7 Important Things to Avoid Regarding Personal Loan

Personal Loans are a great a way to tide over your short term financial need as it requires relatively less documentation, quickly disbursed and doesn’t require any collateral. The interest rates these days offered by banks and financial institutions are also very competitive especially for borrowers with high credit score.  But there are certain vital things that one should keep in mind regarding personal loans:
  1. Avoid Applying for loans with too many banks: This is a very important point as not many people are aware of this fact. You need money urgently and you might be tempted to apply with multiple banks in case your desired bank doesn’t approve your application. With advent of online banking, it has become very easy to apply for personal loan online with several banks. This is a bad strategy in this case. Every time you apply for a loan with a bank or any financial institution, it will check your Credit Score on CIBIL. Now with each credit score check your overall credit score comes down a little bit. Now if some four - five banks check your Credit Score at the same time it’ll hamper your score in a meaningful way, which in turn will pose a problem in getting your loan sanctioned. Also lower credit score result in higher personal loan interest rates.  
  2. Avoid taking large loan amount: Just because personal loans are structured in such a way that you don’t have to discuss the reasons for taking one, it doesn’t mean you try to get as much as you can. Take only as much as you can afford to repay. Taking a loan amount more than you can afford to repay on time will put you in a debt trap. 

How to improve your credit score through simple snowball effect?

If you are reading this you are definitely looking for improving your CIBIL score (the most widely used credit score referred by lenders to hand out the loans) and this article will certainly help you in achieving this objective specially if you haven’t taken a loan before.

Since you don’t have a credit history the lending institutions will hesitate to approve your loan application especially medium to large ticket sized loans for items like Cars, Home etc. Let’s first understand the range of scores assigned by credit rating agencies and their grades:

Credit Score Ranges
Range
Grade
0 or -1
No Credit History
550 - 300
Bad
551-649
Poor
650-699
Fair
700-749
Good
750 and above
Excellent

If you fall into the first three categories of the above table, not only there is higher chance of application rejection but also the cost of loan is going to be higher, which is the interest rate you pay on the loan amount. The only way to improve your credit score is to make timely payment on your dues and in short term that can be done either by having a credit card and paying all its dues timely every month or you can improve yourCredit Score with Personal Loans.

Kya Lena Chahiye?

My reply to everyone asking me "Kya Lena Chahiye" after this brutal market fall.

Equity Portfolio Update

Significant panic witnessed in our markets due to IL&FS issue which lead to very sharp corrections in some of our stocks we hold in our portfolio. This was largely expected and we were more than 40% invested in liquid bees. Deployed all the cash today to bring down the cost of some of our holdings and also added a new name which I feel could be a potential turn around candidate as the sector itself is at the cusp of turnaround.

You can check the latest portfolio from the following link: InvestorZclub Equity Portfolio

Go Cashless with Debit Cards

Debit cards make daily money management easy and fuss-free, and they also offer many benefits that save your money. 

The country took to the Digital India initiative in a big way when de-demonetization was announced in November 2016, bringing the nation to a standstill. With ready cash not available, people were forced to transact using their debit and credit cards for all their needs. However, this was a positive development as far as spending electronically goes – debit cards offer tremendous mobility to all users since you don’t need to dispense with cash at all. Whether swiping the card at a payment terminal, or withdrawing money using the ATM card, or using the card number while completing an online purchase, a debit card makes money management really simple.

Leading banks in India offer customers debit cards online, with frequent cashback offers and discounts on using the card. Apart from the convenience of using the card, the debit card offers result in good savings and unique experiences for the card holder.

The argument for using debit cards…

Earlier, most people preferred using credit cards instead of debit cards, because the former added a lot of reward points on most purchases. However, banks have excellent debit card offers that offer customers a range of experiences, discounts and cashback on using the card at select merchants. These days, airlines, five-star hotels and high end retailers also accept payment using debit cards, while some e-commerce giants offer EMI schemes against debit cards as well. Moreover, debit cards are always a better option than credit cards, for the following reasons: 

5 Things You Should Know about Credit Monitoring

Imagine you going through a lot of pain to maintain that perfect credit score. You make all your payments on time, no defaults and there is no chance of you being in bad books of credit. All of a sudden you encounter an emergency and decide on applying for a personal loanWhen applied for the same, you are rest assured that your loan will be sanctioned within no time; all of a sudden you receive a bad news stating your loan has been rejected! Now you are in a confused state on how this happened and how is it possible on the first place, because you used to make all your payments on time.

