The Kashmir Pulse

If you’re on the lookout for a good investment app to start your investment journey, then there are several choices available. Which one do you select? Here are some ways in which you can shortlist and finalise the app that is right for your needs.

Checklist While Selecting Investment Apps

These are the features that every reliable investment app should contain:

Design and Navigability: Investment apps are meant to be used by almost anyone across age groups and varying levels of digital awareness. The interface should be understandable and user-friendly. Finding something should be an easy task.

Security Features: These apps should also ensure robust and advanced security for investors. Proper data privacy guidelines and measures should safeguard personal information, along with suitable encryption and other technologies.

Investment Choices: What’s a good investment app without a variety of options for you to consider? Depending on your needs, look for apps that offer stocks, mutual funds, or both. Some apps may specialise in mutual funds, while others may focus on stocks and ETFs. Make sure the app offers the asset classes you need to build a diversified portfolio.

Data Updates: Good investment apps should offer real-time or near real-time updates on prices, trends, market patterns, and more. Some apps may offer real-time data only with premium plans, so check what is included before signing up. Proper investor resources and educational material are also a plus.

Support Services: The app should provide guidance on making investments and managing portfolios and offer timely customer support during market hours. Some apps also provide chatbots and self-help resources for assistance outside of working hours.

Analysis and Evaluation: Reliable apps will always have various analytical tools and technologies that help you evaluate different investments and make better decisions. These may include expert analysis, charts, and more. Advanced features like technical analysis might only be available on stock trading apps or through premium plans.

Conclusion

While the above-mentioned parameters are certainly important, make sure you also look for fast and hassle-free executions of trades/investments and a simple sign-up procedure. Also, watch out for the charges/fees and make sure that they are reasonable and transparent, without any hidden costs such as Demat account maintenance fees or brokerage charges down the line. Daily alerts, stock picks, IPO access, and other handy features may also be helpful, but these might not be available on all apps or may require a subscription.

Another important thing to ensure is choosing an investment app from a reputed and well-reviewed player, whether it’s a newer tech-driven platform or an established financial institution. Before proceeding, check the firm's reputation, overall reviews, and customer base.

Picking the right app is one of the biggest steps that you can take to accelerate your journey towards financial progress. The right app will make it simple to choose investments, manage them carefully, switch plans, diversify portfolios, and stay on track towards your goals in an organised manner. It can be a one-stop solution for your investment needs, offering access to information, resources, tips, insights, and more—depending on the specific features you require. So, keep the pointers given above in mind and take your time before zeroing in on the right app for your needs.

This post first appeared on The Kashmir Pulse

When it comes to your financial future, there are several things that you have to keep in mind. It is always best to make informed decisions on the best saving scheme for your portfolio, instead of blindly going by others’ advice and inputs. However, to do this, you will have to thoroughly evaluate multiple such savings and investment schemes before coming to a final decision.

Some of the key aspects in this regard also include tax implications and benefits, risks, and, of course, the final returns that you can expect. Let us look at some of the best options in this article.

Best Saving Scheme for You: Top Choices

Here are some of the top savings schemes that you can consider:

1. PPF (Public Provident Fund): This is ideal for those with lower risk tolerance levels. You can expect assured returns from this government-backed scheme with tax deductions for your annual contributions and exemptions for the maturity amount. Yes, the returns may seem lower than many other market-linked plans, but there is not much risk involved. The lock-in period of 15 years (you can extend this) is another point worth considering for building up long-term savings.

2. Fixed Deposits: The interest rates are again lower than many investment plans, but the returns are fixed. There are virtually zero risk elements in this plan, and you can choose to compound your money to earn even higher returns over a period of time.

3. ULIPs: Unit-linked insurance plans are excellent savings options and suit those with moderate risk appetite. They offer life coverage throughout the policy period while enabling you to invest in market-linked instruments for earning higher returns in the long haul. Of course, there are risks involved, but you can mitigate them with features like fund-switching and professional fund management. The premium payments are tax-deductible, depending on certain conditions. However, the annuity received is taxable as income.

4. Pension Plans: These plans are ideal for getting a guaranteed income stream after retirement. You have to invest a certain amount in a lump sum or periodically over time and then get an annuity to cover you after retirement. Many pension plans also have handy life coverage that you can consider. Premiums of immediate annuity plans are tax-exempted.

Some other options include post office monthly income schemes, National Savings Certificate, Senior Citizen Savings Scheme, Pradhan Mantri Jan Dhan Yojana, and the National Pension Scheme (NPS). You should evaluate each of these choices thoroughly and then go ahead.

What Should You Do?

As they say, it is not advisable to keep all your eggs in one basket. Hence, you should diversify your savings and investment portfolio. If you have a lump sum amount, put some into a fixed deposit for long-term wealth creation, and also invest in the PPF every year.

Simultaneously, consider ULIPs for mid-term and long-term goals while investing in pension plans for retirement. Make sure you have adequate life and health insurance coverage while spreading out your investments in avenues like mutual funds, ELSS, NSC, and so on, with varying levels of risk.

