Equitipz

Is Payday loan the right solution for you?

David — Sat, 28 Aug 2010 20:21:01 +0000

We are often overwhelmed by some unforeseen financial emergency in life and don’t know who to turn for help. Borrowing from family and friends can indeed be a humiliating thing. At that point of time Payday loan can become a blessing for you.

Note: The Payday loans are something like Personal Loans, available in India. This article is for our readers in UK, Australia, USA and Canada.

What is a Payday loan?

A Payday loan is small, short term and unsecured loan. It is designed to cover your expenses till your next payday. They are provided by cash advance stores with one time fees attached. The borrower usually writes a check for the amount borrowed plus the fee. So it is a loan drawn against a future paycheck to meet urgent needs. Loan amounts can range from a few hundred dollars to $ 1000. The interest charged is usually 15-20% of the amount borrowed.

Payday loans are getting increasingly popular these days. Why?

Payday loans provide an instant solution to an unexpected financial emergency. They can provide easy and fast access to cash. In case you have an emergency (like a health related problem), Payday loan can act as a quick fix.
Payday loan involves a hassle free process. It takes only a couple of hours to complete the formalities. You just need some basic documents like identity proof, bank statements etc.
Within a day the money will be deposited to your bank account. So you will get the cash within 24 hours. If you need the money quite badly then this aspect of payday loans will appeal greatly to you.
A good thing about Payday loan is that your financial information remains private. It is for consumers who want anonymity during emergency situations. In case of traditional long term loans things are just the opposite.
Credit checks are usually not required here. This makes it easy for people with no credit or credit problems to apply for Payday loans.
It is not hard to qualify for Payday loan. All you need is a steady monthly income and a valid bank account. Even an individual with bad credit rating or a history of bankruptcy can be eligible for Payday loan. Generally people who don’t have access to credit cards and savings account use this kind of loan. Military personnel and immigrants also use them often.
A Payday loan, as mentioned before, is an unsecured loan. That means even if you fail to repay your loans you won’t have to lose your assets.

Also Read: 7 warning signs that you have got too much debt

A few things to remember while opting for a Payday loan

Excessive dependence on Payday loans can be a source of trouble. You must remember that Payday loans are an answer to the emergency situations that pop up out of nowhere. If you start relying on them just because you can’t resist the temptation to buy unnecessary stuffs then a lifetime of indebtedness would follow.
Payday loans have extremely high interest rates. The lenders virtually take advantage of the fact that you desperately need cash. So before going for it make sure that you can afford it.
Payday loans are usually small loans. So if you need some big bucks then better look elsewhere.

Also Read: What is the right strategy to Combat Debt?

Payday loan stores are all over the place these days. If you still have trouble to locate them then internet can help you. Now that you are familiar with the concept decide for yourself whether it is the best solution for you. Take your decision carefully.

This post is submitted by our Guest Blogger, David Brown. David is the founder of fileyourbankruptcy.org, where he writes articles on Personal Finance. He is also associated with monsterhols.com, quicklyprofit.com and darngoodblogging.com and debtincome.com.

Finally, Indian Rupee gets the currency symbol

Amandeep Singh — Thu, 15 Jul 2010 20:19:23 +0000

Some days back we updated you about the final 5 in the race for being the Symbol for Indian Rupee, in which the final was to be decided by the Indian Cabinet. The final 5 were decided out of the 30k design entries received for the Rupee symbol design competition hosted by the Indian Government.

The final verdict has been announced by the jury and finally, the Indian Rupee has got the new Currency Symbol. It resembles the English letter ‘R’ with its left vertical stem removed and with two parallel horizontal lines intersecting the top curving portion. The symbol reflects and captures the Indian ethos and culture as it also has the Devanagri ‘Ra’. This will help the Rupee retain its Indian character with an International flavor.

With the new symbol, the Indian currency joined a select club of countries namely US Dollar, British Pound, European Euro and Japanese Yen that currently have a unique identity with their own currency symbols.

The winning design for the Indian Rupee symbol has been authored by D. Udaya Kumar, a post-graduate student from the country’s premier Indian Institute of Technology. “My design is based on the Tricolour with two lines at the top and white space in between. I wanted the symbol for the Rupee to represent the Indian flag,” said Kumar.

D. Udaya Kumar, Designer, The new symbol for the Indian Rupee

The new rupee will also find its way on to keyboards of Indian manufactured computer systems, with suitable amendments being made to the existing list by the Bureau of Indian Standards.

As part of the strategy on incorporating the new rupee with the mainstream, the government said the national association of software companies, Nasscom, will approach IT firms to embed the symbol in their operative software, as a new programme or as an update.