After a brief inquiry, you happen to know that you are a victim of identity theft and your information is used for making various financial purchases. Your banker understands the same and suggests you opt for a credit monitoring plan. But what is a credit monitoring plan? Is that necessary for me? How is it going to be beneficial for me? If you have been a victim of identity theft, the answers to such questions are mentioned below:

Credit Monitoring

Let us first understand what is credit monitoring. A credit monitoring service is offered by various third party companies who can keep a track on your credit related transactions and maintain your credit score for future transactions. Customers usually use this service to guard them from identity theft and also to improve cibil score.A credit monitoring service keeps a close eye on your credit activity and notifies you of any credit transactions happening towards your account. The transactions can include any hard inquiry, purchase of a new loan, etc. Some monitoring services also give you a comprehensive tracking of the cibil scores.

Major Crypto currency bubble burst

Major cryptos that saw more than 80% correction from high

How to Plan for Retirement When You're Already in Your 40's?

We are always told to start saving for retirement right from the time when we are young. However, what are you to do if you weren’t able to save much and have entered your 40s now? Is it still possible to plan for your twilight years now? The answer is “yes”!

The following are some tips on how you can plan for your retirement even if you started late:

1. Pick a Number
The first thing you need to do is determine your retirement amount. Many experts believe that you need around 10 times your ending income to survive through the retirement years.  However, since you are beginning to save money quite late, you may not be able to achieve that target by the time you retire. So, what you can do is crunch some numbers and get a “conservative” figure that works for you.

2. Start Saving
Now, not only you need to start saving as soon as possible, you must increase the saving amount every month. The rule of thumb is that you should put 10% of your income in the retirement fund, but in this case, it might not be enough. This is because you have to achieve your target in less time as opposed to those who start saving for retirement early. Thus, you should go for 20% savings instead.
You should also try to increase the percentage over time as you see fit. Just be sure you have enough room for the payment of EMIs and credit card bills as you don’t want to hurt your CIBIL score. After all, it’s not easy to get a loan with bad credit score.

Phases of an Asset Price Bubble

A typical Asset Price Bubble
Phases of an asset Price bubble

From South Sea bubbles or tulip mania of 16th century to dot com crash of 2000 and housing bubble of 2008, a typical asset price bubble consists of 4 major phases:

5 Trading Advise From The Best

"Most people approach trading to make a lot of money, and that is one of the primary reasons they lose." -  Van Tharp (Trading Coach)

"There is no need to rush into any position, wait for your signal. Rushing into a position and chasing a stock is one of the main reasons that traders lose money. Follow your trading plan not your emotions and impulses." -  Marty Schwartz

"Trading offensively is trying to grow you capital while defense is protecting what you have. Winning trades are how many points you score and losing trades is how many points you give up to the other team. While offense is great for a show defense wins championships." - Paul Tudor Jones

Easing into retirement by reducing liabilities

Make your retirement the happiest phase of your life with systematic planning and a few decisive moves today.

Every person who works hard all their lives does so with the expectation of retiring in style. They wish to ease into the last years of their lives in comfort and peace, secure in the knowledge that they’ve done everything they could for the good of their loved ones.

But wishing for a peaceful retirement and actually getting it are two different things. It takes a lot of planning and hard work to be able to retire with grace and dignity. And the time to put in the work is now, while you are still employed and have a regular income. You can follow this simple guide for retiring with complete fiscal security.

Think of retirement as a journey, not a destination.

Many people think of retirement as a phase where one’s active life ceases and one of rest and relaxation begins. But you can fashion your retirement the way you want – you can be as active or as laid back as you wish! It can be a phase of true contentment, as you rediscover and explore the things that matter the most to you. You did not have the time to indulge your hobbies the way you would have liked for several years – retirement gives you the opportunity to travel, make new acquaintances, take up a sport or hobby, be by yourself… the world is your oyster, and it’s time to make it yours!

5 pitfalls to avoid in the home loan application

Following are the common areas of error that you are likely to make when applying for a home loan – and how to avoid them.

As if buying a house in an escalating property market wasn’t difficult enough, you also need to navigate the home loan process carefully. Though home loans have been suitably simplified by leading housing finance companies, some parts of the process can prove to be veritable landmines. These errors can prove costly in the long run, and even result in the loan application being rejected. We list these areas of potential trouble and enumerate how you can avoid them:

1. Not having enough money at your disposal for a range of payments.

Most first-time home buyers are aware that they require some amount of money to make a down payment on the house. The down payment is normally split into two components: The token or booking amount, and the first installment on the house. But you also need to have sufficient money at your disposal to pay the following costs, which will not be paid from your home loan:
  • Stamp duty costs 
  • Registration fees
  • Lawyers’ and broker fees
  • Money to pay towards placing an advertisement in the paper asking for claimants to the property to come forward (this cost is split between the seller and buyer)
  • Home loan application fees
  • Lender’s evaluation and processing fees
  • Stamp duty on the loan agreement
  • Pre-EMI money (before the first EMI is deducted)
  • Society/developer transfer fees
  • Society membership fees
Find out all these costs and set aside the money accordingly – or you may come up short!

