum amount and the EMI into another product versus invest in your property investment after bearing the costs of interest and maintenance and adding rent (like income if you get any).

Now, How to calculate the benefits of prepaying a home loan?

Here are the few steps you need to follow to find out the opportunity cost to take a rational decision:

• Plan your calculation sheet by asking for the prepayment EMIs schedule options from your bank and look for the other investment options return available.
• Now, compare the expenses of housing loans along with the returns of investing options (or you might simply compare the rate of returns in both cases).
• Lastly, consider all the tax benefits you can avail as well as the tax you have to pay on your invested returns (generally in case of equity) or can opt for the tax-free investment options.
• If you have the opportunity to earn a higher return than the interest on the home loan, prepayment would be beneficial in financial terms.

However, one should not only stick on the number of calculations to take the decision but also consider other factors as well

• You have to think mentally which alternative will give you more leverage like will being debt-free make you happy or enjoying returns on investments.
• If you thinking to get higher returns in equity, will you be able to take the risk and have other options of earning to cover up in case of loss as the market remains volatile and emotions never play any role.
• Consider your liquidity position as well as if you need to have liquidity for short term, equity investment might not be a good option.

Demanding a new opportunity might cause a reduction in your current payout. Pay cut simply means a reduction in an employee’s salary. There could be various reasons including layoffs, corporate restructuring and cost-saving initiatives by the employer.

Apart from these, there could be reason from your side like you may decide to switch companies or careers and ready to work in a lower salary because the opportunity for growth is great or you want to work with a company having less stress.

Of course, reduction in anyone’s salary is unfair, and unjust, which gives an unpleasant reaction and you have to sacrifice a few of your dreams as well and deal with a pay cut.

So, you have to take immediate action to deal with the money effectively. Here are the small six steps that will help favorably to manage your money and deal with this problem:

1. Revise your Budget: You should consider all your money inflows and outflows again and revise your budget based on your new paycheck. You might have to consider factors like in case of shifting jobs, the cost of living might get changed. Try to make a list of necessary things and check that your current salary is enough to cover the necessities. If yes, you might look for other luxurious items or savings, depending upon your needs.
2. Eliminate unnecessary expenses: This is the foremost advice to manage your earnings. You should not only focus on saving but also cutting down or limit your expenses. Try to eliminate expenses from clothing, entertainment (Netflix, fast food), trips, etc. Go for a local grocery store instead of spending much on restaurant meals.

Don’t worry this cut in expenses is for the short term. Once you start getting a higher salary, you can start it again or might be till then you got habitual of saving from one more option of cutting down unnecessary expenses.

3. Look for Side hustle: In the Internet era, you can look for various freelancer or part-time jobs where you can devote 3-4 hours (depending upon the type of work) daily to earn some extra income. This will help you to compensate your salary which was offered earlier at the higher rate.
4. Save your rent: Another good option is to save from paying higher rent. Yes, if you are living in a rented property with a high rent rate, you can look for another rented space with lower rent costs. This will help you to save this money and use it for other important necessary payments.

Alternatively, you can ask someone to share your room by paying rent. It is beneficial for both as you will able to earn and another person could eliminate their own expense.

5. Debt Priority: Don’t forget to pay your debts in due time. It’s difficult to manage the payment of others but it could worsen the situations if you don’t pay your debt on priority. Moreover, being too late in repayment will also give an adverse impact on your Credit score.

So, what you can do is, in case you have taken any loan, you can negotiate with the lender and it will help you to offer an extended time to repay your debts.

6. Don’t liquidate your investments: The biggest mistake people do is to liquidate their investments of Fixed Deposits, Sips, and Mutual Funds. No doubt this will help you in the short term but what about after retirement? How are you going to manage that time?

It is better to manage your current salary for the short term rather than compromising the long term goals.

Saving a penny could lead to filling a box, no matter how much small saving it is, it will eventually help you somewhere to manage your living. It is always advisable to maintain good savings not only to secure your future but also to deal with unexpected emergencies.

Saving money might not seem easy for everyone.  Some people get stuck in a financial dilemma every year.  If you plan to save money in everyday life, it can save you from such unplanned worries. It is important to know the details of your income and expenditure before making a saving habit. There are so many things in everyday life we tend to buy instead of following a sustainable idea. Here is a brief idea of the money-making habits in everyday life.