This post first appeared on The Kashmir Pulse

When one considers investing in the financial markets, a whole range of options unfold, each with its own degree of benefit or risk. Among these, two of the best and the most popular investment instruments are CFDs and shares. Both instruments have distinctive opportunities, but they operate on an entirely different basis. For those looking for leveraged trading and diverse market access, Contracts for Difference or CFDs offer unique advantages, particularly in the context of CFD trading.

Understanding CFDs

Definition and Mechanism

CFDs are basically financial derivatives that allow a trader to speculate on price movements of diverse underlying assets without really owning them. Contracts for Differences are when a person exchanges the difference in the price of an asset from the time a contract is opened to the time a contract is closed. One earns if it goes in their favour; otherwise, losses are incurred.

Benefits That Come with CFD Trading

There are several advantages to CFD trading. Perhaps the most significant of these advantages is leverage. In trading, it facilitates opening positions that are fractions of the total trade value. This can increase potential returns but increases the risk as well. Secondly, CFDs grant access to a great variety of markets: shares, indices, commodities, and Forex trade, hence helping traders diversify their respective portfolios. CFDs also allow for short-selling, enabling traders to profit from falling prices.

Risks of CFD Trading

Although beneficial, CFDs carry high risk. Leverage can be risky as it is helpful while taking profits. In some cases, financial leverage could lead to massive financial loss. Moreover, the market can be highly volatile and prone to instant changes in price. Another drawback of CFD trading is the high fees and spreads in comparison with trading traditional stocks.

Understanding Shares

Definition and Mechanism

Shares are essentially a form of ownership in a company and are also referred to as stocks or equities. When buying shares, a person becomes a part owner of the company and has a claim on its assets and earnings. Shareholders can receive dividends, which are distributions of a portion of the profits the company generates, and possibly enjoy capital appreciation when the stock price goes up.

Merits of Investment in Shares

Buying shares can result in long-term capital growth and income in dividends. Shareholders have the right to vote on various key decisions within the company. If one has shares in good-performing companies then, over time, substantial returns can be expected from such investment. Share investing is, in most cases, for the medium to the long term periods; hence it goes hand in hand with wealth-building strategies.

Risks of Investing in Shares

Shares are exposed to market risk, which means that share prices can vary according to multiple factors such as the performance of the company, general economic conditions, and market sentiment. Companies performing badly can result in huge losses of capital. 

How CFDs Differ from Shares

Ownership and Rights

The key difference between the two is ownership. When one buys shares, a portion of the company is owned, together with all the rights that come along with ownership, such as voting and dividends. However, CFDs do not bestow the buyer with any ownership of the underlying security. They are purely financial derivatives that depend solely on price fluctuation.

Leverage

CFDs are generally leveraged more significantly than shares. This means that traders are able to control larger positions with a smaller amount of equity. While leverage can amplify gains, it also increases the potential for large losses; thus proper risk management in CFD trading is important.

Costs and Fees

Generally, the costs of CFD trading are slightly higher, taking into consideration the spread, overnight financing charges, and commissions. Contrary to this, share trading has generally less costly fees, more so with the availability of discount brokers. However, in both cases, transaction fees and taxes may be charged depending on the trading platform and jurisdiction.

Market Access

CFDs make it convenient to access a wider range of markets that would otherwise not have been easy to reach, such as foreign stocks, commodities, indices, and Forex trading. This kind of flexibility makes it possible for a trader to diversify their investments and at the same time participate in all kinds of markets that would present themselves. Share trading will only remain mostly restricted to the stock exchange market and in company equities.

Practical Examples

Leveraged Position

For instance, consider a trader who is willing to invest $1,000 in a given stock. With the 10:1 leverage afforded by CFDs, they can achieve effective control over a position of $10,000. Assuming that the price of the underlying stock has risen by 5%, this position has a value of $10,500; in other words, his profit is $500, or 50%, from the original $1,000 invested. Of course, the price of that same stock falling 5% will result in a position value of $9,500 and a loss of $500. The large leverage offered amplifies both gains and losses in a big way.

Dividend Income

Consider an investor who buys $10,000 worth of shares in a company paying a 4% annualized dividend yield. The investor would realize $400 in dividends for the year. If the underlying stock price appreciated by 10%, the value of the share is now $11,000 for a total return of $1,400 (14%) from both dividends and capital appreciation.

Choosing When to Use CFDs or the Stocks Themselves

Investment Objective

The choice essentially revolves around what one's investment goals and strategy would be. If one looks forward to long-term gains and investment for income from dividends, then it can be through shares. Share investing dovetails with wealth-building strategies and confers the advantage of ownership. On the other hand, if you prefer short-term trading, leverage, and participation in a broad range of markets, then maybe CFDs would be the way to go.

Risk Tolerance

A very strong factor that remains true to the decision between shares and CFDs is the issue of risk tolerance. Leverage and market volatility make trading CFDs riskier while using CFDs requires the trader to be able to take big losses and have very strong risk management strategies. Investing in shares could pose a huge risk, but it is generally less speculative and less volatile in the long term.

