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.
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.
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.
**Disclaimer: This Article is only for
information Purpose and should not be treated as Financial Advice.
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.
**Disclaimer: This Article is only for information Purpose and should not be
treated as Financial Advice.
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.
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.
**Disclaimer: This Article is only for information Purpose and should not be
treated as Financial Advice.
Get started with your
investments here: Mutual Funds
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.
**Disclaimer: This Article is only for information Purpose and should not be
treated as Financial Advice.
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.