How to plan early for a relaxed life post working years?

Benjamin Franklin once said "Failing to plan is planning to fail" and it sounds so obvious for one of the most important part of our lives - RETIREMENT. Proper retirement planning considering your current standard of living, your assets and liabilities and the impact of inflation on them, will help you enjoy a relaxed life post your working years.

Use a retirement calculator to estimate the amount you would need to invest now to lead a comfortable life post-retirement. Once this amount is known you can buy a retirement policy from an established insurance provider. Today more than a dozen insurance companies offer retirement &  pension plans with several benefits / flexibility ranging from single premium pension plans to regular annual premiums, lump sum payment to annuity payouts or a combination of both and many others.

3 Margin Types that every derivative trader must understand

If you are a derivative trader in Indian stock Markets specially an Option writer (Call and put sellers) or futures trader, you must understand various types of margin imposed by your broker. Failing to maintain adequate margin can lead to very high penalty beside ad hoc squaring-off existing positions to trim the size of your overall positions.

SPAN margin

The initial margin required for the positions is computed online and on an intraday basis, using a software called SPAN (Standard Portfolio Analysis of Risk). Sellers of options (both call and put) and holders of futures (both long and short), where the potential losses could be high, are required to have sufficient margin in their accounts. The SPAN system uses strike prices, risk-free interest rates, changes in prices of the underlying securities, changes in volatility and time-value to calculate the worst possible move in the security. For the exchanges, SPAN margin covers almost the entire risk for the day, minimizing the systemic risk due to margin pressures.

Kotak Free Intraday Trading – What you should know?

In this age of disruptions companies are differentiating themselves by offering products and service to creates sticky customers. Across customer facing industries there are companies which are taking on competition by offering more value for the buck. As a consumer, online retail & telecom comes at the top of the mind where disruption has brought bonanza for customers.

There are disruptions happening across financial services industry as well. Brokerage industry, for instance, is facing disruptions from discount brokers and off course full service brokers are responding with innovative offerings. One such recent offering is FreeIntraday Trading (FIT) from Kotak Securities which has waived off brokerage on non-delivery based trades for retail clients.

So how significant is this?
Considering the fact that an average intraday self-trader spends 220 rupees on brokerage per day and approx. 5000 per month only on cash segment, the savings are significant if you add-up the total intraday brokerage paid in all segments put together (cash, futures, options).

6 Important Things to Know About Fixed Deposits

Fixed deposits at banks are one of most convenient, safe and hassle-free investment instruments that also provide reasonable returns. With the advent of online banking these days, you can open FD online within few seconds and clicks.  The tenures in fixed deposits are fixed and usually provide higher return on higher duration. For example, a one-year deposit might fetch 6% per annum return while a 5-year deposit might fetch 7% per annum return depending upon the financial institution. Following are some of the key things to know about fixed deposits:

1.  The rate of return on fixed deposits is fixed. Unlike other high-risk investments like stocks, mutual funds, and debt funds, FD Interest rates aren’t dependent on fluctuating market rates.

2.   All banks provide flexible tenures to choose from. You can open an FD account for as low as 6 months to a maximum of 5 years.

3.   You can avail loan against your Fixed Deposits. Some banks provide up to 90% of the total FD value as personal loan. Unlike other unsecured personal loans, you get lower interest rates when you secure your loan with your FD as collateral.

4.   You can choose between cumulative and non-cumulative options. In cumulative fixed deposit option, interest is accumulated over the tenure of the FD and is paid only at the time of maturity. This helps you in getting a lump-sum amount on maturity. You can use a simple FD Calculator to know the amount you will receive on maturity. A non-cumulative FD works on the opposite principle. In these fixed deposits, the interest payments are made to the investor in a periodical, steady, and timely fashion. This makes it the most sought-after investment option by retired investors, or those who seek frequent cash flow.

Debit vs Credit cards – Which one is better for you?

While shopping you have the option of paying either through your credit card or your debit card. Though the difference might not appear, but there is a huge difference the way payment is processed behind the scene.