Market Knowledge and Experience

CFD trading requires a higher level of market understanding, technical analysis, and risk management. It works better for advanced traders who can handle complex, leveraged trading trades. Shares are easier to understand for beginners and are a great way to get started with a solid foundation of investment knowledge.

Risk Management Strategies

For CFDs

1. Stop Loss Orders: Stop-loss orders should always be used to stop the probable losses.

2. Limit: The leverage ratios should be used to low leverage ratios to prevent huge losses.

3. Diversification: Diversify investments across different markets and instruments.

4. Stay Informed: Understand the market conditions and modify the strategies according to these factors.

For Shares

1. Ensure Thorough Research: Invest in well-researched companies with strong fundamentals.

2. Diversify: Spread the risk through a diversified portfolio.

3. Invest Long Term: Invest for long-term growth and do not try to respond to changes in the short term.

4. Monitor Regularly: Keep track of company performance and economic indicators.

Tax Implications

CFD Trading

CFD trading generally attracts capital gains tax, but in many countries, it might also be liable for other forms of tax. Thus, it is very important to consider the tax regimes of countries and keep a record of all investments.

Share Investing

Usually, capital gains tax and dividend tax apply to shares. A number of tax-advantaged accounts for share investing operate in many countries, offering some possible tax benefits. Knowledge of the taxation of shares may enable the optimization of returns on investments.

Regulatory Environment

CFDs

Generally, CFD Trading is regulated in many jurisdictions so as to provide protection to investors. Regulatory bodies ensure that the brokers operate under certain set standards, therefore offering a degree of security for traders. The degree of regulation can vary, so it becomes important to choose a reputable broker.

Shares

Share investment is also regulated, and it involves stock exchanges and a number of regulatory organizations that keep an eye on market activities. Regulations ensure transparency and fairness for investors' interests to be fully protected. Understanding the regulatory environment would help an investor sail through the market more effectively.

Overall, understanding the differences between CFDs and shares forms a very important part of making any informed decisions regarding investments. Although CFDs give leveraged trading and diverse market access opportunities, they come with higher risks and costs. Shares provide not only ownership advantages and long-term growth but also the extra income benefit of dividends. These are instruments where one must use a different kind of investment style. It is essential to consider investment goals, risk tolerance and knowledge of the market, to choose the right tool for your financial goals.

This post first appeared on The Kashmir Pulse

There seems to be nothing as blissful and soothing as finally being able to retire, right? It is that one time of your entire life when you can just do what you want. These may include the hobbies you wish to pursue, reading, spending time with near and dear ones, travelling, getting involved in community service, or even starting something of your own. However, retirement can only be free of stress and turmoil if you are financially sorted.

Now, in this case, pension plans are something of a godsend, helping meet your financial requirements seamlessly after you retire. How to choose the best one? Here’s the lowdown below.

What are Your Financial Objectives?

Right before you sign on the dotted line of any pension plan, a few things should always be clear to you. These include the costs that you will have to cover down the line and also the lifestyle that you will lead once you retire. This will give you a picture of the money that you need. You can use this point of view to look for suitable pension plans that will help you accomplish these objectives.

Just to take an example, you can always opt to accumulate money over a prolonged duration and then get it as a pension income after you retire. You can also choose to invest a large sum of money that you receive at retirement into a pension plan. In such cases, the annuity will begin immediately once you make the investment.

Check the Available Plans

Some of the pension plans available can be summed up below:

Deferred Annuity: This means a policy where you can build up your corpus for retirement steadily. Thereafter, up to 60% of the corpus can be withdrawn as a lump sum, and the remainder must be used to purchase an annuity plan, as per current Indian regulations (PFRDA).

Immediate Annuity: This is often a convenient option for those who are close to retirement. Once you get a big lump sum payout, you can use it to invest in these plans. They will start giving you regular pension income immediately.

Future Costs and Your Risk Appetite

When planning retirement, your consideration should also be based on future expenses and your risk tolerance. For instance, medical expenses are expected to rise with age so you need to make sure your pension plan offers sufficient coverage.

Also, consider where you are on the risk tolerance spectrum. You might want to opt for a traditional pension plan with its guaranteed returns if you're risk averse. Yet, in case your risk appetite is on the higher side, then unit-linked plans may be better choices.

Conclusion

Evaluate your financial goals, and weigh the different considerations, to see which plan fits into your future needs and risk profile. Ultimately, retirement should be about living life not worrying about how to pay for it so invest in pension plans with careful consideration.

This post first appeared on The Kashmir Pulse

A Unit Linked Insurance Plan (ULIP) is a unique financial product that offers the dual benefit of insurance and investment. It offers life insurance coverage while also allowing you to invest in a range of investment options such as equity, debt, or balanced funds, depending on your risk appetite and investment objectives.

The ULIP premium is split into two parts – a small part is directed towards life insurance coverage, and the other part is invested in the market. Including this hybrid product in your investment portfolio offers several benefits.

