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A excellent time to invest in retirement plans or schemes is when you have just begun to make money in life. You will need to make prudent investments, though, if you want to amass a sizeable corpus that will last you your entire life. For this, there are several investing options available, and which one you select will depend on your current age and income profile. You can enroll in the National Pension Scheme if you are young and have plenty of time to save for retirement (NPS). But why should you invest in NPS, exactly? What qualifies NPS as a wise retirement investment? The top 5 causes for young investors to start investing in NPS now are as follows: 1. A higher annual tax deduction of up to Rs. 50,000 Under Section 80CCD of the Income Tax Act of 1961, investments in NPS are eligible for an extra tax deduction of Rs 50,000. Consider this tax benefit as a "bonus investment" in your retirement account. In that case, this additional investment could have a considerable impact on your retirement fund during the ensuing 25 to 30 years. Another way to look at it is that the tax savings increase your take-home pay and enable you to invest in more possibilities to reduce your taxes. 2. When your money reaches maturity, it won't be subject to taxes. According to existing tax legislation, NPS investors are permitted to withdraw 60% of the corpus tax-free at maturity. There is no tax owed at the time of purchase, but you must buy an annuity to cover the remaining 40%. As a result, the entire withdrawal is tax-free. Only the monthly annuity payments you receive will be subject to tax. Even this income would be limited by the basic tax exemption amount, so only a portion of it would be taxed. Government NPS taxation regulations have become increasingly enticing to investors over time. With the same tax treatment as PPF and EPF, NPS is a competitive investment for a young investor. 3. Investments with low costs and strict regulations In programmes like equity-linked savings schemes (ELSS) and unit-linked insurance plans (ULIP), fund management fees can range from 1 percent to 2 percent. NPS fees, in contrast, are 0.01 percent of the asset under management (AUM). The regulatory body PFRDA also actively regulates and oversees NPS. This suggests that your rights and interests are always protected. This is crucial due to the long-term nature of investments and the critical significance of the financial goal for which you're investing your hard-earned money. 4. A variety of alternatives for asset allocation and fund management You can choose from a range of fund managers and fund allocation options with NPS. If you're choosing a fund manager, you can quickly review the past performance of each fund to help you decide. If you see a decline in performance after investing, it is simple to switch funds online in the middle. When it comes to fund allocation, you can select between active and automatic asset allocation. Planning an equity allocation of up to 75% is possible if you are an informed investor who is familiar with how markets work. However, auto allocation will automatically balance your asset allocation based on your age if you are a passive investor. 5. NPS becomes a wise retirement investment due to the lengthy lock-in period. Young investors may find it challenging to think about or even consider retirement, yet this mindset could jeopardise their retirement age and corpus. Let's get this straight: if you start saving for retirement in your early 40s, you will lose out on the power of compounding. The more money you'll need to set away each month the later you start saving for retirement, which is bad for both you and your savings. Unlike other investments, the money you invest in NPS is locked in until you turn 60, making it a wonderful method to multiply your funds. Although it can seem like a disadvantage for you as a new investor, it is not. Yet how? The lock-in period guards you against the temptation to spend your arduously saved retirement funds on unnecessary spending and frivolous products.

