Your Financial Assistant
SOA (Statement of Account) is a document summarizing financial transactions between parties over a period, essential for tracking banking activities. Demat (Dematerialization) involves converting physical securities into electronic form held in a Demat account, facilitating easier trading and management of stocks, bonds, and mutual funds. …
Bank Fixed Deposit (FD) VS Debt Mutual fundFeatures: Pros: Cons: Debt Mutual Fund Features: Pros: Cons: Comparison Summary: Conclusion Each option has its place in a diversified portfolio, and the choice depends on your individual risk appetite, investment goals, and time horizon.
Starting your first job is an undeniable milestone in your adult life. While your paychecks bring you financial autonomy, they also bring you specific financial responsibilities. To better manage your responsibilities, you need to learn certain habits.
Learning financial discipline early on makes savings a regular part of your life, helps you prepare for contingencies, and nurtures a ready corpus to meet future milestones.
1. Define your Financial Goals
Define your goals by creating a personal finance calendar for the year. Set financial milestones and plan how to achieve them. It’s like drawing a roadmap to know what you’re working towards and the steps needed to reach your goals.
2. Start Saving and Budgeting
Open a savings account, budget expenses, and save a set amount each month to build a balanced savings approach. Automate savings for at least 25% of your salary. Assess expenses to identify spending patterns and priorities necessities over non-essential purchases.
3. Start Building a Good Credit Score
A good credit score aids in achieving future goals, like buying a dream home at a favorable loan rate. Start with a credit card, pay dues on time, stay within the credit limit, and use funds responsibly. Repaying existing debts, such as student loans, also improves credit history.
4. Get Insurance Coverage
Prepare for the unpredictable with comprehensive health and life insurance plans. Insure yourself at a young age for lower premiums and tax benefits1. Health insurance protects savings during medical emergencies, while life insurance ensures financial stability for dependents. Moreover, popular plans like Unit-Linked Insurance Plans or ULIPs offer the dual advantage of insurance cover plus equity-linked benefits. So, you can insure yourself and build a corpus – all at once.
5. Start Investing in Your Future
Don’t wait until you reach your 30s to plan for the future. Sowing the seeds of investment today can help you reap attractive benefits in the next few decades. A straightforward approach to investment as a novice is simply segregating goals into short-term and long-term goal segments. Depending on your goals, investment horizon, and risk appetite, you can decide on specific investment products like ULIP, Mutual funds, Equity, PPF, etc.
To design the perfect investment plan, ULIP calculators help you determine your premium payments and expected returns on investment vis-a-vis your risk appetite, investment horizon, and goals.
All good habits show results over time. The same is true for financial planning and investment. Defining your goals, developing a diligent budgeting habit, building a credit history, and preparing for emergencies can help you take stock of the future. Not just that, with a head start in the investment department, you can exploit the benefits of compounding and build up a sizable corpus by the time you retire. Tools like PPF, FD, and ULIP calculators can help you understand the right investment strategy vis-a-vis your goals.
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Despite choosing the best possible insurance policies, there are times when people encounter unexpected situations that make them falter on premium payments. This can further lead to a bigger trouble of policy lapse if one fails to pay the premium even within the grace period. …
Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric number that is required on all TDS returns under Section 203A of the Income Tax Act, 1961. The TAN number is needed by all those who are responsible for deducting and collecting taxes.
Let us tell you how you can download TAN online
An applicant can know the TAN details either by providing the name or TAN. If you have forgotten TAN, it can be retrieved by following the steps mentioned below:
How to know TAN?
To know one’s TAN, the process involved is the same as the one when it comes to searching for TAN. The detailed process involved to know one’s TAN is as mentioned below:
How To Register To Know Tan Details For The New User?