Plan your week

• Who does not love weekends? And most of us love to splurge on luxuries during vacations on weekends. But at the end of the month, you are unable to spend even an extra penny. So this is not the way to save smartly.  Plan your week according to your budget and income.
• Do not go overboard with expensive dinner dates! It will help you to save more for your everyday groceries.
• You can always opt for a coffee machine at home to make more cappuccinos at lower costs. A single investment in a coffee machine will save your money from regular bills at cafes.

Save on your everyday commute

• Opt for public vehicles whenever you can. It will retain your savings by cutting the expenditure on fuels. Moreover, it will also contribute to a greener world.
• Offer your colleagues a seat in your car by sharing the fuel expenses.

Uninstall on-line shopping apps at some certain intervals

• Online shopping stores always offer lucrative vouchers to attract customers. The more you visit these apps, the more you become an impulsive buyer.
• Uninstalling such apps will help you to splurge less.

Install some financial planning apps

You will be much benefitted if you install some financial planning apps. Apps like Mint and Acorns can help you to create plans according to your budget. So, cut off expenses by setting an alert on your smartphone.

Cook at home

• Most of us end up ordering from restaurants or some food chains at the end of the day. This happens to have unplanned meal preparations. Curtail your expenditure by cooking at home more often. It will not only make you healthier physically but also financially.
• Try to use the food wastes in making different recipes. You can always learn these from online tutorials.

Do not keep lights on during day time

Allow keeping your windows open to let the sun rays in your rooms. Cut off your electric bills by using natural light as much as you can. It will also make you feel fresh and happy from within.

Do not overcharge your gadgets

We always tend to forget to switch off the electric supply even after a full charge of a gadget.  This is harmful to the gadgets also. Moreover, it will increase the electricity bills to some extent if you make it a habit.

Catch offers whenever you can

Look into the offers online and offline while buying anything. Research and compare product prices to save more in daily life.  It will allow you to buy more things in a short budget.

Opt for wholesale markets

If you buy your daily needs like groceries and stationeries from wholesale markets, you can save more than you expect.  You will be able to manage to buy more things in the small budget from wholesale markets.

Get customer reviews before buying new things

We love to experiment with new things like beauty products and gadgets. But it is seen that new things might not be as satisfactory as the old ones. So, get customer reviews before buying new things. Do not experiment after investing hard-earned money in these.

These daily habits will curtain unwanted expenses from your day to day life. Thus we can manage to have more savings from the very beginning of our earning days. Save more to get more!

One of the things we’ve noticed in our family is that the more advertising we see, the more stuff we are likely to want. This is especially true with our children. We try to minimize the amount of advertising they are exposed to, which helps to alleviate some of the “I wants”. It is tricky, though because advertisers are always trying to woo our kids.

One of the ways we attempt to keep marketing material away from the children is to minimize their tv time and their exposure to commercials. We have a rule in our house, “when the commercials come on; the tv goes off”. They are trained to shut the tv off for a few minutes while the commercials play and then turn it back on when the show they are watching resumes. We are usually close by to enforce this rule. The kids have limits on the shows they are allowed to watch as well as the length of time per day.

Another way we minimize their exposure to advertising is by throwing out all the toy catalogues and magazines that are sent their way. American Girl is one of the worst offenders. We have never purchased anything from them, but somehow they got our daughter’s name. They faithfully send her their latest catalogue so she can see all the dolls she must have, at the cost of $100 or more per doll. Yikes! Now we sort through our mail before bringing it into the house and toss any catalogues or sales flyers directed at the kids.

For myself, I don’t browse catalogues or stores where I know I will be tempted with impulse purchases. I have come to recognize that merely removing these things from my line of vision helps me to see more clearly our goal of saving money and living within our means. When I am feeling particularly emotional, I avoid advertising like the plague — no TV, magazines, online shopping, etc.

Now we don’t tune out all advertising. That would be impossible to do. However, we find that by keeping it too low levels, everyone in the family is not focused on the next “thing they have to have”.

The tendency of the Indians to invest more during auspicious occasions is undeniable. Diwali is coming soon and the financial market is already getting prepared for the same. But before jumping into the decision, you must know where you should invest from your side. Many people tend to invest emotionally in various risky options. But this Diwali, there will be nothing like such hasted decision if you follow some simple tricks.

You must know some important facets of the financial market to have an effective investment. These are the following –

• Analyze the market value
• Know the market conditions before investing
• Estimate your budget
• Judge your need for investment
• Do not invest emotionally
• Be updated to the conditions of finance sectors

Some important sectors of investment you must know this Diwali

These are some most popular and important sectors of investments one can opt for this Diwali. But, it is always advised to know the risk factors before investing in any of these.

