It is beneficial for all to be well versed with the details of Personal Finance, especially if you are a young working executive earning anything from Rs.10,000 per month upwards. In India, we have over 50 different banks which are proactively approaching us for products which vary from Credit Cards, Personal Loans, Holiday Packages, Demat Accounts, Unit Linked Insurance etc and we rarely do any research before signing up for these products and land ourselves in a soup. Experts (as well as your long time chartered accountant) can be wrong in their facts and recommendations.
You need to be able to choose products which satisfy your banking / personal needs and believe me, it is not easy doing that!! I have personally faced numerous problems in the last 2 years and I thought I would share some of my insights on the various products which are on offer today.
1. Credit Cards can be your best friend or worst enemy, with an Interest rate upwards of 35% p.a. you need to be very careful of how you use this product, but it is important to note that the best deals and discounts are only offered to Credit Card customers. Over 200 credit card offerings throng the Indian Market today and many more are launched everyday, you need to know which works best for you.
2. Bank Accounts come in different shapes and sizes such as Savings Account, Current Accounts and Overdraft Accounts. They have different Interest rates and different minimum balances, the fines imposed for not maintaining the minimum monthly balances are also different. What should I really look for before choosing my Bank? Home my subsequent posts help you answer these questions.
3. Personal Loans and Home Loans all appear the same - however in reality they are very different in terms of the fees and penalties. You need to match your loan, not only to your finance requirements, but to your long term financial strategy as well. Processing Fees, Preclosure Fees, Manner of computing Interest (Daily Reducing Balance, Monthly Reducing Balance, and Yearly Reducing Balance) will make a huge difference to you financially. It is a pity that these points seldom feature in our discussion while availing a loan.
4. There are a plethora of Investment Options available to the average Indian Customer, ranging from Stocks and Mutual Funds to Fixed Deposits and Gold. What are the details of each of these investment options and which one is best suited to you? A lot depends on the liquidity that you require at any given point in time.
5. Insurance, this is the most mis-sold product by banks and agents in
India. Be rest assured that most insurance companies and referring banks, do not disclose all that you need to know about your policy. I myself have a Birla Sun Life Insurance Policy (ULIP) where 60% of my first year premium of Rs.60,000 was eaten up by the agent / insurer / partner bank and only the remainder was invested. Believe me these agents are ruthless. However, Insurance is a great product which can be extremely beneficial - but please be in the know on what you are signing up for.
6. Tax Planning is something which most people spend very little time on. The prevailing opinion is that it is best left to the Chartered Accountant. But no one knows your financial needs better than you. So please pull up your socks and learn the ways in which you can save tax. Some of the best options are Rent Benefit, Interest on Educational Loan, and Interest on Home Loan, Health Insurance Policies, and Donations to Educational Institutions etc.
2. Bank Accounts come in different shapes and sizes such as Savings Account, Current Accounts and Overdraft Accounts. They have different Interest rates and different minimum balances, the fines imposed for not maintaining the minimum monthly balances are also different. What should I really look for before choosing my Bank? Home my subsequent posts help you answer these questions.
3. Personal Loans and Home Loans all appear the same - however in reality they are very different in terms of the fees and penalties. You need to match your loan, not only to your finance requirements, but to your long term financial strategy as well. Processing Fees, Preclosure Fees, Manner of computing Interest (Daily Reducing Balance, Monthly Reducing Balance, and Yearly Reducing Balance) will make a huge difference to you financially. It is a pity that these points seldom feature in our discussion while availing a loan.
4. There are a plethora of Investment Options available to the average Indian Customer, ranging from Stocks and Mutual Funds to Fixed Deposits and Gold. What are the details of each of these investment options and which one is best suited to you? A lot depends on the liquidity that you require at any given point in time.
5. Insurance, this is the most mis-sold product by banks and agents in
India. Be rest assured that most insurance companies and referring banks, do not disclose all that you need to know about your policy. I myself have a Birla Sun Life Insurance Policy (ULIP) where 60% of my first year premium of Rs.60,000 was eaten up by the agent / insurer / partner bank and only the remainder was invested. Believe me these agents are ruthless. However, Insurance is a great product which can be extremely beneficial - but please be in the know on what you are signing up for.
6. Tax Planning is something which most people spend very little time on. The prevailing opinion is that it is best left to the Chartered Accountant. But no one knows your financial needs better than you. So please pull up your socks and learn the ways in which you can save tax. Some of the best options are Rent Benefit, Interest on Educational Loan, and Interest on Home Loan, Health Insurance Policies, and Donations to Educational Institutions etc.
There are several questions which come to your mind when you apply for a financial product, I will try to help you find answers for them. My objective is to promote financial education through my posts which will cover various issues pertaining to the above mentioned products.
You can feel free to write to me on Ask.Pranav@Gmail.com and I will reply to your queries within 48 hours. Thanks & Happy Banking!
No comments:
Post a Comment