Do you have an idea to invest in Gold ? Here is a smart, safe & secured option

India as a country always has an appetite for investing in gold. Although gold is seen as an investment option, people preference stays with ornament gold and at times they prefer investing in gold bars. The disadvantages which linger around such investment are:

• A sense of fear attached to holding physical gold due to security reasons
• The money invested does not earn any income and lies idle
• Additional amount spent on “Locker charges” for safeguarding the physical gold
• Additional spent on purchase of ornamental gold like “Making” & “Wastage” charges
• At the time of liquidation, we may lose some amount due to depreciation value (In case of ornamental gold)

There is still an option to invest in gold smartly negating all the above highlighted pointers. India’s finance ministry has come out with the subscription for “Sovereign Gold Bond”  4^th Tranche for FY 2016-17(series – 1). The subscription period is from 18^th July to 22^nd July. Key features of the scheme are:

Minimum Subscription: 1 gram

Maximum Subscription: 500 grams

Bond denomination: 1,2,5,10,50,100 grams

Rate of Interest: Fixed rate of interest at 2.75% on the initial amount invested

Forms of Gold Bonds: Certificate holding & De-mat format

Redemption Price: The price is fixed at the price of gold of 999 purity as published by the Indian Bullion and Jewellers Association Limited of previous week

Issuance Date: The bond shall be issued at 5^th Aug 2016

Premature Redemption: This facility can be availed after 5 years

Where to Buy: Scheduled Commercial Banks, designated post office & Stock Holding Corporation of India Ltd

Commission Charges: One rupee per hundred of the total value of subscription

Tax Benefits: Capital gains tax arising on redemption to an individual is exempted

Tradability: The date of commencement of trading in respect of Bonds issued will be notified by RBI

Additional benefits to the country:

1. The amount invested in gold is in the form of certificate or De-mat format which is tradable. As the amount invested is not lying idle, it increases the money flow
2. Gold is the 2^nd highest imported product in India. If more gold is purchased through bonds, then it leads to reduction in imports this will reduce our trade deficit
3. Trade balance leads to Rupee value being appreciated

Refer to the link for more details : Sovereign Gold Bond Scheme

National Toll free number : 1800 1800000

The physical gold which we purchase, lead to larger impact to our economy. Next time when you set out to purchase gold make it a balanced one. Only need based investment can be in ornamental form. Any amount channelized towards gold in the form of investment can be through Gold bonds.

THINK WISELY,  INVEST RESPONSIBLY,  LIVE HAPPILY!!!

Easy ways to submit your IT returns all by yourself- Try it out

As the deadline to submit IT returns is fast approaching there is a lot of rush in submitting IT returns. The last date for submitting this year’s returns is July 31^st. Most of them suggest detailed step by step information in their blog to submit IT returns but I would like to keep it simple in mine. According to me, there are only 2 ways of submitting your IT returns. First option is to take a professional support and the second one being “Do it yourself”

Our IT department has made quite a few changes , since the inception of online submission of IT returns and these days the forms has been made more simpler. If you have a registered login with Income Tax Website then use the same to file your returns. Some people find the information provided in this site is not detailed and self explanatory especially for the first timers. To those people we have other websites which offers this service for free .

One such website which offers IT returns services is Clear Tax. It is a product of Defmacro software Pvt Ltd. All you have to do is open your account with your email ID and password and within a minute you are ready for submitting your IT returns through Clear Tax. The moment you get registered with Clear Tax , you will get a confirmation to the email ID which you have used as User Name. The email has link for step by step guide to e-file income tax returns which is very descriptive along with pictorial representation.

All you need to have to get started is the copy of your Form 16. If your Form 16 is in a PDF format , the website has an option to upload your Form 16. This will reduce your work by half as the basic information will be pulled from your Form 16. If Form 16 is available in hard copy then you have to fill in all the details manually.