Benefits of including ULIP in your investment portfolio:

1. Dual advantage

Unlike traditional insurance policies, ULIP plans not only offer life cover but also allow you to invest money in market-linked instruments to build a significant corpus. Adding this comprehensive financial product to your portfolio helps you take care of two goals in one investment – ensuring financial security for your loved ones and building corpus for your future goals.

2. Secure long-term financial goals

ULIPs are designed for long-term financial goals such as children’s higher education, home purchase and more. The lock-in period of five years ensures you remain committed to your financial goals and avoid premature withdrawals that can pull you off track. When you stay invested for a long term, the power of compounding does the magic, resulting in substantial wealth creation over the long run.

3. Flexibility

ULIP plan offer the flexibility to choose from a variety of funds (equity, debt or balanced) based on your risk-taking ability and investment objectives. You can choose the percentage allocation into these funds ranging from high-risk to low-risk as per your need. Additionally, ULIPs provide you the flexibility to switch between different funds without any additional charges. A certain number of switch transactions are free in a year and you can adjust your investment strategy in response to market volatility or change in your financial goals.

4. Transparency

ULIP plans are complex in nature but are highly transparent as they are offered as per the guidelines of IRDAI (Insurance Regulatory and Development Authority of India). Policy document contains clear details of the policy, clauses, charges and more. You also get regular updates on the fund’s performance, the value of funds, and the allocation of premiums. You can monitor your portfolio closely and make informed decisions depending on the market conditions.

5. Wealth creation

By adding ULIP to your investment portfolio, you can create wealth as it allows you to invest in market-linked instruments. Equity funds within ULIPs have the potential to deliver high returns, especially over the long term. If you have a higher risk appetite, this can be a valuable avenue for achieving long-term goals through wealth creation. If you are looking for steady returns, you can switch to debt funds or balanced funds within ULIPs that offer stability and lower risk.

6. Tax benefits

ULIPs are considered to be a tax-efficient investment product for the long term. The ULIP tax benefits include the tax deductions allowed under Section 80C for the premiums paid towards ULIPs of up to INR 1.5 lakhs per financial year. The death benefits or the maturity proceeds are tax-free under Section 10(10D), provided certain conditions are met. These ULIP tax benefits make it a lucrative option to include in the investment portfolio.

7. Liquidity

ULIPs are typically designed for long-term goals. However, there is an option of partial withdrawals after the completion of a five-year lock-in period to offer liquidity to investors. You can withdraw partially from your ULIP in case of emergencies or unforeseen financial requirements. There may be limits and specific conditions applicable based on the policy terms of your insurance provider.

8. Instils financial discipline

Paying premiums on a regular basis and the mandatory lock-in period instil a sense of financial discipline among investors. This disciplined approach helps in systematically building a corpus over time, helping you to meet long-term financial objectives such as retirement planning, children's higher education or dream vacation.

Conclusion

In conclusion, a Unit Linked Insurance Plan (ULIP) can be a valuable addition to your investment portfolio, offering the dual benefits of life insurance and wealth creation. The tax efficiency, customisation, suitability for long-term goals, and flexibility to switch between different funds make ULIPs a versatile financial product to add to your investment portfolio.

ULIP is a compelling choice that can play a vital role in enhancing your investment portfolio. However, it is crucial to assess your risk tolerance, financial goals and investment horizon before investing in a ULIP. It is important to make an informed decision and choose a ULIP that aligns with your overall investment strategy.

This post first appeared on The Kashmir Pulse

A Unit Linked Insurance Plan (ULIP) is a unique financial product that offers the dual benefit of insurance and investment. It offers life insurance coverage while also allowing you to invest in a range of investment options such as equity, debt, or balanced funds, depending on your risk appetite and investment objectives.

The ULIP premium is split into two parts – a small part is directed towards life insurance coverage, and the other part is invested in the market. Including this hybrid product in your investment portfolio offers several benefits.

Benefits of including ULIP in your investment portfolio:

1. Dual advantage

Unlike traditional insurance policies, ULIP plans not only offer life cover but also allow you to invest money in market-linked instruments to build a significant corpus. Adding this comprehensive financial product to your portfolio helps you take care of two goals in one investment – ensuring financial security for your loved ones and building corpus for your future goals.

2. Secure long-term financial goals

ULIPs are designed for long-term financial goals such as children’s higher education, home purchase and more. The lock-in period of five years ensures you remain committed to your financial goals and avoid premature withdrawals that can pull you off track. When you stay invested for a long term, the power of compounding does the magic, resulting in substantial wealth creation over the long run.

3. Flexibility

ULIP plan offer the flexibility to choose from a variety of funds (equity, debt or balanced) based on your risk-taking ability and investment objectives. You can choose the percentage allocation into these funds ranging from high-risk to low-risk as per your need. Additionally, ULIPs provide you the flexibility to switch between different funds without any additional charges. A certain number of switch transactions are free in a year and you can adjust your investment strategy in response to market volatility or change in your financial goals.