New repo rates of 4 percent and a reverse repo rate of 3.35 percent, effective December 2020, were announced by India's Reserve Bank monetary policy committee. Since March 2020, the repo rate has fallen by 115 basis points. The repo rate is routinely lowered or raised by a certain amount of basis points. For commercial banks, a decrease in these rates is always welcome. Now that you know how it affects your EMI, how can you use it to your advantage? To understand how repo rates and EMIs operate, we first need to understand how repo rates function. How much is the repo rate? The Reserve Bank of India helps commercial banks in India when they run low on cash. The repo rate is the interest rate levied by the Reserve Bank of India to commercial banks when they lend money. This rate is used by monetary authorities to keep inflation in check. Inflation may prompt the central bank to hike the repo rate. Commercial banks are deterred from borrowing funds, which reduces the quantity of money in circulation and reduces inflation. If inflation lowers, the central bank has the option of lowering the repo rate. Commercial banks use this as an incentive to provide loans. They will then transfer these funds to their customers, increasing the money supply. To begin, what precisely is EMI? To return a bank loan, you must do it in monthly instalments. Each payment is referred to as an Equated Monthly Instalment (EMI). Every EMI consists of the principal and interest. Banks typically collect the bulk of your interest over the first half of your term. The reason for this is because when you initially take out a loan, you'll have to pay a lot of interest on it. Your EMI will begin to contain a larger portion of principle as the duration of your loan draws to a close. What is the relationship between EMIs and the Repo Rate? Theoretically, a low repo rate should translate into lower borrowing costs for the general population. Banks are expected to drop their lending interest rates when the repo rate is lowered, as the RBI wants them to do. As a result, customers will pay reduced interest rates on their loans, cutting their EMI payments. Likewise, if the repo rate rises, so does the cost of borrowing for customers. Due to the fact that commercial banks must buy money from the central bank at a higher price, they are forced to boost their lending rates. It's not always this way, however. It takes time for banks to cut their lending rates when the Reserve Bank of India lowers its interest rates. When the repo rate rises, banks are keen to boost their lending rates. Consequently, in order to change how commercial banks function, RBI adopted MCLR regime. Banks are now required to communicate new interest rates five times a month at the absolute least to customers. They also face greater restrictions on the spread they can apply to their base rate. An additional 25 basis points can be used by banks over the MCLR. Under the new MCLR structure, the repo rate and the EMI may be more closely linked than they were before.

Investors who are wary of risk have had a difficult time as interest rates have fallen. Once offering returns of over 8%, fixed deposits now only provide returns of 4-5 % before taxes. Increasing your guaranteed returns can be done in many ways. In this post, we'll examine how often interest is compounded and how it affects your interest income. Compounding frequency Bank FDs normally grow at a rate of one quarter every year. What exactly does this mean? It implies that at the conclusion of each quarter, the deposit is reinvested with the interest produced from the previous quarter's deposits. As a result, interest will be computed not only on the principle, but also on the interest that has already been generated in the upcoming quarter. To what extent does this help the depositor? The more often a deposit is compounded each year, the more advantageous it is for the depositor. Let's have a look at an example of this. We have a 6-percent FD with a compound yearly interest rate of Rs. 1 lakh. The FD will pay out Rs. 6000 in interest at the end of the year. One more FD of Rs. 1 lakh is also available at 6%, although this one compounds quarterly instead of monthly. An annual interest payment of Rs. 6136 would be made on this FD. Compounding has a greater impact on returns when invested over a longer period of time and with a larger sum. A five-year return of Rs. 133,822 for the first FD and Rs. 134,685 for the second is an example. Reduced rates can be used to cover greater interest costs It's possible. Take, for instance, two five-year FDs each at Rs. 1 lakh. 6% annual compounding is offered by the first, which will pay Rs 133,822 lakh at maturity. The second yields 5.87 percent every quarter. It will pay out Rs. 133,825 at maturity, which is nearly the same as the first FD offering a 13-basis-point increase in interest. Similar to the 6.15 percent FD compounding annually, a 6% FD with quarterly compounding will yield about the same returns. What financial products are available from the banks? Quarterly compounding is the most common method of interest accrual for long-term fixed-rate deposits (FDs). While this isn't always the case, certain banks may provide compounding on a monthly, semiannual, or annual basis. You, as a depositor, must verify the terms of the deposit. If you rely on fixed-income instruments like FDs for your financial well-being, these minor details matter. Interest revenue can be increased by increasing the frequency at which interest is compounded.