After getting into the main window you have 5 sections to be filled in. They are:

•  Personal Info
•  Income sources
•  Deductions
•  Taxes Paid
•  Tax filing

All of the above sections have detailed comments near the header which will guide you to easily fill in the required information. The site also provide a download option to check the ITR preview . Also the final section has the summary of your Personal Info, Income, Deductions and Taxes. These options helps you to quickly verify the details submitted.

The site also has a link which takes you to e-filing. Hence you need not navigate out to separately do this. The site is ISO 27001 certified & SSL Certified site. So you can feel confident and safe about the information which you enter for filing your IT returns.So why to wait, get started at the earliest.

Clock is ticking and the deadline is just a few days away.

Note : As per section 139(1) of the Income Tax Act, 1961 in India, individuals whose total income during the previous year exceeds the maximum amount not chargeable to tax, should file their income tax returns (ITR). The above article is applicable to all such individuals

Courtesy : Clear Tax

Do you know your “Credit score”? - A measure for your credit grants

CIBIL was founded in August 2000. CIBIL stands for Credit Information Bureau (India) Limited. This is India’s first credit information company which maintains the records of individual’s payments against the loan taken and credit card transaction. Based on the records a credit score is arrived. This forms the basis for all financial institutions to decide on the loan grant. Credit scores normally ranges from 300 to 900. As per a survey 79% of the loans are approved for individuals whose score is greater than 750

Courtesy : nextadvisor.com

Now let us see what does various credit scores denotes to us.

Credit Score 300 – 600:

A score in this range means there are unpaid loans and write off in the past. Default in payments would have been done by the individual on multiple occasions. This is considered as highly risky by financial institutions and loans would be rejected with such low credit scores.

Credit Score 600-750:

This score suggest that there were few delayed payments in the past while settling payments. This is a moderate credit score and financial institutions would be extra cautious while providing loans on such credit scores. They make ask for either a guarantor or surety against the credit offered. Sighting the low credit scores the banks and other financial institutions would spike their interest rates

Credit score 750 -900:

A score in this range is considered a best score for offering loans. This score denotes that the past payment history is good. In fact most of the cold calls are done by banks to customers who fall in this bracket. So next time when you receive a cold call from a financial institution, then you can safely presume that you have a better credit score. The banks offer their best interest rates for individuals with high credit scores. The individuals also get an opportunity to negotiate on other fees like documentation charges, processing fee, pre-closure charges etc.

Courtesy : eponafs.com

The above summary makes it more interesting for you as a reader to know what your credit score is. At the time of inception of CIBIL such services where not offered to the public. Now an individual can know his/her exact credit score from CIBIL by paying a nominal fee. There are other avenues to know your credit score as well.

One such link is given by me in this article below, which will help you in knowing your credit score for free. The scores reflected will be a closest match to the actual credit score. Even the values are not exact this will give an individual an indicative number on where he/she stands when it comes to credit score and make amendments to ensure the credit score is improved in the future. I tried to arrive at my credit score and it was very close to the actual one.

Click this link to know your credit score

Why to wait ??? Go ahead and check your credit score for Free!!!

Can Banker’s be penalized for their mistakes? - “An awareness campaign” with a personal experience to share.

Banks are lifeline for financial system in a country and it is governed by various laws. Whilst I appreciate all the services which they offer, at times I’m disturbed the way we are treated by the banks. Any flaw from the customer side is immediately charged to the customer in the form of interest /late payment/penalty etc., but who would penalize the banks for an error committed by them? Do we have an open window system where common public can reach out to raise our concerns against such flaws and claim compensation?

The article narrates a real life incident which I have undergone with India’s largest private sector bank.  My uncle who got retired very recently invested his retiral benefits in Fixed Deposit (FD). He promptly submitted Form 15G (The form is to declare that the total interest income for the year is less than minimum exemption limit) at the time of investing his money in FD in order to ensure that his little income doesn’t attract any TDS.

As he being new to such banking norms, he failed to collect the acknowledgement of the Form 15G submitted with the bank. To his surprise after 3 months he got his interest statement from the “Leading Private Sector Bank” along with Tax Deducted at Source (TDS) deductions. He was helpless and he brought this issue to my notice.