4. Transparency

ULIP plans are complex in nature but are highly transparent as they are offered as per the guidelines of IRDAI (Insurance Regulatory and Development Authority of India). Policy document contains clear details of the policy, clauses, charges and more. You also get regular updates on the fund’s performance, the value of funds, and the allocation of premiums. You can monitor your portfolio closely and make informed decisions depending on the market conditions.

5. Wealth creation

By adding ULIP to your investment portfolio, you can create wealth as it allows you to invest in market-linked instruments. Equity funds within ULIPs have the potential to deliver high returns, especially over the long term. If you have a higher risk appetite, this can be a valuable avenue for achieving long-term goals through wealth creation. If you are looking for steady returns, you can switch to debt funds or balanced funds within ULIPs that offer stability and lower risk.

6. Tax benefits

ULIPs are considered to be a tax-efficient investment product for the long term. The ULIP tax benefits include the tax deductions allowed under Section 80C for the premiums paid towards ULIPs of up to INR 1.5 lakhs per financial year. The death benefits or the maturity proceeds are tax-free under Section 10(10D), provided certain conditions are met. These ULIP tax benefits make it a lucrative option to include in the investment portfolio.

7. Liquidity

ULIPs are typically designed for long-term goals. However, there is an option of partial withdrawals after the completion of a five-year lock-in period to offer liquidity to investors. You can withdraw partially from your ULIP in case of emergencies or unforeseen financial requirements. There may be limits and specific conditions applicable based on the policy terms of your insurance provider.

8. Instils financial discipline

Paying premiums on a regular basis and the mandatory lock-in period instil a sense of financial discipline among investors. This disciplined approach helps in systematically building a corpus over time, helping you to meet long-term financial objectives such as retirement planning, children's higher education or dream vacation.

Conclusion

In conclusion, a Unit Linked Insurance Plan (ULIP) can be a valuable addition to your investment portfolio, offering the dual benefits of life insurance and wealth creation. The tax efficiency, customisation, suitability for long-term goals, and flexibility to switch between different funds make ULIPs a versatile financial product to add to your investment portfolio.

ULIP is a compelling choice that can play a vital role in enhancing your investment portfolio. However, it is crucial to assess your risk tolerance, financial goals and investment horizon before investing in a ULIP. It is important to make an informed decision and choose a ULIP that aligns with your overall investment strategy.

This post first appeared on The Kashmir Pulse

SRINAGAR — The Union Government on Monday unveiled Rs 59,364 crore interim budget for Jammu & Kashmir Union Territory, while the budgetary estimates for the next financial year 2024-25 are expected at Rs 1,18,728 crore.

Interim Budget

The budget documents of J&K Union Territory laid in the Lok Sabha lay bare that the Union Finance Ministry has proposed a vote-on-account for Rs 59,364 crore for Jammu and Kashmir.

Documents reveal that the capital expenditure involves Rs 19,283 crore and revenue expenditure Rs 40,081 crore.

The proposed interim budget includes Rs 48,930 crore as revenue receipts and Rs. 10,434 crore as capital receipts.

The documents show that total gross receipts in respect of the proposed vote on account for 2024-25 are estimated at Rs 75,932 crore, including the provision for ways and means advances of Rs 16,568 crore.

The Union Finance Ministry has sought parliamentary approval only for Rs 75,932 crore, including the provision for ways and means advances of Rs 16,568 crore.

The interim budget was presented as a Model Code of Conduct would likely come into effect in the first week of March for Lok Sabha elections which would be held in April-May. The UT’s full budget will be presented once the next government is in place after the 2024 parliamentary elections.

Budget Estimates for 2024-25

The total budget estimates for fiscal 2024-25 are Rs 1,18,728 crore, excluding the provision for ways and means advances, of which the revenue expenditure is estimated at Rs 80,162 crore and capital expenditure to be Rs 38566 crore.

The expected revenue receipts are Rs 97,861 crore and capital receipts are Rs 20,867 crore.

Fiscal Indicators

According to budget documents, the tax/GDP ratio is projected at 7.84 per cent for 2024-25 which is higher than the previous year of 6.56%.

These documents state that GDP for the year 2024-25 has been projected at Rs 2,63,399 crore, which shows a growth of 7.5% over the previous year.

This was the fifth consecutive budget of J&K UT to be presented in Parliament. After abrogation of Article 370 and reorganization of J&K into a UT, all budgets of J&K have been presented. This is being done as J&K has been without its own Assembly since 2018.

"Investment proposals worth Rs 90182 crore received in J&K"

The Government of India on Monday said that the J&K Government has received investment proposals worth Rs 90182 crore and investment worth Rs 5319 crore has been grounded in the Union Territory since 2019-20.

These details were revealed by the GoI in the budget documents of J&K laid in the Parliament today.

According to the documents, investment proposals worth Rs 90182 crore were received which have the potential to generate employment for 4,01,965 youth.

“Since 2019-20, an investment worth Rs 5319 crore has been grounded,” the documents lay bare.

