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Saturday, January 28, 2017

7 Personal Finance And Investment Tips - RoundUp

Take a forward step towards Financial Freedom and Manage your Finances better with the help of some of our best Personal Finance and Investment Tips. 


1. Open up Multiple Sources of Income: 


It is often never enough to meet all your expenses and then save enough to meet your investment goals from just one source of Income. Explore our list of Passive Income Ideas to see how you can make more money by opening up multiple sources of Income. 

2. Always maintain a Mediclaim Policy for You and your Loved Ones

Medical expenses these days can run into lakhs and I have seen people having to liquidate fixed deposits (maintained as a retirement fund) to meet such expenses. It is therefore important that you maintain a Mediclaim Policy with a sufficiently large cover to meet emergent medical treatment costs for you and your family. 

3. Fixed Deposits should be an Important part of your Investment Portfolio

Fixed Deposits are Safe, give you a guaranteed return and should always be a part of your Investment Portfolio. 

4. Maintain several Fixed Deposits of Smaller Amounts than one single Fixed Deposit of a large Amount

It is always a good idea to maintain several Fixed Deposits of a smaller amount than one single fixed deposit of a very large amount. This is because in case you have an emergent need for funds, you need not prematurely withdraw the entire Fixed Deposit. 

Lets say you have a single Fixed Deposit for 10 Lakhs at the interest rate of 8% for 5 years. This is a part of your retirement corpus. Now lets say you need 50,000 rupees to start a business. Now to fund this investment you need to break the Fixed Deposit that you have. But, since you don't need the entire amount so you decide the invest the remaining amount in a fresh Fixed Deposit. 

However, when you approach the bank you learn that that the rate of interest has come down to 6.5% thus leading to a immediate reinvestment loss. 

You could have easily prevented this situation had you maintained 10 Fixed Deposits of 1 lakh each instead of the large FD of 10 Lakhs. By withdrawing any one of those 10 FDs you could have prevented the reinvestment loss. 

5. ULIP's Call for Regular Fund Switches

If you maintain an Unit Linked Insurance Policy (ULIPs), switching between funds at the right time can help you maximise returns. 

In a falling market, one should switch to a Debt Fund and in a rising market switch back to an Equity Fund. 

Read our resource to learn more on how regular Fund Switch helps to Maximize ULIP returns

6. Timing is Important when it comes Investing in Mutual Funds

A Mutual Fund Investment does not necessarily guarantee you great returns. You need to time your Mutual Fund Investments right. This is specially true in the case of Equity Oriented Mutual Funds.     

In an overbought market scenario most of the stocks trade above their intrinsic value. An investment into a Equity scheme of a Mutual Fund in an overbought market would mean buying into a basket of stocks at such elevated levels. When the market corrects, the stock prices would fall and so will the value of your investment.   

7. Gold ETF's Score over Investment in Physical Gold

Gold ETFs are a better investment when compared to buying physical gold in the form of gold coins and jewellery. They are easy to sell (at live market prices) and unlike physical gold do not attract any value added tax. Since Gold ETFs are held through your Demat Account, there are no additional storage costs involved. 

Thanks for your time. 

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