With money management, one of the most common statements is, 'if you want to get your finances in order, set a budget!' There are a wide range of options when it comes to budgeting. One type of person focuses on envelopes; another on percentages; a third is concerned with how much they spend. The most important thing is to choose one that works for you. Budgeting in reverse is a viable option. Reverse Budgeting- Reverse budgeting is paying yourself first and figuring out the rest of your spending plan from the money that's left over. Investing and saving are the first steps you should do. What is left over is used to pay your bills and meet needed needs. Investing and saving should take precedence above all other considerations. It is important to remember that this does not mean that you should forsake basic essentials like lodging and food. Reverse budgeting is best suited for whom? People who find it difficult to save money at the end of the month would benefit from this budgeting strategy. In addition, it's useful for those who are attempting to keep a tight rein on their spending because it forces you to reevaluate all of your current spending practises. If you put your savings and necessities before your desires, you won't have to worry about not meeting your savings goals before your next paycheck. Do you know how to do it backwards? The most important question is how reverse budgeting works and what steps need to be taken to get there. We'll find out. Look at your spending/expenditure The first step in creating a budget is to take a look at your current spending patterns. Make a detailed list of all the information you need to know. How much do you have to spend on basic essentials like food, clothing, and transportation? Do you spend a significant portion of your earnings on food? Do you go out to dine a lot or do a lot of shopping? Consider student loans and credit cards, for instance. Ensure that you take into consideration both your short-term and long-term financial goals. Are you in the market for a new automobile or a new home? Choosing where and how to spend your money is easier when you know how much you're spending and what you're trying to achieve. Decide how much money you want to save? Now that you know how much money you spend and what your goals are, you can start creating a budget. What percentage of the way there have you been in reaching your goals? You need to figure out how much money you'll need to accomplish your goals first. How much money can you put aside each month? Aim for a budget that permits you to cover your essential expenses and yet have money left over for fun activities. Bills must be paid in full- It's time to pay your bills after you've decided how much money you want to save and invest each month. How much money do you spend each month on average? There should be an option to insert monthly subscriptions for example. It's also a good time to think over whether or not you really need these subscriptions. Amounts placed aside each month will be determined once you've paid all of your monthly bills. Putting money into your own development is the best course of action. Make a personal investment in yourself as soon as you receive your next paycheck. First and foremost, fund your retirement and investment accounts with funds you have on hand. Having done the first three stages, you should have a fair sense for the amount of money you can save. The balance of your money should be saved for something enjoyable, like supper with friends or a new top. Reverse budgeting is the finest since you don't have to feel bad about spending the extra money because you've already saved and paid your expenses! Adaptation and Modification- It's possible that you're saving too much or too little money. That's perfectly OK!! I'm not perfect, and I'm not alone in this. Make any required budget modifications. In order to pay for your holiday shopping, you may decide not to set aside as much money in December. This is quite OK. Never lose up on your goal of prioritising your own personal development. A look at the Pros and Cons of Reverse Budgeting- The pay-yourself-first approach to budgeting takes less upkeep than other approaches, such as the zero-based approach. In order to keep track of your spending, you don't need to classify everything you buy or keep a detailed log of every transaction. Taking a step back and taking a look at the larger picture might also help you avoid making hasty conclusions. Savers are more likely to spend their money on things they need or value since they have less to spend in the first place. Cons- Is it always the best financial option to put money ahead of other priorities? When it comes to saving for a trip or a new car, it's best to put money toward clearing out high-interest debt first. Alternatively, you might designate your loan repayments as savings in order to cope with this. When it comes to budgeting, reverse budgeting emphasizes paying oneself first. As long as you put your financial well-being above all else, moving forward is a piece of cake. However, not everyone will enjoy it. In the end, though, reverse budgeting is just one of a number of budgeting options to consider.