The Union Territory Government has launched the Jammu & Kashmir Industrial Policy 2021-30 with the aim to attract new investment, create employment opportunities for youth, developing backward regions and expanding existing industrial units.

In a move to woo investors, it has also notified the Industrial Land Allotment Policy 2021-30, Private Industrial Estate Development Policy 2021-30, Wool Processing, Handicrafts and Handloom Policy 2020.

The GoI also revealed that apart from the existing 64 industrial estates, 46 estates are being developed to fulfil the goal of 'Made in Jammu and Kashmir'.

“46 new Industrial Estates have been identified for development that will attract investment and create employment opportunities,” the budget documents state.

According to the documents, Jammu and Kashmir emerged as the top-ranking Union Territory of India in the 2022 Export Ranking. “The Union Territory improved its ranking from 35 in 2020 to 17 in 2022,” the budget documents revealed.

The Centre also revealed that Handloom and Handicraft exports have doubled from Rs 563 crore in 2021-22 to Rs 1116 crore in 2022-23.

This post first appeared on The Kashmir Pulse

When we desire to invest our surplus money, a fixed deposit (FD) is the first thing that comes to our minds. As one of the most traditional products of investment, fixed deposit is immensely popular and trusted amongst investors.

Everything has made FDs a remarkable investment option, from guaranteed returns and hassle-free procedures to ease of investment. But FDs are way more than just a mere investment avenue. In other words, the benefits of a fixed deposit are much more than you can ever imagine!

Whenever there’s an emergency and a sudden requirement for cash, we tend to seek loans against different assets. But did you know that you can also use a fixed deposit as collateral for loans and other financial products? Well, you can seamlessly pledge your fixed deposit and avail overdraft against it from your bank.

Rather than breaking and drawing your FD prematurely, you have the opportunity to acquire an overdraft against it. This article will give you more informative insights into FD as collateral and the benefits of acquiring the same. Please keep reading until the end to learn more about it. Let’s dive in!

Overdraft Against Fixed Deposit - An Overview

An overdraft against a fixed deposit is a secured loan where the customers pledge their fixed deposit as collateral. And in return, they can avail of a loan amount.

The loan amount usually depends on the amount of the fixed deposit. Please note that the amount of the loan can go up to 90%-95% of the deposit amount.

The loan's interest rate is usually 1-2% above the fixed deposit interest rate. However, the interest rate is likely to vary from one bank to another.

Requirements of Applying for an Overdraft Against Fixed Deposit

If you apply for an overdraft against a fixed deposit, you must fulfill some requirements. Some of the most prominent ones include:

Fixed Deposit

As you need to keep your fixed deposit as collateral, it’s imperative for you to hold an FD account.

FD with Equal or Greater Value Than Your Loan Amount

The value of your fixed deposit should equal or exceed the amount you are borrowing. For instance, if you are borrowing an amount of Rs. 5 lakhs, then your FD should comprise an equal or greater value.

Similar Tenure for Loan and FD Maturity

Tenure for FD is nothing but the period over which your fixed deposit investment matures. Likewise, the tenure for an overdraft against a fixed deposit is the period over which you need to repay your borrowed amount.

Please note that the tenure for your FD should be the same or more than your loan tenure. In other words, you are required to repay the loan within which your fixed deposit matures.

Other Investments

A overdraft against FD usually works better when you have multiple investments. When you have a single FD that otherwise generates cash, it might be risky to put it at stake. Before you borrow, you should ensure that you have several investments that yield excellent results.

Fulfilling the Eligibility Criteria and Other Application Formalities

Like all other loans, you need to fulfill the eligibility criteria before applying for this option. Make sure you go through the application procedure carefully and submit the basic documentation as required.

Benefits of Acquiring Loans Against Fixed Deposits

Some of the most commendable benefits of acquiring loans against fixed deposits are:

• While the loan is secured, it comes with simpler eligibility requirements in comparison to unsecured loans.
• To acquire this loan, you won’t need to break or liquidate your fixed deposit prematurely.
• The interest rates are pretty low as you need to submit your FD as collateral.
• This loan doesn’t have any additional requirement of processing or handling fee.
• Since the payment tenure is equivalent to the FD’s maturity tenure, the payment procedure is quite flexible.

Conclusion

If you are searching for a loan to meet a certain financial emergency, you can always consider your fixed deposit. If you desire, you can also keep your FD as collateral for an education loan. And while most banks charge lesser interest rates than other loans, availing of this type of loan is truly beneficial.

For more information regarding acquiring overdraft against fixed deposit, you can get in touch with AU Small Finance Bank.

Frequently Asked Questions

This post first appeared on The Kashmir Pulse

An equity fund can be an excellent way to begin your investment journey in the stock market. Read this article to learn the benefits of investing in equity mutual funds.

Rising inflation and diminishing returns from traditional investment avenues have made investors look for various new investment options. As a result, equity mutual funds have rapidly gained popularity due to the multiple benefits they offer to investors.

What is an Equity Fund?