This will enable the computer users worldwide to use the symbol even if it is not embedded on the keyboards like in the case of the Euro.

Short-listed entries for Indian Rupee symbol – Final to be decided

Amandeep Singh — Tue, 29 Jun 2010 03:30:00 +0000

Long time ago in August 2009, we had informed you that Indian government has decided to have a symbol for Indian Rupee. In this regards, Indian government invited designs from the Indian public which had to be judged for the final choice.

The good news is that 5 symbols have been shortlisted and one among them will be destined to become the Indian Rupee symbol, just like we have for US dollar($), Euro(€) and British Pound(£).

On the contrary, a somewhat bad news is that since, it is the Indian government who would decide the fate of the rupee symbol, it may not happen pretty soon. I wish if they could have conducted some online poll or voting, it should have proved more interactive and thoughtful for the Indian Audience to decide the final Symbol of Rupee.

“In the ensuing year, we intend to formalise a symbol for the Indian rupee, which reflects and captures the Indian ethos and culture.” Finance Minister Pranab Mukherjee said while tabling the Union Budget 2010-11 in the Parliament, after the decision was taken in 2009.

Above are the final 5 short-listed symbols, one out of which will be the final symbol anytime soon for the currency of the fastest growing economy, INDIA.

Which one of these 5 do you like the most and why? Don’t you think that conducting a final voting from the citizens of India could have been a better idea to decide the final winner? Do share your views in the comment section below.

7 warning signs that you have got too much debt

David — Mon, 21 Jun 2010 12:14:35 +0000

The world economy has not yet fully recovered from the damage caused by the global economic depression. As a result underemployment and unemployment are still quite common. Difficult climate demands prudent lifestyle. So you must get control over your finances and look out for the danger signs which indicate that some financial crisis may be approaching. The following are some “omens” which reflects the fact that you are treading along the danger avenue.

Borrowing your way out of debt

Do you borrow from friends, relatives or even resort to payday loans for temporary respite? If yes, then dark clouds of trouble are looming over you. When you are already in a financial mess, further borrowing will only increase your misery. You either need to spend less or you ought to negotiate with your lenders for lower installments if you are already in a debt.

Use of credit cards for everyday expenses

You cannot evade the responsibility to feed your family. However, buying groceries with credit cards just points out that you are in the red zone. You simply do not have adequate money to support yourself and your family. So the wise thing to do here is to bring down your lifestyle.

Also Read: 8 Mistakes to Avoid when using a Credit Card

You work efficiency is affected by economic pressure

Has your performance at the office dropped suddenly? Is financial blues the reason behind it? If the answer is affirmative then better be cautious. It’s surely a sign of excessive debt. Remember that psychological pressure will only lead you to loss of job. That will certainly push you in a deeper hole. Try to focus on what you need to do and that’s your best hope.

Drugs and alcohols are your best friends

Do you really believe that narcotics and alcohol is a sign of a healthy life? If you do then you are mistaken. It just shows, how hopeless you feel and it is only a desperate attempt to escape the brutal realities. Wake up and leave things that would ruin you. Be pragmatic and try hard. You can certainly turn things around before it’s too late.

Living paycheck to paycheck

A drained savings account is not a very assuring thing. In fact, it indicates that you are living on the edge. If an emergency comes up then you might not know who to turn for help. Debt might be the root cause of this situation. To combat it, you should try to build a rainy day fund and contribute to it whatever you can afford to. Even a little contribution will come handy in future

Also Read: 56 Ways to make your money work harder for you

Hiding facts from loved ones

Is your family aware that the monetary situation may not be perfect? Also, how honest are you about your spending? If you have started concealing facts from people who matter to you the most, then things are wrong and you know that yourself. To address the problem, you need to confess everything to your family, seek their advice and put a check on your expenses.

You no longer answer the phone

You stop answering the phone when you realize that it might be your creditors and you haven’t got any answers to their questions. Neither can you take their abuses anymore. The situation is absolutely alarming.

Conclusion

Most of us dream to live a debt free life. However, our dreams often turn into nightmares and we struggle to find a way out. To avoid such a situation, remember what you have read. It will help to you to sense the encroaching danger and can save your neck.

What are your views on this topic? How are you controlling your way out of debt, or to avoid it in the very first place? Do share your views in the comment section below.

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[Editor's Note: This post is submitted by our Guest Blogger David Brown. David is the founder of fileyourbankruptcy.org, where he writes articles on Personal Finance. He is also associated with monsterhols.com, quicklyprofit.com and darngoodblogging.com. If you also want to write for EquiTipz, please read the instructions to write a Guest Post.]