Debit vs Credit CardsPaying through Debit card is almost like paying cash and is usually without transaction charges. Payment though debit cards is also instant. On the other hand credit card transaction requires a signature, and is processed by the credit card company. The funds may or may not be immediately deducted from your bank account, depending on how the retailer handles their transactions. Some stores "batch" their credit transactions and send them at the end of the day. Unlike debit cards, to the merchant, processing a transaction as credit usually involves a credit card transaction fee to the major issuers, like Visa and Mastercard. 

Credit cards are mostly a better option while shopping online because of host of offers provided by issuer banks such as interest free EMI, zero transaction charges and higher reward points. It is also relatively safe as you are never liable for unauthorized charges, unlike debit transactions, which are the same as cash. It is advised to use your credit card while purchasing a flight ticket as many companies offer air miles for purchasing the tickets through credit card.

6 Benefits of Buying Term Insurance Online

People are increasingly getting aware of advantages & disadvantages of various life insurance products available in the market and carefully assess their personal needs before buying one. This is primarily happening in urban India because of variety of factors coming together such as easy access to internet, loads of educational content on blogs & forums and variety of products offered by many insurance companies.

One such theme which is widely getting popular these days is term insurance plan which, unlike conventional insurance schemes (endowment, money back etc. ), provides pure protection  and is solely taken with the intention of protecting the dependents in the family. There are many benefits of taking a good term insurance policy but the main benefit that comes with it is large coverage at affordable cost. Since term insurance is a pure protection product, companies are able to provide very competitive rates.

While the amount of suitable coverage varies from person to person based on their need, in general I recommend a sum assured of 10 to 12 times of one’s annual income. So if one is earning INR 5 lacs per year, the ideal term insurance he / she should take is INR 50 to 60 lacs. Off course the more the better but the premium also increases with the increase in sum assured and might not be suitable for the earning profile. You can use a term insurance calculator to check the premiums of various sum assured levels and decide what is best for you.  Here are the 6 benefits of buying a term insurance online:

1. High coverage at affordable premium: Term insurance plans provide a very high life insurance coverage vis-à-vis conventional insurance plans. For example for 30 year old person a typical endowment insurance policy with coverage of INR 50 lacs for 25 years would roughly cost INR 2 lacs in premium per annum while a typical term policy of same sum assured and tenure would cost less than INR 10000 per annum. Off course endowment policy provide some return on premiums invested but if the objective is pure protection and your investments are planned elsewhere, term insurance is the best option.

Model Portfolio Update

Updating Portfolio after 5 long months. As expected lot of stocks have become attractive for investment / trading and hence a sizable portion of cash got utilized in buying some undervalued names. 

Top 5 Largest One Day Drop in Dow Jones

Dow Jones witnessed largest single day fall of around 1200 points on Feb 2015 in its history which have wiped out many un-hedged short volatility traders who were making money easily since 2015. Sharp fall leads to sharp hike in volatility which feed on itself and leads to further decline in stock prices. After prolonged bull market of nearly 10 years, markets are finally showing signs of correction. Here are some of the biggest one day correction in dow jones in terms of absolute points. Off Course the biggest correction in terms of percentage was in 1987.

NSC or Tax Saver FD – Where should you Invest?

When it comes to tax planning there are variety of investment instruments yielding different returns, depending on the risk you are willing to take and the flexibility you desire from the instrument. As you know ELSS is a great investment avenue from tax planning perspective as it yields market based return.  which could be sometimes very high but is also subjected to volatility. This particular instrument is good for young professionals who have time by their side. Young investors are also able to withstand volatility better than elderly professionals as markets beat all other asset classes on a 10-year time period by a wide margin.

But if you are risk averse then Tax Saver Fixed Deposits, National Saving Certificates & Public Provident Fund are the popular choices in India. FD Interest Rates are generally lowest among these three but FDs offer quarterly compounding which results in somewhat similar yields. PPFs are similar to EPFs, with relatively lesser benefits, but available to all citizens of India irrespective of their profession. Since EPF or Employee Provident Fund is available to most salaried individuals, they can choose between Tax Saver FDs & NSCs for further investments from tax-saving point of view. In this article we will explore the similarities and differences between these two instruments.

Bitcoin bubble burst


Carnage in crypto currencies. Whats going on? Stay cautious. Stay on cash.

How to approach stock market and what to expect?

A must must watch video for all my dear readers who can understand Hindi. This video can change the way you approach stock markets and set your expectations right. Having the right expectation is the key ingredient for long term success in any business including stock market which is nothing but a business of businesses.

NSE NIFTY Yearly Return 1996 - 2017


Nse Nifty 50 index return from 1996 to 2017

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