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Wednesday, December 28, 2016

Top 10 Personal Finance Tips

Here is our list of the Top 10 Personal Finance Tips to help you save more and manage your finances better.



1. Compare bank FD rates before opening one. 

Before opening a fixed deposit (FD) account, compare the rates offered by different banks online. You would find that different banks offer different FD rates for the same tenure.


Also be mindful of the tenure, even the difference of one day in the FD tenure could translate into a loss of interest of upto a 100 basis points.

Consider the following Fixed Deposit Rates offered by the State Bank Of India as an Example. If you open a FD for a tenure of 45 days, you earn an interest rate of 5.5%. However if you increase the tenure by just 1 day, the interest rate goes up to 6.5%. That's the difference of a staggering 100 basis points. Got my point? 


TenorsExisting for Public w.e.f. 24.10.2016Revised For Public w.e.f. 17.11.2016Revised for Senior Citizens w.e.f. 17.11.2016
7 days to 45 days
5.50
5.50
6.00

46 days to 179 days
6.50
6.50
7.00


2. Say NO to multiple credit cards. 

Dont jump in just because your bank is offering you a Credit Card with zero annual fees. Chances are that the zero fees is for the first year itself. Also, there may be hidden charges. For example some cards might require you to spend a minimum amount every quarter or incur penal charges.

3. Keep note of your expenses. 

Keep regular note of your expenses and then analyse them at the end of the month to determine which were necessary and which impulsive.

4. Set Financial Goals. 

Set financial goals, assign a definite time frame to them and save accordingly.

5. Align your investments to your financial goals. 

Align your investments to your financial goals. For example if you plan to buy a house 5 years from now, you wouldn't want to invest in a traditional insurance plan that matures in 15 years from now.

6. Buy Insurance right. 



 Buy the right amount of insurance to keep yourself and your family protected in case of any exigencies.

7. Switch ULIPs to maximise gains. 

If you hold an Unit Linked Insurance Plan (ULIP), switching funds at the right time can help maximise your returns from such investments.

8. Maintain an Emergency Fund. 

Maintain an emergency fund sufficient to cover all your expenses, including loan repayments, for a period of 6 - 8 months. This will be of help to you in tough times like when you are transitioning between a job and your own entrepreneurial venture.

9. Buy a Mediclaim Policy. 

Medical treatment cost for certain ailments can run into Lakhs. Buy a mediclaim policy to cover expenses in case of a medical emergency.

10. Negotiate terms of loans.

Whether you wish to take a home loan or a SME loan for setting up a small enterprise, it always pays to approach multiple banks and then negotiate the best terms, in terms of rates and repayment tenure, for yourself. It definitely helps if you have a good credit score.

Bonus Tip: Buy Mutual Funds

If you invest in mutual funds at the right time (when the markets are down) and hold them for a sufficiently long time (3-6 years), they can give you some solid returns over the years.

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