A Beginner’s Overview of FOREX (Foreign Exchange) Trading

Amandeep Singh — Tue, 08 Jun 2010 21:56:29 +0000

Beginners to the world of investing are confronted with a plethora of choices regarding the types of things worthy of investment, as well as the style by which these things are bought and sold. Investors generally fall into two types, the ones who prefer a “buy-and-hold” strategy and those that wish a more active trading experience.

Active traders buy and sell stocks, commodities and currencies and may even dabble in the options and futures markets from time to time. One of the most popular active trading fields in the last decade has been foreign currency, or forex, trading. The flexibility and liquidity of the world’s largest global market is appealing to many, and the Internet has made accessibility available in real time for even the smallest of individual investors.

As there are beginners’ guides for investing for stocks, there are similar tutorials on the Internet for aspiring forex traders. After learning a bit about the profession, the next step is to enroll in a qualified training class to learn the “in’s and out’s” of the trade. As with any other performance-based pursuit, an amateur needs to observe the actions of a professional and learn how he became successful. Your chosen expert will teach you about forex charts and how important they are in guiding you through the maze of pricing movements that appear on your trading screen. Indicators will help you discern trends and indicative patterns that suggest the right time to consider buying or selling.

Also Read: 7 Reasons people prefer to be their own Financial Adviser?

You will also learn that currencies come in pairs and represent the relative value that the market is assigning to each country’s fundamental economic factors. For example, there is uncertainty in the present market as to whether the European Union has the will and the power to respond effectively to the debt crisis in Greece and other European member states. This “fundamental” fact has caused the Euro to weaken related to most all other currencies, as evidenced by the “technical” action observed in respective forex charts. Staying current on fundamental facts that could affect the currency pairs of your choice will be a priority effort that you will have to perform. Knowing where and how to access useful data is key to effective trading.

However, the most important part of your training will involve your spending hours honing your trading skills on a “free” forex demo account. Your “virtual” currency will be used with real data to create a “what if” trading experience. You learn to develop a trading strategy, execute it in a disciplined fashion, which means keeping your emotional involvement in check, and see the results accumulate over time.

Foreign exchange trading is a risky business, and most all of early failures are due to novice traders not putting in the required practice time. Eagerness and impatience will doom you from the start. Six months is not too short a training period, and many successful traders have put in over a year of practice to gain the confidence and consistency necessary to achieve the results they desire. NO Shortcuts Allowed, (Emphasis Added!)!

A few words are also appropriate regarding investment fraud. The criminal element is well trained, and has invaded the world of forex, primarily because of the popularity of forex trading. Always deal with a bank and broker on-shore that you know and trust. Beware of unsolicited offers received via email or any other medium. Crooks know how to deceive. They have had years to perfect their art form. Studies show that educated people are the most susceptible to scam artists, so you have to be your first and last line of defense. Be alert, be safe, and if it sounds too good to be true, walk the other way!

For anyone to be successful at financial planning and investing, preparation, knowledge, experience and control of one’s emotions are paramount to achieving that desired outcome. Staying alert for potential fraudsters is also a necessary task in today’s Internet world where business partners are invisible. Once these activities are mastered, forex trading can actually be fun for a trader with an active spirit and will to succeed, and it can also be a rewarding experience at the same time.

[Editor's Note: This post is submitted by our Guest Blogger Vincenzo Desroches. Vincenzo is the founder of Forex Charts which is a website about Forex Trading. If you also want to write for EquiTipz, read this.]

7 Reasons to be your own Financial Adviser?

Amandeep Singh — Thu, 27 May 2010 23:02:00 +0000

A glance at the TV advertisements or any Business news channel will quickly tell you that there is no shortage of firms or individuals who are eager to help you to manage your finances. Of course they offer no free lunches Still, why do people nod their heads while hiring a professional financial adviser and instead choose to be their own masters and decision makers while investing money?

I was just reading an article by Manish Chauhan on JagoInvestor “5 reasons why you should hire a financial planner?” and the thought tickled my brain that what are the excuses that people have, not to hire a professional to manage their wealth. I have tried to pen down some of the reasons which people often have when asked why they do not hire services of a professional financial adviser. I hope that you find these reasons interesting to identify a suitable category for yourself and take appropriate action.

I cannot afford financial advice

People often have this excuse that they cannot spare much money to save in the first place; affording a separate adviser on top of that is not their cup of tea. As a matter of fact, there are many financial products with which you do not pay anything extra, because you are already paying for their advice even without paying! I am referring to agents here. (Read about Commission agents earn here and here.) They receive commissions on the product by the company you bought or invested in. This goes to the people who often ask the agents only, to suggest any good investment scheme.

