Investment for Beginners

Small Investment of ₹ 500 Is Better Than No Investment

Not everyone can spare a huge sum to invest in a mutual fund or any other scheme in one shot. This is particularly true for those who have just started earning. For them, it is better to invest in smaller amounts regularly and systematically i.e. small SIPs. In this article, we will discuss why it is important to start small SIP if one-time investment is not possible.

Why SIP is good for beginners?

An SIP lets you save a certain sum regularly, and this sum can be as small as Rs.500 per month. So, you do not need to have large disposable income, just need to be consistent to accumulate wealth and inculcate financial discipline. This will help you overcome temptation (to spend all at once) and make logical and systematic financial decisions. Indeed, small SIPs are better than no investments.
Systematic Investment Plans will also prevent you from catching the market volatility and getting burned. A pre-agreed sum you can comfortably shell out per month can save you taxes as well as grow wealth without the need for market timing.

Benefits of investing in small SIPs

Builds financial discipline

Saving an amount habitually imparts staunch financial discipline. You will get into the habit of investing regularly and it will be easier to fight the temptation to spend all your salary.

No need to time the market

You do not have to constantly keep an eye on the market rise and falls. Investing lumpsum requires you to assess the market movements and it can cause you to delay your investment decisions.

Option to automate payments

If you set the amount to be auto-debited on your salary date, it will be easier for you to plan your monthly budget. You do not need to put any additional effort.

Scope for higher returns

It averages out the expense ratio (mutual fund costs), which translates to more returns. This is because when you invest habitually over a term regardless of the market mood, you can own more units when the market is down.

Power of compounding

As mentioned above, power of compounding works here more. Starting small can be advantageous because it creates wealth faster and steadily.

Flexibility for low to mid income investor

Small SIPs offer you more flexibility. As you go up the career ladder, you can even increase the monthly SIP amount accordingly. It is less stressful to invest small but manageable sum.

Easy way to save tax and grow wealth

Investing in ELSS through SIP is non-taxable upto Rs.1.5 lakhs per financial year as per Section 80C of the Indian Income Tax Act.

**Disclaimer: This Article is only for information Purpose and should not be treated as Financial Advice.

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GETTING HELP FROM PROFESSIONAL FINANCIAL EXPERTS

Most people work hard so that they are able to enjoy the finer things in life, or at least be able to live a fairly comfortable existence. There are a lot of financial commitments that would require the attention of the individual and these commitments grow increasingly fast as the individual ventures into more spending requirements.  

Professional Help

Getting the help of a financial planner is sometimes not only a wise thing to do, but maybe necessary to ensure the individual does not over commit financially. Some of the decision made, could render the individual’s situation useless and crippling financially in the long run. The following are some of the areas a financial expert will be able to provide adequate advice, so that the individual will be armed with the necessary information to facilitate an informed choice on a financial commitment scheme:

A financial professional will be able to give advice on intended investment, as they knowledge in such areas would be more in depth and detailed. The right guidance will help the individual make a better and more informed decision when it comes to choosing suitable investments. These professional are able to work out the risks and show figures that would either balance the investment well to show profits or show a possible loss should the investment not be a wise one to commit to.

Financial experts are also able to provide guidance and information for retirement plans and other financial commitments, which would allow the individual to enjoy the same or similar quality of life during the retirement phase of life. The assistance given in this area will allow the individual to make good choices based on the information learned.

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SMART INVESTMENT STEPS

It is possible to make smart investment plans without too much hassle and detailed paperwork. The key to smart investment plans lies mainly in the ability of understand and make smart choices. Taking the time and effort to thoroughly understand investment plan before committing to it would be the best way to go about the smart investment idea. 

Some Pointers

The following are some points to consider in the quest to ensure the investments made are beneficial to the individual both in its current form and in the long term scenario:

Making sure the effort to understand the particular requirements and advantages the chosen plan dictates is perhaps the most important exploration exercise to embark upon. Without this knowledge the individual would be basing the commitment on the hearsay of others and this may prove to be a folly when payouts don’t match the perceived promise of the plan.

Don’t be bull dozed into making a financial commitment, until all aspects of the plan has been thoroughly understood. A lot of people become so overwhelmed with the sales pitch presented that they fail to take the time to really read the fine print on the plan being presented.