My uncle and I visited the branch to enquire the rationale behind the deductions. On further investigation we happen to know that the bank has conveniently ignored his Form 15G and hence TDS was deducted on his interest income. As the response was not up to the expectations, I escalated the issue to the Bank Manager. The Bank manager promised us to look into the issue and help us in getting the money back.

My uncle was made to follow up on this issue 4 times with the Bank Manager and after 2 months he got his money refunded. Now, who would pay for the loss for the bank’s negligence? Given the age he was made to travel from pole to pillar for his refund which put him under severe turmoil and also the money refunded was not paid with interest.

There should be an investor campaign on such issues to raise awareness. An easily accessible grievance redressal forum is required. A law to be framed to ensure such negligence is compensated by the bank instantly. Will all these come to light?

Let’s voice it out!!!

How to make your home loan cheaper - 4 must to know points

Building a dream home lingers in every person's mind. The very thought of thinking about the finance which is required to built it, stop us from taking further steps. Many people won't proceed and bury the thoughts in their dream land. These days there a lot of banking institutions and NBFC (Non Banking Financial institutions) ready to offer loans. The world is running at knot speed and the financial institutions who understood the lack of time of a potential customer started offering instant loans (These days loan sanctions are faster than coffee preparations :-))

Everybody acknowledge the fact that the loans reach them faster with less hassles. In the process of getting a smoother service during loan process we fail to understand our home loan better. Many amongst us fail to understand on how to negotiate on our home loan. This article deals about the 4 must to know points about your home loans.

Source of funds:

In order to have a better bargain we need to know the source of funds. There are 2 channels , the first being banks eg: ICICI bank, Indian Bank, Corporation Bank, AXIS bank etc.. governed by RBI and the second being Housing Finance Corporations(HFC) eg : LIC Housing Finance Limited, HDFC Ltd etc.. governed by National Housing Bank.

Interest Rates:

Effective July 1st 2010, RBI issued guidelines to make loan offerings based on Base Rates. This was done keeping in mind the interest of people(especially the existing borrowers who payed more compare to new borrowers). Since then banks follow the base rate to offer loans.

Effective 1st April 2016, RBI suggested to offer loans based on MCLR(Marginal Cost of funds based Lending Rate).MCLR is the average cost of funds for a bank. Bank should be replacing the Base Rate system with MCLR. SBI was the first bank to introduce MCLR based home loans for new borrowings. The advantage of this system ensures that the home loan is not increased immediately once the Repo rate is increased by RBI.

Housing Finance corporations (HFC) follow the BPLR or RPLR to offer loans . This is called Benchmark Prime Lending Rate(BPLR) or Retail Prime lending Rate(RPLR)

Repo Rates:

The rate at which RBI lends bank for short term is called Repo Purchase Rate. If RBI borrows money from the bank the rate at which it borrows is called Reverse Repo Rate. If the repo purchase rate is increased by RBI then the cost of borrowing becomes costlier, whereas if this rate gets reduced then loan becomes cheaper due to lower cost of funds. Hence repo rate plays an important role in rate of Interest at which loans are offered.

Spread: 

Spread is an important term in fixing your home loan rate of interest. It is the difference between the Base Rate or RPLR and your actual rate of interest. Banks call this difference as  "Mark Up"  and HFC call it as "Discount". For example ABC bank offers home loan at 10.75% ( Base rate/MCLR 9.75% and mark up of 1%) & HFC offers home loan at 10.75% ( RPLR @ 16.5% and discount at 5.75%). 

As we know that repo rate has direct impact on the home loan rate of interest, let us assume an example, give the above scenario the repo rate is reduced by RBI by 0.25%. Then ABC bank will  offer home loan at 10.5%( Base rate/MCLR 9.5% with a mark up of 1%). HFC will offer at 10.5% (RPLR @ 16.25% and discount at 5.75%)

At  every change in repo rate the bank or HFC does not instantly change their base rate or RPLR. Also the spread varies from one customer to other. This is the prime reason for difference in rate of interest between 2 customers of the same bank or even with other banks. 