An equity fund is a type of mutual fund category that invests primarily in equities and equity-related instruments. As per the SEBI rules, an equity mutual fund in India must allocate at least 65% of its assets toward equities and equity-related instruments. Equity mutual funds can be divided into many categories based on their investment objectives. Some popular categories of equity funds are as follows.

• Large-cap Funds





• Mid-cap Funds





• Small-cap Funds





• Multi-cap Funds

Six Reasons to Invest in Equity Funds

1. Portfolio Diversification

Equity funds allow you to spread your investments across different sectors. Additionally, equity mutual funds allow you to invest in a range of assets such as stocks, bonds, commodities, and real estate, further diversifying your portfolio.

This is also an effective way to spread your risk, as you will invest across various equities and asset classes. As a result, your portfolio is unlikely to bear the full heat if one of the asset classes underperforms, as other investments can potentially mitigate the impact.

2. Professional Fund Management

Many individuals may find it hard to identify the right time and the stock to invest in. Secondly, you may not have enough time to monitor the market and predict the market behaviour.

However, equity mutual funds are managed by experienced investment professionals with in-depth knowledge and expertise in equities and the market in general. They routinely conduct extensive research and analysis of stock performances and market trends. These investment professionals ensure that your money is invested optimally through their mutual funds.

3. High Liquidity

Apart from ELSS and a few other specific category funds, open-ended equity mutual funds in India don’t have any mandatory holding period. So, investors can easily sell their fund units on any business day. Upon redemption, the redemption amount is credited to the investors’ account within a few days. Therefore, you can use your mutual fund investments to arrange cash in time of need.

However, if you exit the fund too soon, there might be an exit load. The scheme document mentions the lock-in period, which can range between a few days to a few months.

4. Well-Regulated

All mutual funds in India must adhere to the stringent regulations of the Securities and Exchange Board of India (SEBI), India’s capital markets regulator. This ensures that utmost transparency is maintained while handling the investor’s money.

5. Start Small

Many people can't afford to purchase all the individual securities a mutual fund holds. However, you can easily purchase equity fund units in small amounts. The minimum initial investment in most equity funds can begin from as low as ₹500-₹1000. So you can start accumulating fund units in small quantities to build a robust portfolio over time.

You can also invest in an equity fund through Systematic Investment Plan (SIP). SIP enables you to invest a fixed amount in your chosen fund at regular intervals like monthly, quarterly, etc., instead of investing a large amount at once.

6. Potential for Wealth Creation

Like all market-linked investments, equity mutual funds can carry a certain level of risk. However, they also have a strong potential to generate inflation-beating returns if you can stay invested for a long period, like seven years or more. Therefore, equity mutual funds can be an excellent option to create a good investment corpus for your future or fulfilling long-term financial goals.

There are various types of mutual funds to suit the varied needs of investors. So, set your investment goals, identify your risk-taking ability, and select the right equity fund to begin your investment journey without any further delay.

This post first appeared on The Kashmir Pulse

Gold is not just a top choice for ornament-making in India but also for investments. Given the high liquidity ratio of the asset and its inflation-proof price structure, gold remains a preferred choice among Indian investors hedging market volatility.

While the prices of gold have doubled over the last five years, like all investment vehicles they tend to experience period fluctuations. As an investor, you need to know what causes these price swings to protect yourself from fluctuating gold rates in Chennai and other cities.

Factors Influencing Gold Prices

Demand and Supply: The world has a finite reserve of this precious yellow metal. Thus, any change in the supply or demand side of its equation will have an impact on prices. For instance, during the wedding season in India, the demand for gold reaches an all-time high. If the supply doesn’t meet this high demand, the price of gold in Mumbai and other Indian cities will go up. Conversely, if the disposable income is low and supply outstrips demand, gold prices will fall.

Inflation: Since gold is often used as a hedge to mitigate inflationary pressures, gold rates in Mumbai and other cities are closely linked to inflation rates. When inflation is high, fiat currency is devalued. In other words, the purchasing power of currency notes reduces. However, since gold is a store of value, people tend to look to gold for savings. Higher demand for the asset spells higher prices.

Market Volatility: Any form of a market crisis triggered by geo-political or economic events impacts the gold rate in Chennai and other Indian cities. For instance, if investors see a palpable bearish trend in the stock market, they might wish to migrate to the safe-haven asset - gold, raising its price. Alternatively, a strong bullish trend in the stock market will lower the demand for gold as investors look to exploit higher returns from stocks.

Exchange Rate: India meets its gold demand through imports. Depreciation of the Rupee to the Dollar raises gold prices in cities like Mumbai, Kolkata, and others. In other words, gold prices in India will rise as the Dollar grows stronger.

Crude Oil Prices: Crude oil is an essential component of gold mining. So, the higher the price of crude oil, the higher the cost of gold production and the higher its market price.

Apart from these factors, others like RBI reserves, interest trends, the weakening Dollar, and the wedding season affect gold rates in Chennai and other Indian cities. To protect your gold investment from ups and downs, you can track these factors to gauge price movements and minimize losses.