Investment in Precious Metals

Generally, common people try to invest in buying some costly metal items during the Diwali season.  These are gold, silver, and platinum. But the market value of these metals varies in every Diwali. So, it is better not to invest more than 8 percent of your total budget. Moreover, the price of platinum and gold always remains on the higher side. So, it might not be easy for everyone to afford such precious items.

Mutual Funds

Some people want to invest in mutual funds in Diwali. Undoubtedly, mutual funds are growing rapidly in Indian economies. Most of the young generations prefer to invest in mutual funds in a large amount. It will not only give you more return but also provide an instant lift to your finances. But mutual funds are always subjected to market risks. So always consult with a financial advisor before investing in mutual funds.

Equities

The trading window becomes wider during the Diwali season. The effects are seen not only in Indian exchanges but also in some international stocks. But it does not ascertain you about getting a risk-free benefit from it. The liquidity level in the market fluctuates during Diwali. So, there will be some percentage of risks when you invest in Equities.

Real estate investments

Many people try to invest in real estate during Diwali and Dhanteras. But some of them do not care about the rest of the savings left after such a huge investment. Real estate investments need plans. You should not choose it over small investment options. It is suggested that after years of savings and planning one should invest in real estate. This is not a short term investment plan. So, be wise while deciding on investments in such criteria.

Fixed deposits

Invest in fixed deposits (FDs) to avoid financial risks. This is the most favorite option for middle-class people. But you must know about the maturity period before investing. If you are not comfortable with longer maturity periods, then avoid.

Bonds

Financial bonds are making an impressive base in the market. People expect a good return after investment. And bonds assure a safe investment plan. On this Diwali, invest in bonds if you are searching for a safer option.

NSC (National Savings Certificates)

Post Office investments are also beneficial for clients or investors. These are risk-free options for beginner investors. It will also a good return to you after a certain time.  You can also get the benefit of Income Tax under 80C.

PPF (Public Provident Fund)

If you are already in any service, you should opt for PPF in this Diwali.  Though PPF runs in a span of fifteen years it is a risk-free choice for all service holders. Invest in PPF as soon as possible you start your service career. You will also be able to save Taxes as a result. But you cannot invest more than 1.5 lakhs in a financial year.

So, here are some applicable ideas on investments you can follow in this Diwali to get the most out of it.  Choose the most appropriate one for getting a regular benefit from your investment.

Savings for life have become tricky as well as mandatory now a day. In the modern world, the risk of investment has increased. Besides, the need for investment has also risen. The diversity of options concerning savings is bringing you on the edge of threat regarding savings. So, you must know the correct way to save enough for the future. Here you will get to know about the details of it.

These are the strategical steps to guide you towards the appropriate way to save more.

Estimate your need

It is important to know what do you need to invest in to live a brimful of life. Moreover, an estimation of the expenditure should be framed to balance your life with income. The idea of saving more comes from the idea of buying less. So, cutting off unnecessary luxuries from a daily life might change your financial goals.

Search for the best insurances

In the 21st Century, investment comes with insurance. It might seem that investing in insurance will make you compel to provide premiums regularly. But the insurance in which you are investing today will revert more benefits tomorrow. Besides, it will ensure a secured life. Insurances are of many types as in health insurance, life insurance, automobile insurance, and home insurance and so on. But you will have to judge which one is most necessary for you right now.

Get the best mutual funds

Recently, mutual funds are taking the lion’s share in savings for the young generation. Mutual funds might be a bit riskier than other investment options. But, it returns more benefits than the other rivals available in the finance market.

Check your savings status at a certain interval

Always check your status of savings at a certain interval of time. It will assure you a review of the strategies. If you find the status is not much healthy and cash flow rate is higher, you must check the strategies once again. Go through the bank details, returns from ITR, insurance premiums and so on for getting a detailed scenario of the same.

Check the status of loans

There are many types of loans available in the finance market in today’s world. Education loans, home loans, car loan and many more are there. Most of the people need to get the support of financial loans to grab a firm base of financially robust life. But, when you feel that you need to start with a new loan check the status of other loans.

Home loans generally run for a longer period as the amount tends to be bigger than other loans. If you see that you are almost near to fulfill the home loan, try to complete the cycle with savings amount. It will save amounts of interest.