Most Indian families place a high value on ensuring their children receive the greatest possible education. The best universities and institutions in the world may be found all throughout the world. The competition for admission to Ivy League universities is fierce, and the prices associated are prohibitive. In this case, parents need to plan for their child's education abroad by establishing an education fund. To accomplish this, follow these steps: Make an accurate cost projection- Consider first how much money you want to put into the school fund of your child. Then work your way backwards from that point. There are two things to bear in mind if your child is in school and has at least 10 years to go. While it's unclear the direction your child will take, you have the luxury of time and money to save for it. It's a good idea to look at the pricing of some of today's most popular courses at some of the nation's best institutions. Colleges charge for academic inputs as well as for living expenditures, which are included in the cost of education. The expenses are spread out over the duration of the course and are subject to inflation. Experts believe that when assessing costs, it's important to account for inflation of roughly 4% and currency depreciation of around 3%. According to the latter, the rupee has generally devalued against the dollar at a pace that is higher than that of the course fees and living costs. Assuming a child enrolls in the same school 15 years from now, the expenditures come to Rs 4.3 crore after taking inflation and currency depreciation into account. Invest Frequently- You're off to a good start if your estimate is accurate and you have enough time to complete the project. The less money you have to put up each month, the more time you have. If you want to save Rs 4.3 crore over 15 years and expect a 15% return on your assets, you'll need to set aside Rs 63,528 a month. You can see from the table above how much money you'll need to set aside each month. Your Best Chance is to Invest in Equities- The sums presented look to be excessive. But don't give up hope. You might begin saving slowly and progressively raise your contribution over time to compensate for a shortfall. Moreover, in some situations, scholarships, tuition exemptions, and school loans are available. In spite of the current volatility in the equities markets throughout the world, the long-term stats are excellent. The Nifty 50 and Nasdaq 100 indexes have returned 14.46 percent and 20.93 percent, respectively, during the previous 15 years ending May 31, 2022. If you're going to invest in stocks, stay away from those that have performed well in the past. Because of the recent volatility in the stock market, do not avoid investing in shares. Staying the course and not attempting to time the market makes sense. Keep your eye on the prize- Though exposure to equities ― both local and international, give a possibility to achieve significant profits, they also come with volatility. Doing so entails maintaining an eye on the portfolio. Debt investments, which earn less than stocks but are also less volatile, will be necessary as you get closer to your objective. One of the most tax-efficient ways to invest in debt is through debt mutual funds. Fixed Deposits (FDs) may also be considered by conservative investors for debt allocation. If you're okay with the liquidity limits, an existing Sukanya Samriddhi account can be utilised to invest in debt for school funding for girls. Education costs must be closely monitored in order to see how they evolve over time. Every now and again, you need to check your assumptions about inflation and currency devaluation. Investments should be increased when there is a gap. Don't neglect the uncertainties of life when making all of these investments and keeping track of them on a regular basis to help your child reach his or her educational goals. Invest in enough term life insurance early in life. Your child's education will be met even if you are not there. Saving for your child's education is an excellent idea, even if you can get a student loan. It's a great way to avoid spending retirement savings that you can't get anywhere else.

The Securities and Exchange Board of India has issued new guidelines for debt funds that are passively managed. Last week, According to SEBI, Debt ETFs/Index Funds could be based on indices that include Corporate Debt Securities, Government Securities, T-Bills, and/or State Development Loans (SDLs) (G-sec indices), or a mix of the three. The constituents of the index in debt index funds should have enough liquidity and diversification at the issuer level, according to the new standards. The index's constituents will also be reassessed on a regular basis. The Securities and Exchange Board of India (Sebi) has also mandated that no single group of securities should account for more than 25% of the index's weight (excluding securities issued by PSUs, Public Financial Institutions (PFIs), and Public Sector Banks (PSBs)). In addition, no single sector may account for more than 25% of the index's weight (excluding G-sec, t-bills, SDLs and AAA rated securities issued by PSUs, PFIs and PSBs). This provision, however, does not apply to sectoral or thematic debt indices. Sebi has asked AMCs to make sure that the updated constituents of indices and methodology for all of their Debt ETFs/ Index Funds are always published on their websites. Furthermore, since the commencement of the schemes, historical data on the constituents of the indices will be made available on their website. To begin, AMFI has been asked to publish a list of debt indices in preparation for the launch of debt ETFs/Index Funds. AMFI is required to publish the list within one month after the circular's publication. In the case of Corporate Debt ETF/Index Funds, Sebi has stated that investments in securities of issuers accounting for at least 60% of the index's weight comprise at least 80% of the ETF/Index Fund's net asset value (NAV). The Securities and Exchange Board of India (Sebi) has also stated that the securities of non-index issuers shall not exceed 20% of the ETF/ Index Fund's NAV at any time.