And the commission is financed out of the charges you pay for the product. The only advantage that you get with this is that the charges for the advice are split over the life of the product and you do not feel the pain. But actually you are paying. So, better look out for products that do not have huge commission structures built in or shout for a commission rebate. This will be a win-win situation for both you and the Agent (Financial adviser)

I am not wealthy enough to have an adviser

However large or small are the savings that you have, you have to invest wisely. What I think is, the smaller the amount that you have as savings, the safer you should be while investing and making the right financial decisions since you cannot afford to make mistakes. Some of the financial advisers are even willing to give time to the smaller clients. Maybe they think that as they grow bigger, they will grow with them while some are totally not as smaller the investment, smaller is the commission they get on the investments.

Also Read: First Time Investing – Learn How Not To Fail On Your Debut

I do not trust Financial Advisers

There is another bunch of people who want to be their own financial advisers for a simple reason that they do not trust the professional advisers. There may be some cases where the financial advisers are only looking for their benefits but it would be a big mistake to tar all advisers with the same brush for the reason that there are many skilled, knowledgeable and trustworthy advisers throughout the length and breadth of India. The trick is to spot these genuine ones and to avoid their less honourable colleagues. Definitely, the more you become aware about your finances, the less likely are you to fall prey to such fraudsters who are only in the market to make money at the cost of your trust. Go out, find a good adviser and start investing.

Advisers are just pushy Sales People

Fraud from an adviser is a rare possibility but there are other ways in which an adviser can let you down. The commission system that we talked of in the Point 1 is a less ideal way to pay an adviser who is supposed to have your best interests at heart. What I mean by this is, there are in-built incentives for advisers to recommend products to you that generate commissions rather than those which do not. You benefit from that or not, that is a different story.

A good adviser will not be swayed by the amount of commissions he gets by selling products to you. Doing the opposite will not only be unethical, but will also be bad business as such advisers cannot have a good base of satisfied customers and cannot survive for long.

You, as an investor, can avoid the possibility advice biased advice due to commission by choosing an adviser who takes fees instead.

I don’t know how to find an adviser

This is a set of people who have a plain excuse that finding an adviser is a tough job for them as they do not know how to find one. To help you with that, there are 2 kinds of advisers, one type is who act as agents of a company whose products they sell. Others act as your agent (and charge fees) and can recommend products from the full range on the market. (also called independent advisers)

People in this bucket should understand that finding an adviser is one thing and finding a ‘good’ adviser is totally another. According to my advice, one should go with Independent advisers as they can give you unbiased advice about any product without being worried about their commissions. All they are worried is their fees and of course they can offer good advise

I will save Money handling my own Finances

Whether you pay fees or your adviser receives commissions, it is true that you have to pay from your hard earned savings to your financial adviser. So, can you save that money by doing this job yourself?

Of course Yes, many people do this by not going to a fee-charging adviser. But, the people in section take care of a few things. The charges that you save by not paying to an adviser, could be trivial compared to the losses if you end up choosing the wrong product. If you have any doubts, it is better to pay and take advice rather than landing up in any problem later.

Handling my own Finances will be Fun

Not many people can be found in this bucket but as far as I am concerned, this is the best reason for being your own financial adviser. You get to learn a lot from your experiences (true for me) and also, many factors such as trust, sharing your secret information, or giving the management of your wealth in somebody else’s hands, are also dealt with.

And having this reason, if at any point in time you feel that this is not much of a satisfying and an enjoyable experience, y0u are free to find a professional adviser for yourself.

Conclusion

If you have any other reason not to have a professional adviser than just to have fun, better go for one.

I have tried to cover all the major reasons that people have in minds not to have a professional service to manage their finances. You need to decide now which category you fall in and take suitable action to start taking one step forward towards your financial well-being.

So, what category do you fall in. Please list down any other reason that people have on not to have a financial adviser, if I missed out any other class of people. What are your views on hiring a professional to take care of your finances?

No related posts.

Debt Snowball or Debt Avalanche – What is the right strategy to Combat Debt

David — Tue, 25 May 2010 20:30:59 +0000

Introduction

Consumer debt is an epidemic to which the materialistic human beings are very susceptible. Multiple debts can indeed make your life a misery but do you know what’s the right way out of this suffocating situation? Financial gurus suggest a number of approaches to eliminate your debt. Among them “Debt Snowball” and “Debt Avalanche” are two popular choices. So, which one is the right strategy for you? Let’s discuss.