If you have kids, you might get support from the education loan. Most of the higher studies need a higher amount of money. If you plan for it from the beginning of your family life, you can save the interests of education loans.

The verdict is if you need a loan on an urgent basis, then only go for it. Otherwise, plan for house building, education for kids and other expenditures from the very beginning of your life. It will help you to save more money for your older age.

Take a smart retirement plan

Retirement plans are nothing but pension plans. It will provide you an assured sum at a certain interval of the period after your retirement. It will determine a fixed income even after your retirement.  Proper planning during your service period is necessary to choose a smart retirement plan. It is necessary to invest in such financial plans when you are earning sufficiently.  The policy you are selecting must be fulfilling your estimated needs after retirement.

A small outline to save more

• Always start it early. It means that think about savings from the very beginning of your service life.
• Compare the investment plans before investing in any
• Do not be biased to any certain criteria while choosing an investment plan.
• Save more with fixing small targets
• Save it more frequently in a small amount of sum.

If you are already following these strategies for a better future then it is perfectly alright. Otherwise, it is time to think about your plans and savings once again.

Having a home of your own is one of the greatest achievements in an ordinary person’s life.

Well, somewhere we all are fascinated about buying our dream home at our dream location. Isn’t it? Whenever any of the interior decor posts on social media comes in front of you, we silently think I wish I could have it or could afford it, but we got stuck when money comes into the role and why not?

Afterall considerable investment is required to buy a home, but don’t worry, I have the realistic and simple ways to save and grow money which will surely help you to buy home within a few years.

However, I would suggest you before you begin saving, you first have to know how much you’ll need to save. Plan to sit down with a mortgage lender who will let you know how much of a mortgage you can qualify for.

So, be proactive, and here are the Best Ways to Save Money for Buying a House:

• Invest In Mutual Fund SIPs or FDs

You must have heard and seen many times about invest in Mutual funds and get your money double. Many of you doubt that we will lose our money, but it is not valid.

In the present time, Mutual fund SIPs are a reliable and easy way to generate money from your invested capital. One can set apart a portion of their income and invest it towards Mutual Fund investments through Systematic Investment Plan. This will help you to make Home Loan down payment quickly as your ultimate goal.

You can understand it with an example like if you start investing Rs. Fifteen thousand a month in SIP, with a reasonable return of 12%, you can build sufficient fund of around Rs.12.40 lakhs in just five years.

Similarly, Fixed Deposits (FDs) also help you to build a good wealth within a few years.

• Start early savings

It is a fact “when it comes to saving money for investments, the earlier you start, the better it is for you.” Therefore, It is always recommended to start saving in your 20s itself

If you start investing while you are still in your 20s, you can enjoy the power of compounding to multiply your savings, thus having sufficient funds by the time you plan to purchase a home. This will help you in making your home loan EMIs, thereby reducing your Home Loan burden.

Your early strong financial position will also help the bank to put trust in you and will ensure approval of your Home Loan application.

• Cut down unnecessary expenses

For reducing the unnecessary costs, the first step is always to make monthly expenditure budget. A budget doesn’t stop you from spending money, but it will help you to figure out where your money is going so you can check out and cut off the expenses which are not required.

• Create a second income for yourself

It’s the era of Digital India with many proven ways of earning money with the help of a laptop and the Internet; you can quickly start earning and saving. Start doing side hustles, utilize your time, and make more money. There are many side incomes you can generate like if you work as a writer, you could do freelance writing on the side, if you work as an accountant you could help people with their tax returns, or you can also work with someone on a commission basis.

Keep exploring beyond your imagination as there are many sites which provide you assignments or side projects to generate passive income.

• Lower the Rent You Are Currently Paying and Save The Difference

If you are living in a rented property which has higher rent you can look for another cheap rented property and save the difference of rent. Currently, it does not seem to be nice but what you can do is to invest that difference amount in FDs, MFs or Gold, etc. which will help you to generate another income source from the savings.

“Buying a house is a massive investment; some of us call it a lifetime investment. You have to look for every aspect.”

The mega economic cycle that started in 2003 is well and genuinely reaching an end (from the looks of it).

2003 was a critical time in history –
1. The US had entered Iraq and was pouring money into two wars
2. China was added into WTO
3. Enron, 9/11, Worldcom, Dotcom and Asian crisis had ensured the bottom was well and truly made
4. Banks were giving away cheap loans to the subprime customer to create MBS