To know the TAN details, it is not mandatory for a new user to register on the Income Tax e-filing website. However, if the individual still wants to register himself/herself to avail other benefits it can be done in the following ways:
Filing income tax returns is no longer the hassle it used to be. Gone are the long queues and endless anxiety of making the tax-filing deadline With online filing,also called e-filing, it is convenient to file returns from the confines of your home/office and at very short …
A lot of individuals seem to think that filing tax returns is voluntary and therefore dismiss it as unnecessary and burdensome. As we will see, this is not a very healthy perspective on tax-filing. Filing tax returns is an annual activity seen as a moral and …
Investors are always looking for investment options to park money for a while, until they need it. Their go-to option is the regular savings bank account. But there are plenty more short-term options for investors.
Any investment option which is less than 5 years is considered as a short term investment. Short term goals are set to achieve unavoidable things that are going to occur in the near future. For e.g. your kid is currently 16 years of age and after 2 years he/she will need cash for graduation. Buying your kid a motorbike when he graduates or a luxury car for your family 3 years down the line, these are all short term goals that require short term investments. Few of them you can postpone and few of them you can’t. To achieve definite goals in the near future, you must not take any risk and be specific about your decisions.
Investors with short-term money have two primary objectives:
The typical investment tenure for best short term investment plans is less than 12 months.
Short Term Investment options for such investors:
| Sr No. | Short Term Investment Options | Ideal For |
| 1 | Savings accounts | Better liquidity (4%-7% returns) |
| 2 | Liquid funds | People looking for secure investments (4%-7% returns) |
| 3 | Short term funds | At par with Liquid funds |
| 4 | Recurring deposits | People who want to invest on a monthly basis |
| 5 | NSC | People with long term goals |
| 6 | Arbitrage funds | If held for more than year 8% interest |
| 7 | Fixed maturity plans | Similar to FDs with a lock in period of 3 years |
Following are some short term investment options:
One of the easiest and safest way to access your money is by having a savings account. The main motive here is liquidity, not that much on earning though. Banks provide not more than 4% to 7% return from savings accounts.
These are kind of mutual funds that invest in short term government certificates and securities of deposits. You can enter and exit at any given time as these investments are secure. Try restricting throwing in your emergency funds in these, as the redemption takes around 2 days. One can expect around 4%-7% post tax return on liquid fund investment.
Investors can consider liquid funds to park money for a period as little as one day to as much as 90 days or even higher. Liquid funds invest in money market investments like call money among others. It is rare for liquid funds to see a dip in their net asset values (NAV).
Investors can opt for the dividend option or the growth option. Dividend is taxed at nearly 30%. Capital gains are added to income and taxed at marginal income tax rate(rate of taxation). From a taxation point of view investors in the lower tax brackets are better off opting for the growth option while investors in the highest tax bracket can choose either option.
Short term funds invest in securities that mature in 1-3 years. These funds are a little risky as the maturity of securities are more than ultra-short term and liquid funds. Taxation is the same as any other debt funds.
Banks offer deposits of varying time frames beginning with a minimum of 7 days. So an investor looking to park money for even a week can choose a fixed deposit with a matching tenure.
The interest on the deposit is added to income and taxed at the marginal rate of taxation.
While liquid funds are suitable for investment tenures of a few days, short-term mutual funds are ideal for tenures running into a few months. Like liquid funds, short-term debt funds are managed conservatively with the explicit aim of safeguarding capital and posting modest capital appreciation.
From a tax perspective short-term mutual funds are at par with liquid funds.
This a type of secured investment and is suitable to those who don’t want to invest in a lump sum and rather invest on a monthly basis. You can either use Postal RD or Bank RD, generally bank offers RD for a minimum tenure of 6 months to a maximum of 10 years. Also, the interest received on RD is taxable.
One can also invest in 5 years Postal NSC, if only you’re sure that the goal is at exactly 5 years from today. You can claim tax deduction under Section 80C of Income Tax Act, but the interest will be taxable.
Also known as equity mutual funds, arbitrage funds are more tax efficient if held for more than a year. They give approximately 8% of interest post tax.
They have a lock-in period of minimum 3 years and act exactly like your bank FDs. They are more tax efficient though and you can expect better returns than FDs.
So these were the options and they’re laid out in front of you, choose anyone according to their tax benefits and interest earned so that you don’t make any mistake while investing.
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