Equity-linked Savings Schemes (ELSS) have long been a popular tax-saving tool, and now the capital market regulator is enabling mutual fund providers to create passively managed ELSS. Mutual funds can start passive ELSS schemes based on one of the indexes encompassing equity shares from the top 250 businesses in terms of market capitalization, according to a circular released by the Securities and Exchange Board of India (Sebi) earlier this week. As a result, the ELSS scheme might be based on a wide range of indexes, including the Nifty 50, BSE Sensex, Nifty 100, Nifty 200, and Nifty Large Midcap 250. This will enable fund houses to provide a diverse range of options to clients, including exposure to large and midcap equities. According to the Categorization and Rationalization of Mutual Fund Schemes guidelines, the fund could be created under the 'Other Schemes' category. Mutual funds, on the other hand, could offer either an actively managed or a passively managed ELSS. A passively managed fund is one that attempts to mirror the composition of a specific stock exchange without the requirement for a fund manager to actively manage the fund. This reduces the expense of active management, lowering the fund's cost to investors. Because most existing fund houses already have an actively managed ELSS, the requirement that a fund house offer either an actively managed or a passively managed fund could delay the debut of passively managed tax saving funds.

Purchasing a vehicle will be more expensive as of June 1, 2022, because third-party insurance will be more expensive. The premiums of third party insurance will go up from 1 June. Instead of the insurance watchdog, the Insurance and Regulatory Development Authority of India, a notification was issued by the transport department under the Ministry of Road Transport and Highways (IRDAI). For two-wheeler bikes over 150 cc, the insurance premium is expected to rise by 15 per cent. For cars with the engine capacity between 1000 cc and 1500 cc, premiums are expected to grow by 6 per cent. The new private car owner will have to pay 23 per cent more premium for a car of 1000 cc if a lump sum amount is paid for a three year period.

The mortgage lender HDFC Ltd has upped its retail prime lending rate (RPLR) on housing loans, which means monthly EMIs are anticipated to rise, according to the company's official statement. Interest rates are projected to rise in the next months as geopolitical tensions, mostly owing to Russia's invasion of Ukraine, have fuelled global inflationary fears. This caused the Reserve Bank to boost its inflation target earlier this month. Even while the key repo rate, or short-term lending rates to banks, remained constant, the RBI said it would focus on removing accommodation to keep inflation within the target range. The Reserve Bank of India (RBI) has been obliged to keep retail inflation at 4%, with a 2% tilt on each side. For borrowers whose loans are tied to an existing MCLR-linked floating rate loan, this upward revision in loan rate will increase their loan EMIs on the re-set date.

PMJJBY-PMSBY Premium Rate Increase: The government has increased the premium rate of the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) due to growing demand from insurance firms and increasing claims throughout the years. PMJJBY has accumulated 7 crore enrollments, while PMSBY has accumulated 22 crores. PMJJBY's annual premium rate has been raised to Rs 1.25 per day. This premium, which was previously Rs 330 per year, will now be Rs 436 per year. Aside from that, the PMSBY annual premium has been raised from Rs 12 to Rs 20. From June 1, 2022, these new premium rates will be in effect. The premium for PMJJBY and PMSBY has been updated after a long wait. For the past seven years, there has been no increase. Following the increase in claim losses, there was a demand for a revision in the companies' premiums. It is expected that if interest rates rise, private enterprises' participation will rise as well. What is the Pradhan Mantri Jeevan Jyoti Yojana, and how does it work? The Pradhan Mantri Jeevan Jyoti Yojana is a term life insurance plan that provides a death benefit of Rs 2 lakh. This insurance plan must be renewed every year. To invest in this plan, you must be at least 18 years old and not more than 50 years old. What is the Pradhan Mantri Suraksha Bima Yojana, and how does it work? The Pradhan Mantri Suraksha Bima Yojana covers you in the event of an accident or disability. This plan has a Rs 2 lakh insurance coverage. In the event of partial disability, a sum of Rs 1 lakh is provided. Only auto-debit from the account is used to provide policy coverage.