Always be suspicious of plans that advertise “free” benefits because these are usually tagged to further commitments which are usually not explained and perhaps is never really explored until the opportunity present itself where the “free” elements are called out by the investor. In most cases it is only then that the investor find out the “free” addition is not really as it was first perceived.

Remember to only commit what can be afforded at the time. Over extending oneself is not a good idea as it might eventually cause the individual to default on the investment and lose anything that has already been committed.

Wrapping Up

Keeping a good hold on your financial issues can sometimes be a very difficult task. With the use of the above tips it should become a walk in the park. Start living a much more comfortable life, stop worrying about finances. Enjoy your life and be finance burden free.

 

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DEALING WITH MOUNTAINS OF DEBT AND CREDIT

When struggling to deal with a mountain of debt that does not seem to be decreasing, no matter how much effort is put into curbing the spending habit, it is usually a very stressful and complicated matter. However, all is not lost as there are some exercises that can be used to bring some satiny into the debt and credit situation.

Examine It Well

The following are some areas to consider when looking into the management of debts and credit lines:

One of the first steps to take is to face the financial situation head on and take the time to understand in detail the situation at hand. In doing so, the individual is able to make important decisions and is definitely more aware of how to better manage the debt by considering some workable ways of decreasing it.

Putting down all the incoming and outgoing financial figures on paper will help the individual make some adjustments and informed decision on which debts needs to be tacked and given priority over others. This should be decided based on the incurring interests charged on the debts, thus helping in some way not to accrue more debts.

Contacting the creditors with the intention of redesigning the debt situation, so that it becomes more manageable will also be an option to consider. Most debtors are willing to help as it would eventually mean that they too will be able to benefit from the debt being eventually paid in full. Simply continuing with the current payment conditions will not help and may even cause more problems when the initial sum is not cleared and payments are only servicing interests incurred.

Although this may incur some cost, seeking the help of a professional financial planner should also be explored as an option to finding ways to manage the mountain of debts. These professionals will be able to provide a better insight on how to handle matters to the best interest of the individual.

 

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DECIDE YOUR SPENDING PRUDENTLY

When it comes to finances, most people seem to have a problem making decisions about how their money should be spent and how to make wise decisions that would affect their financial future. There is a lot of information available but finding ways to put this information to work for oneself in the trick in getting the finances in order.

What Happens

The following are some tips on how to decide on spending habit that would be both prudent and wise: 

Perhaps one of the best advices that can be given would be to learn to use cash as much as possible, rather than resorting to the seemingly convenient credit cards. Any other form of transactions that don’t involve cash, has the tendency to get the individual to spend without actually having a clear and controlled amount in mind, therefore the individual is often unaware of his or her spending habits, until faced with the credit card or other financial statements.

Putting off buying items that would involve huge amounts of money, unless the bulk of the payment or all of the payment can be done in cash is another prudent way to handle finances. This will help the individual be better focused on saving for the item and also avoid having to pay phenomenal interests rates when payments are made based on a loan plan.

Learning how to negotiate for the best deal when making purchases is a good way to spend prudently and yet get the best deal. Furthermore it will help the individual acquire skills that could help the individual in other area in life. It also helps the individual to learn to develop the habit of being strong and walking away should the price not fit the budget outlined.

Designing a suitable budget and strictly sticking to the budget will help the individual to adhere to prudent spending habits. This is because everything has been carefully planned and is clearly worked out, thus giving the individual an idea of every expense incurred.

**Disclaimer: This Article is only for information Purpose and should not be treated as Financial Advice.

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All You Need to Know About Shariah Investing

Before we begin analyzing Shariah Investing, let's first understand what Shariah is.

Shariah, broadly translated as 'clear path' or 'way to the original source', governs the day-to-day life of people following Islamic tradition, including financial activities like investing.

What is Shariah Investing?

Shariah investing is investing in compliance with the set goals and values under Shariah.

The Islamic tradition governs that you must be ethically and socially responsible while investing your money. It means that your investments not only benefit you but also contribute to the overall development of society.

Under Shariah investing, you must comply with a set of principles.

Let's take a look at these principles.

Three Major Principles of Shariah Investing

Prohibition of Interest

Interest is prohibited under Shariah. You are not allowed to either pay or receive interest as it is considered unjust. For example, a bank following Shariah cannot give interest-based home loan to you. Instead, the bank will purchase the house and rent it to you, and you are required to pay rent to the bank. This rental income received by the bank will further be distributed among the depositors of the bank as a way of sharing profits.