Steps to do:

You need to understand your spread for the home loan offered.Negotiate with your financial institution to have a lower spread. A better negotiation will help you lower rate of interest. After all , home loans are long term commitments and even a minor change in the interest rate will help us save a lot.

Go Ahead, Negotiate your Spread & Reduce your Burden !!!!

5 effective ways to become richer with your credit card

There is always a myth which spreads around that credit card financially burdens an individual. It’s never seen as a boon rather treated as a bane. I would like to bring in a different perspective to this opinion, as I always treat credit card as a blessing in disguise. The plastic money (credit card) never burdens the individual, rather it’s the individual’s financial mismanagement which disrupts the fame which the credit card suppose to carry.

In the article below, I would like to cover on the key things to know about credit cards and the financial discipline that one need to follow

Things to know about your card:

1. Card Features: A credit card offered by any financial institution comes with different variants. Based on the individual ability to repay the credit limit will be fixed. The rate of interest will also vary based on cards offered. Also the rewards procedures differ from one card to another.

Financial discipline: Before signing on the dotted lines of the credit card application form, an individual need to understand the terms and conditions which applies to the credit card to be owned by the individual. The individual should spend some time on reading the disclosures statements to understand his/her credit card better.

2. Billing & Payment dates: The billing cycle start & end date and the payment due date are the 3 important dates to know about a credit card. The billing cycle is normally a monthly cycle and purchases during this time frame will be sent out in a statement for payment to be made by the credit card user. “Payment due date” is the date by which the card holder should make his/her payment for the previous billing cycle.

Financial Discipline: Knowing the billing cycle should help one to plan all their expenses especially during the first week of the billing cycle. This gives the card holder a credit period on an average of 30 - 40 days. Remembering the Payment Due date will help one plan their finances to pay the outstanding amount shown on the credit card statement.

It is always advisable to pay the total outstanding in full. Any partial payment will attract interest for the residual amount. We need to bear in mind that credit card interest rate is the highest lending rate amongst all financial instruments available. So due care to be taken while settling the bills.

3. EMI Options: Any purchase made can be converted into EMI’s. These days an immediate notification from the bank pops up on the feasibility to convert an outstanding amount into an EMI. If this conversion does not attract higher interest rates and the expenditure made is the need of the hour then it will be a good idea to opt for EMI.

Financial Discipline: A card holder should know ones monthly expenditure capability. Any spend made should take into consideration the EMI factor and spend to be planned for the remaining capacity. For example if an individual had a monthly capability of up to Rs.10,000 and out of which a pre existing EMI runs for Rs.2,000 , then the card holder should restrict the expenditure for the billing cycle within Rs.8,000

4. Credit card statement: Generally the credit card statement is generated on a monthly basis and this will be a reflection of all the expenditure made & payments done during the previous billing cycle.

Financial Discipline: On receipt of the monthly statement perform reconciliation on all the entries to cross verify whether whatever expended is getting reflected. Any payment made during the past billing cycle should be duly deducted. EMI pertaining to the specified period only to be displayed. In case of any discrepancies reach out to Customer Care before making the payment

5. Reward Points: Most financial institutions which offer credit cards provide rewards for the usage of their cards. These rewards are converted into points and displayed cumulatively in the credit card statement.

Financial Discipline: Never let these points go unattended. The points accumulated can be redeemed against products or services as per the catalog of rewards offered by the financial institution. Once sizeable points have been accumulated and if it can be redeemed against a product or service of our choice then the decision should not be delayed and immediately acted upon.

The financial discipline listed above helps one to lead an organized credit life. Debt will be completely avoided and even if arises, it is carefully charted out, so that it never becomes an undue burden. Careful planning of expenditure will have an elongated credit period on our cards. Managing funds through credit cards helps one to have the money retained in their own account for a longer period and in turn helps gain interest. Hope the article would have changed your view on credit card management and help you effectively manage them going forward.

Efficiently manage credit health, sufficiently increase financial wealth !!!!