The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio of Small Cap companies. What is Small Cap Mutual Fund ? Small Cap Funds invest in all companies expect the top 250 in terms of market capitalisation. Based on the market capitalization, companies are classified into three different categories: Small Cap Mutual Funds invest 65% of their money in Small Cap Companies, i.e., those companies which are not in the top 250 listed companies of India. Analysis of Quant Small Cap Fund Quant Small Cap Fund is an open ended equity scheme investing in Small Cap portfolio of Equity Shares. Benchmark Index: NIFTY Small Cap 250 Total Return Index Minimum Investment: 5,000/- and multiple of Re. 1/ Subsequent Investment: 1,000/- and multiple of Re. 1/- Quant Small Cap Fund - Return(%) Portfolio Top Holdings Quant 1 Year vs 3 Year vs 5 Year Return (%) Quant Small Cap Fund 3 Yr return (%) vs NIFTY Smallcap 250 Total Return Index

Debt Fund is a Mutual Fund scheme that invests in fixed income instruments, such as corporate and government bonds, corporate debt securities, and money market instruments etc. that offer capital appreciation. A debt mutual fund invests a large amount of your money in fixed-income securities such as government bonds, debentures, corporate bonds, and other money-market instruments. Debt mutual funds reduce the risk element for investors significantly by investing in such outlets. This is a relatively safe investment option that may help you build wealth. Can minors invest in Mutual Funds ? Read more What is the meaning of a Debt Mutual Fund? A mutual fund is a type of investment that pools money from multiple investors and invests it in government securities such as stocks, bonds, fixed-income instruments, and other asset classes. A debt mutual fund invests a large amount of your money in fixed-income securities such as government bonds, debentures, corporate bonds, and other money-market instruments. Debt mutual funds can be purchased by SIP or lump payment, but some debt mutual fund schemes (such as fixed term plans) are not available through the SIP method. Low cost structure, reasonably constant returns, great liquidity, and decent safety are just a few of the primary benefits of investing in debt funds. Who should invest in a Debt Fund? 1. You're new to investing and don't know where to start when it comes to putting up an investment goal. 2. You're looking for a short-term project with a minimal amount of risk. 3. You want something with a slightly higher rate of return than a savings account or a fixed deposit. 4. You want to put your money into fixed-income securities with a fixed interest rate and regular interest payments. 5. You have a steady monthly income and are looking for methods to supplement it. Benefits of investing in Debt Funds 1. Unaffected by the stock market: The stock market's volatility has no bearing on debt mutual funds. While equity markets see a lot of ups and downs, your debt fund investment is not subject to the same volatility. 2. Large amount of liquidity: Debt funds, in comparison to most other asset types on the market today, have a high level of liquidity. You can quickly withdraw money from your debt fund account at any time to meet your needs. 3. Increased profits: This is most likely one of the key reasons why debt mutual funds are such a popular investing option for many people. 4. Less Risk: Debt funds aren't risk-free like fixed deposits, but they're also not as dangerous as equity market investments. 5. Tax-effective: Debt funds turn out to be quite efficient tax savers in the long run. If tax reduction is a crucial investment goal, you can consider investing in debt mutual funds Want to know more about taxation of debt funds - Read here How to invest in Debt Funds? 1. Lump sum investments: The lumpsum technique is preferred if you have a large sum of money to invest all at once. You must, however, select a fund type based on your investing timeframe or objective. 2. Systematic Investment Plans (SIP): A Systematic Investment Plan (SIP) is a good option if you want to invest small amounts of money at regular periods. How to choose Debt Funds - MyRupaya Take 1. Avoid investing on the basis of 1 year return. 1 year is too short a period to evaluate the performance of a fund. 2. Fund size is an important factor to be considered before investing in a mutual fund. 3. Always check 3 year or 5 year performance of a mutual fund to evaluate its performance. 4. Per unit NAV is not important. What is important is change in Value of NAV = Return on investment. Debt mutual funds are a good alternative to consider if you want a more consistent income than stocks while also limiting your exposure to market risk. Debt funds are ideal for investors who aim for regular income, but are risk-averse. Debt funds are less volatile and, hence, are less risky than equity funds. Where will you find better results ? Difference between Debt Mutual Funds and Fixed Deposits - Read here