Prohibition to Invest in Certain Businesses

Shariah prohibits you from investing in businesses that earn their income through the sale of alcohol, abusive drugs, pork products, gambling, weapons, and other such products. You are also forbidden to invest in companies that earn most of their income, like interest from others.

Balanced Distribution of Wealth

As per Shariah, you must pay a certain percentage of your wealth as an act of charity. If we compare it with Tax, it is somewhat similar in the sense that you must share your wealth with others who are less fortunate. It is considered to cleanse and purify the remainder of your wealth.

In addition to the above three points, Shariah also governs both risks and returns associated with any financial transaction that must be shared between both parties. No one party must be the only beneficiary.

How to Invest Following Shariah Principles?

Following the Shariah principle, you can invest in stocks or mutual funds. However, it can be challenging to select Shariah-compliant stocks. In that case, investing in a Shariah based mutual fund can help. There are Shariah-compliant mutual funds available in India. These funds invest your money in socially responsible businesses based on the principl
es of Shariah. With a focused investment objective guided by Shariah, these mutual funds can provide capital appreciation, diversification and income distribution. These mutual funds have Shariah indices as their benchmark. An investor should consider the fund details available in the Key Information Memorandum (KIM) and the Scheme Information Document (SID) before investing in Shariah-compliant funds. This can help you know the risk profile, asset allocation, past performance, and other details about the fund.

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Investor Awareness

SETTING GOALS TOWARDS SUCCESSFUL FINANCIAL PLANNING

Ideally, everyone should have some form of financial planning in place. The earlier this particular exercise is launched, the better the chances are for the individual to be in a position where opportunities can be capitalized upon.

Where to Start?

The following are some of the elements to explore in the quest to setting goals towards successful financial planning:

Setting measurable financial goals is one exercise that should be done very early on for the individual. With this type of planning firmly in place target can be reached, as the individual stays focused on the goals. Also this helps the individual to actually design a plan that involves very detailed goals, in its very basic financial commitments.

There should also be some measurable financial goals which allow the individual to budget accordingly. Understanding the implications of the financial commitments, will definitely be a needed factor when considering investments as a whole. As each investment affects the other, every detail should be clearly outlined when the goal setting process is in the planning stage.

Periodical valuation done on the financial status and investments of the individual should be a practice incorporated into any goal setting exercise. As several changes may have taken place after the previous valuation, it would be prudent for the individual to reconsider investments that have not performed as desired, thus allowing the individual to make the necessary adjustments deemed fit.

Planning as early on in life as possible, will allow the individual to explore setting various goals, which would eventually help to bring the investments to maturity at the convenient time of perhaps, retirement. When options are explored in a realistic mindset, the goal setting exercise will ensure the individual will be able to better cope with possible deviations of any kind.

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Unblocking Major Obstacles to Achieve Personal Financial Freedom

Unblocking Major Obstacles to Achieve Personal Financial Freedom

When the individual is well aware of his or her financial situation, then there are always areas where this knowledge will help to create better opportunities and investment platforms. This knowledge and periodical assessment can also help to change any current financial rut into a booming opportunity investment. With the use of the information on the finances, the individual can also make decisions that will ensure a healthy financial condition.

This will also ensure help for the individual who is trying to curb negative spending habits. When there is an active assessment done periodically, the individual will eventually be able to identify areas that need attention or curbing. Sometimes the information learnt from the assessment exercise can prove to be really shocking for the individual, is it usually shed light on the situation in a very detailed manner.

Most people take on the assessment exercise to understand their current position and how they can make adjustments to accommodate any investments for the future. Failing to consider financial security for one’s future will eventually cause a lot of problems when the individual is unable to provide for themselves and family dependents.

Financial assessments can also help the individual to consider making other bigger lifestyle changing decisions. These may take the form of investments in property, business ventures, retirement plans and any other financially beneficial exercises. With better planning facilitated, the individual can then explore other pleasurable avenues such as holidays, hobbies that require substantial financial commitments and any other commitments that would require considerable financial expenditure.

**Disclaimer: This Article is only for information Purpose and should not be treated as Financial Advice.

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