A closer look at Debt Snowball

Popularized by the famed financial expert and radio talk show host Dave Ramsey, debt snowball is a process by which you pick the smallest debt to pay off first and gradually move towards the bigger ones. This method requires you to allot as much as possible to the smallest debt while paying the minimums on the rest. As your debts get cleared one by one, the snowball of cash that you can pay to clear your bigger debts gets bigger.

Debt snowball is certainly an effective way to extricate yourself from debt. It is best suited to revolving debt like credit card debt. A debt snowball calculator can help you to manage things better.

Also Read: 8 Mistakes to Avoid When Using a Credit Card

Understanding Debt Avalanche

Financial planners have been using this method for years. Debt avalanche is quite similar to the concept of debt snowball. With debt avalanche you order your debts by interest rate (from the highest to the lowest). You need to throw as much as possible at the debt with highest rate of interest while paying the minimums on the rest. After you succeed in paying off the chosen debt, target the next highest interest debt. Proceed in the same manner till you are a debt free and happy man.

Mathematically speaking, debt avalanche is cheaper and faster way to get out of debt than other similar plans. With debt avalanche you get rid of the most damaging debt first because higher interest rate would mean that eventually you have to pay more. You need to pay the minimum amount of interest if you use this method. So you can start saving and be a winner in the long run.

Debt Avalanche vs Debt Snowball

There has been much debate on which is the best debt reduction method-avalanche or snowball. Debt snowball focuses on the emotional side of human beings. It assumes that paying off the smaller debts will give you a sense of victory. This early success will motivate you to pay off the rest of your debts.

Debt avalanche, on the other hand, has a more rational appeal. If you believe that good financial decisions are rational decisions then avalanche is perhaps the way you should go. It helps you to save more bucks than debt snowball by eliminating the debt with highest interest first. Avalanche has been often criticized as it doesn’t take into consideration the “human element” or “motivation factor” in the debt reduction process. This can be countered by saying that people can always set their own milestones like paying off the first $1000. Reaching that mark would have the same effect on human psychology as paying off the first debt.

What’s the right choice for you?

Debt snowball is suitable for people who prefer quick results, are essentially emotional by nature and want a debt reduction plan that is simple to follow. It can be very effective for people who have a wide range of balances. However, people with an analytical bend of mind would be more benefited by debt avalanche. If you are disciplined enough and have the required patience then debt avalanche can maximize the use of your money. Remember that you have to keep following this plan without expecting any kind of “quick wins”.

You must realize that being debt-free is not just a dream but a distinct possibility. All you need is discipline and a solid financial plan. Both debt snowball and debt avalanche can play an instrumental role to lead you to a debt-free destination. Make sure that you stick to it and remember what Dave Ramsey says- “you can’t go wrong with getting out of debt”.

What are your views on the above two strategies followed to get out of debt. Which one do you prefer and why? Please share your valuable views in the Comments Section below.

[Editor's Note: This post is submitted by our Guest Blogger David Brown. David is the founder of File Your Bankruptcy where he writes articles on Personal Finance. If you also want to write for EquiTipz, please read this.]

How to be safe and smart with your money – A free Workshop by Moneylife Foundation

Amandeep Singh — Sun, 23 May 2010 23:46:24 +0000

Are you looking for someone to teach you the basic lessons about how to start investing and be safe while doing so in order to meet your long time financial goals? Are you not taking the first step towards investing with the fear of failing on your debut? Are you still new to the world of investment and are still struggling to even know the basic terms and lingo used in the markets?

If the answer to any of the above question is a ‘YES’ for you, then you have come to the right place. India is a developing nation and the opportunities for investment and the pace at which the economy is growing has no match. This is the reason that investors all over the world want to invest in a country like India in one way or the other.

Read: How to get over the fear of Investing?

In a country like ours, where the world wants to invest, the financial literacy rate is too low. In the 5 Year plans that our country comes up with or for that matter in the Annual budget, they allocate funds to Literacy in India. Nobody ever talks of Financial Literacy. This where the mediums like EquiTipz come into picture. We have always been striving to provide financial learning to people from the very basics. And when anyone around us does something that matches the vision that we have, I feel that is our duty and honour to spread such a cause.

The event that I am referring to here is a free workshop to spread financial awareness among people. Moneylife foundation in collaboration with ICICI Bank and DISHA Financial Counselling has come up with a series of workshops which aims to provide basic knowledge to people for investments and how to manage their money.