Offsetting the Effects of Gold Price Fluctuation

Tracking these factors isn’t always easy. It’s always better to have a foolproof plan in place. To do so, you can implement the following precautions that’ll help offset the impact of gold price fluctuations.

Portfolio Diversification

Hedging market-linked risks means distributing your eggs in multiple baskets. In other words, you should diversify your holdings to avoid gold rates in Mumbai and other cities impacting your portfolio adversely.

You can mitigate the risks associated with the gold market by having a balanced mix of asset classes in your portfolio (like stocks, mutual funds, and bonds),. Not just that, you should also frequently rebalance your portfolio to ensure that it's keeping with the current market trends.

Gold Mutual Funds

Instead of passively waiting for gold prices to affect you, you can monetize these changes to your benefit with gold mutual funds. You can use the rising gold rate in Mumbai and other cities to earn returns by investing in these funds.

These mutual funds invest in physical gold, gold ETFs, stocks of gold mining companies, and distribution companies via direct and indirect routes. Usually, even a tiny change in the gold prices can change the return value of these MFs significantly. Sometimes returns from the funds even outgrow the actual price of the metal.

Sovereign Gold Bonds

You can also balance out fluctuating gold prices by opting for government-issued sovereign gold bonds. While these bonds are certificates issued against grams of gold, they come with a set return rate.

Investing in such bonds ensures lucrative payouts as the government issues an interest of 2.50% p.a. to the investors, credited on a half-yearly basis. Moreover, if market trends suggest a fall in gold prices, you can always sell these bonds before the end of the 8-year tenure.

Digital Gold

E-gold can be yet another price risk management vehicle you can add to your portfolio. You can purchase digital gold from apps starting from just 1 gram. You can leverage real-time gold rates to exploit price movements. Thus, you can sell the asset to churn out a profit when gold rates in Mumbai and other cities rise or purchase more units when prices are low.

Bottom Line

While you can never go wrong with gold investments, every investment strategy has its own pros and cons. To decide which one fits you best, you should always consider your investment goals, time horizon, and approach. For instance, long-term investors can look at SGBs, while those with short-term goals might find gold funds and ETFs more profitable.

Regardless of your approach, the bottom line is clear: portfolio diversification. While keeping a close eye on the factors affecting gold prices can help you hedge risks, portfolio diversification is the only way to offset price risks.

This post first appeared on The Kashmir Pulse

Life can be uncertain, and you never know what the future holds for you. You may have an emergency at any time without any prior warning, causing financial turmoil. While you cannot predict or prevent any crisis, you can be prepared to handle such situations by having sufficient savings.

Let us look at some of the critical reasons you must save and invest your money for the future.

Financial protection

One of the most significant benefits of investing and saving for the future is that it allows you to be financially independent and gives you a financial cushion against unexpected circumstances. Every penny you save and invest will make your future a little better.

No matter your financial status, money plays a vital role as you never know what will happen the next day. You may suddenly lose your job, and your family may face financial turmoil in the event of your unexpected demise, etc. In such a situation, you may rely on your savings to take care of your regular expenses and live a life of dignity without relying on anyone else.

Be debt free

Regular savings and investments in financial instruments like an assured savings plan can help you accumulate a considerable corpus over time. Upon maturity of the savings plan, you can use the wealth to pay off the loans or mortgage (if any) and live a debt-free life. The earlier you start saving, the more considerable wealth you can accumulate, and the earlier you can be debt-free.

Take an early retirement

Many people aspire to retire at a young age and pursue their dreams. However, only a few are able to achieve this because they don’t have enough financial backing, and they are forced to work till they reach their 60s or even beyond. However, you can accumulate funds for your retirement by saving and investing money from a young age (as soon as you get your first paycheque).

There are many avenues, including special retirement plans and assured savings plans, allowing you to build a sizeable corpus. By investing in a savings plan, you can get assured savings as well as guaranteed returns. Depending on your future goals, once you have accumulated enough funds, you can take early retirement and live the life you have envisioned for yourself.

Have peace of mind

When you have enough savings and investments, you automatically feel a sense of security and peace of mind knowing that you have the necessary financial resources to fall back on during an emergency. With sizeable savings, you can be confident in making certain life decisions and even take risks like starting a new business or voluntarily taking early retirement to pursue your other life goals.

Be future-ready

Most people invariably consider applying for a personal or mortgage loan during an emergency. However, when you avail of a loan, you not only feel the burden of debt repayment, but also you end up paying more than you borrow in the form of interest. However, if you have savings, you can easily use the amount to get through an emergency or whatever situations you face in the future.

Enjoy tax benefits

Tax saving is a critical aspect of a sound financial plan. When you save and invest your money in different financial instruments like life insurance, ULIP assured savings plans, and retirement plans, you get valuable tax benefits under different sections of the Indian Income Tax Act.

As they say, in the financial world, every penny saved is a penny earned. The sooner you start saving and investing, the more tax saving you can enjoy.

Final Word

Now that you know the importance of saving and investing for your future, start investing and saving now so that you and your family never face any financial hardship.

This post first appeared on The Kashmir Pulse