DISHA and Moneylife Foundation are conducting a workshop every Tuesday between 3 P.M. to 6 P.M. from May 4, 2010 to April 26, 2011 on “How to be safe and smart with your money”. These are free workshops, which are open to anyone who wants the basic knowledge about investments and needs to know the basics of how to keep his/her money safe and make it grow to fulfil their long term goals. The effort aims at enhancing the overall financial health of consumers.

At the end of the workshops, there is an interactive session where you can have your queries answered. I suggest all the readers to attend the workshop as you need to learn a lot from the discussions in these kinds of workshops as you come to know various strategies that people follow to manage their money.

To attend these workshops, you need to call 24441059-60 and confirm your presence; or send an e-mail to mail@mlfoundation.in. More details of these sessions can be found on the homepage of www.moneylife.in.

In addition to this, the services of DISHA Financial Counselling (a social and financial initiative of ICICI Bank spread across 8 centres in the country) will also be available free of cost to all customers of all banks.

Moneylife Foundation, started by Moneylife magazine, is a not-for-profit trust and intends to spread financial literacy through workshops, discussions and awareness campaigns; offer advocacy to bring about regulatory changes to protect the rights of investors; and assist in grievance redressal through counselling and research. For more information, you may visit their website at visit www.moneylife.in

I would suggest that if possible, you should attend this session and also, share your experiences with the other readers on EquiTipz.

What are your views on the conduction of such Workshops? Do they help the Investor/Common man in any way.

Should you invest in Highest NAV Guarantee ULIPs?

Amandeep Singh — Sun, 18 Apr 2010 23:22:49 +0000

Nowadays, everyone wants to be rich in the least possible time and for that they are ready to surrender to anything that comes their way. The Insurance companies and the AMCs, taking full advantage of the situation, keep coming up with new product/schemes which are targetted to capture the interest of such investors. Some products are such that the entire investor community is pulled towards the very launch of such schemes. Similar is the story for the newly launched “Highest NAV Guaranteed” ULIPs.

There is a wild excitement spreading in the market today about this newly launched category of ULIPs or insurance schemes by the companies which are attracting the investors because of the name of the product which guarantees a return as per the highest NAV of the product. This sounds good to me as well but in this article we will discuss that does it make sense to go in for it?

What is the mis-conception about Highest NAV?

It gives the impression to the investors that one will participate in the equity market growth. That, of course, is not the case. For these products, what a company guarantees is the highest value of it’s own NAV. To guarantee such NAV, they will have to invest in debt products whose maturity value is equal to the guaranteed value.

Also Read: How to get over the fear of Investing?

How do these kind of products work ?

The Highst NAV guarantee products use the Constant Proportion Portfolio Insurance concept. In this concept, the portfolio is managed and allocated dynamically between debt and equity in such a way that the highest NAV attained is locked by moving a portion of equity assets to debt, whose maturity value will be equal to highest NAV attained till then.

To know more about this concept, you may read more about CPPI on Wikipedia.

Over a period of time, equity assets are bound to move to debt. The reverse, however, may not be possible as when equity markets fall, it may not be possible to move debt funds to equity as they may be locked in to assure highest NAV.

What is the advantage of these products?

1. It offers capital guarantee from day one. In the volatile conditions of the market that we saw in the past, the worry of the Investors was not the “Return ON Investments but Return OF Investments”. So, with such products, you are assured that you will get your principal back.

2. You are in advance, assured of whatever growth happens in your portfolio, in terms of NAV. For risk averse investors, it is a major source of comfort as they know that their principal is safe and any growth in NAV is locked in.

3. One is taking advantage of equity exposure in the beginning and over the time it is shifting to debt which is in line with the requirements, to an extent. But here the change will be much faster to debt.

4. It can be treated as a debt oriented product which will give some returns with an equity kicker in the earlier years. It is like a hybrid product like MIP, with the difference that the equity portion comes down over time.

Also Read: Tips to Make your Money Work Harder For You

What are the dis-advantages of Highest NAV Products?

First and foremost, a simple answer to this question is one simple word – Charges!

Let us take the case of LIC Wealth Plus. For a regular premium payment between Rs 20,000 to Rs.2 Lakhs, the Premium Allocation charges is 12.5%, in the first year and 2.5% p.a. thereafter. Policy Administration Charge is Rs.60/- per month in the first year, Rs 25 per month from the second year onwards, escalating at 3% p.a. Fund Management Charge is 1% p.a. and 0.35% p.a. is the Guarantee charge.

The charges in most products will be on similar lines. This does not look that cheap for a fund that will eventually be a debt fund in the later years.

Below are the main reasons that can keep investors away from this product:

There is nothing stopping the fund manager from having a substantial debt component even in the earlier years, as the mandate in such products is that they can hold 0-100% in Debt or equities.
Those thinking that they will participate in the upsides of the Equity market will be disappointed as this category of product assures highest NAV of the fund itself.
This then turns out to be a product that has a fairly long maturity – at least 3 years or more. For a return that is expected to be somewhat higher than a debt product, locking in for long periods makes no sense.
Guarantee of highest NAV is applicable only at maturity, not otherwise. This clause immediately makes the product less attractive as it is a long duration product. Any withdrawals in between for any exigencies, beats the whole purpose of investing in such a product.

I think that the above information about the products that guarantee “Highest NAV Return” will help you in taking both the positives and the negatives, into consideration, when you are making investments in such products. But still, we suggest that you consult your Investment Advisor before making any investment in such products.

If you like this article, please share it with your friends and family. If you do not understand anything please contact us using the contact form or the comments form below.

What is a CIBIL Credit Information Report (CIR)?

Amandeep Singh — Wed, 14 Apr 2010 21:03:35 +0000

In this viral era of high spending, today everyone wants to have everything. Is there an actual need for that or not, that is a different story altogether. The irony of the situation is that today people spend much more than what their forefathers ever did.

Rising salaries, the desire to own a property in one’s early twenties, the choice of a huge variety of lifestyles, a growing economy, an ever-increasing number of entrepreneurs joining the race to do something new, new business establishments, etc. are leading to a tremendous amount of money flowing on all sides.

In such scenarios, money flow is a key factor in a progressive economy and this means there is a lot of lending from the institutions. This gives rise to situations in which the maintenance of records for such transactions seems to be the need of the hour. How does one keep a tab on all the credit lent, how does one identify defaulters and refrain from re-lending to them to avoid bad debt? As an answer to these questions, Govt. of India and RBI came together with CIBIL as the solution.

Some time back, we informed the readers regarding the Credit Rating system in India as a part of which we highlighted the CIBIL Credit Report being made accessible to the individuals. Now that the system is in place, many of us still do not know about it and are often surprised when they apply for a Credit Card or Loan and the application gets rejected by the bank.

So, I thought that there is a need to make people aware about this and that is what compelled me to write a post on this topic. When we talk about CIBIL Credit Information Report, there are a lot of questions that pop up in the mind. The very first of them being “What is a CIBIL Credit Report?”.

Taking this into account, in this article I am going to provide information about CIBIL and the brief about Credit Information Report. There are many more queries that people have regarding CIBIL like:

How do you come to know if your name is in the CIBIL Defaulter’s list?

How to access your CIBIL Credit Information Report (CIR)?

We will be taking up these in the upcoming posts. You can subscribe to us to receive the future articles in your mailbox.

So, now lets understand the basics about Cibil; What is CIBIL, how is it operated and how is it beneficial and some more things about CIBIL.

What is CIBIL?

CIBIL (Credit Investigation Bureau of India Limited), which is currently the India’s first and the only fully operational credit information bureau, is a huge repository of information, which contains the credit history of commercial and consumer borrowers. CIBIL provides this information to its Members in the form of credit information reports.

How old is CIBIL?

For all those who are not known to this, CIBIL is one of the 4 credit bureaus that have been licensed by the RBI under the Credit Information Companies Regulations Act, 2005 (CICRA). CIBIL, though, is the only one that has been operational for around a decade now and has the credit repayment history of around 14 crore loans and credit cards.

Who is the owner of CIBIL?

As per the information on CIBIL website, CIBIL’s equity share is held by State Bank of India, Housing Development Finance Corporation Limited, Dun & Bradstreet Information Services India Private Limited and Trans Union International Inc. The shareholding pattern is in the proportion of 40:40:10:10 respectively.

Recently, there has been a change in the shareholding pattern, including various categories of Credit Grantors. The distribution is as shown in the chart below:

Who all are the members of CIBIL?

All the Credit Grantors; Banks, Financial Institutions, State Financial Corporations, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies are the Members of CIBIL. These members only provide the information about the individuals’ credit history which can later be used by the other institution while taking decisions to lend money to that individual or not.

What is a CIBIL Credit Information Report?

A Credit Information Report (CIR) is a factual record of an individual’s (borrower’s) credit payment history compiled from information received from different credit grantors which are the CIBIL members. It contains all the information about a borrower’s transaction in the past. Its sole purpose is to help credit grantors make informed lending decisions. Slowly and gradually, all the lending agencies have started using the CIBIL Database before they lend money to any person/company.

How would I know if my name is in CIBIL Defaulter’s List?

There is one simple way to know if your name in the defaulter’s list. Whenever you apply for a loan or a Credit Card Application and everything is in place from your side, but your application gets rejected without any reason, then there is a chance that there is something wrong that the bank or the concerned institution found in your CIBIL Record.

As per the RBI guidelines, if something of this sort happens, the concerned bank has to let the consumer know the reason for this rejection. So, you will come to know if something is wrong in your Credit Report.

Or, the other way is to apply for a Credit Information Report directly from CIBIL to see if everything is in the right place in your report. You can even get the report just like that out of curiosity, to see what you have been doing since some years just like I did.

We will discuss about how to get the access to your CIBIL Report in details here on EquiTipz. Subscribe to EquiTipz to keep you updated when we do that.

Can I get a copy of the CIBIL CIR?

YES. CIBIL has, some time back, started offering the CIR through an interim solution. This interim solution is kind of a testing phase and based on the learnings from this interim phase, CIBIL will be able to operationalize the full-fledged Consumer Relations System.

In this interim phase, CIBIL will be manually handling consumer requests for a copy of their credit information report(CIR). As a future plan (which excite me ), CIBIL is also developing the infrastructure, systems and processes for an automated solution that would be needed to enable an individual direct access to their Credit Reports from CIBIL on-line. The full-fledged Consumer Relations System will have world-class features that will allow consumers to access their report on-line and banks will be able to respond to errors via an on-line maintenance tool. We will keep you updated about this when this happens. Also, we will take up the topic on how to get your CIBIL Report. Subscribe to our email updates now.

I hope that this article covers almost everything about CIBIL and by now you must have atleast some idea on “What is CIBIL”, please highlight if I missed something. Also, please contact us or comment below if you did not follow anything.

Factors affecting the share prices

Krishna — Mon, 22 Feb 2010 08:07:58 +0000

Introduction

In this article I will be writing about the few factors which affects the share prices moves up and down. I spoke to many investors, one thing I understood that most of them are investing on companies without having the fundamental knowledge on the stocks. They just want their money to be doubled with in one year. This article just writes down few suggestions to before start investing in the shares.

Company Specific News

If there is a good news about the company which directly affecting the company, the prices may increase. For example, xyz company enters into a new business where there is less competition, the share prices will increase with the expectation of more profit for the company in future.

In the last week, Bharti Airtel announced that it will acquire the Kuwait based Zain telecom for $10.6 billion. The share prices were declined more than 10% because investors felt the company is over valued and it may affect the Bharti’s profitability.

Investor has to keep close eye on the market and utilize the golden opportunities.

Quarterly Earnings

We know that every quarter company will announce the results of that particular. If the earnings are more than the prediction, price will increase otherwise will decrease.

Fresh Issue Of Shares

If a company is issuing the fresh shares, then share prices will come down because the profit will be shared with more investors then before.

BuyBack

This is when the company buys back its own shares. As the number of shares decline, the company’s earnings will be distributed to fewer investors. As every investor is entitled to a larger share of company’s future earnings, its share price increases.

Summary

I hope this article will be useful for the new investors. It is only the very basic ideas about the share price changes. There are many numbers of factors affecting price changes. I will be writing it on my future articles. Thank you for reading this article!!

[Editor's Note: This post is submitted by our Guest Blogger Krishna Srinivasan. Krishna is the founder of Thin - Plan - Invest. If you also want to write for EquiTipz, please check this. Stay tuned for our Revenue Sharing Program to be announced.]

[Video Tutorial] How do Stock Markets Work

Amandeep Singh — Sat, 20 Feb 2010 10:26:40 +0000

Everyday we see new companies formed and when they are able to grab some business in the Markets and want money to expand, they come out with an Initial Public Offering (IPO) wherein they collect the money from the market for their future ventures. This forms the very basics of Stock Markets. We have written various articles on explaining the basics of Stock Markets on EquiTipz. Some of the Articles are listed below:

While surfing the Internet today, I found a very interesting Animated Video on YouTube explaing the whole phenomenon how Stock Markets Work, What Makes the Stock Prices go Up and Down, and many more interesting information, which I thought to share with the readers. This funny but very informative video explains how companies go public and sell stocks to the investors. A basic primer of the capitalist system and how it is making our lives better. When we remember the basic purpose of the stock market, we can better understand why income investments are the best. Good companies use our initial capital to create goods that are in demand in the world markets. Buying and selling feverishly is inefficient and not effective.

So, watch out the video below which answers many questions and reveals many interesting facts.

Hope you have enjoyed the video and it has helped to clarify many of your doubts about the stock markets. If you still have any questions in mind, please feel free to ask in the comments form below.