1. Am i waiting for the NEW car for the last few weeks or months ?
2. Is there anything i should do on the delivery day or even before registration the car
If YES, then this blog is exclusively for you.
As this is the most expensive machine you are buying in your life time, its better to take some precautions before driving away your brand new car. Here are some of the tips.
1. Before Registration:
Once the car is registered in your name, its your liability. So i strongly recommend visiting the dealerships stockyard and inspect your car prior to registration. Check the car manufacturing month, year, especially when buying in the first quarter of any year. You can ask for the "Form 22" certificate (issued by the manufacturer).
Also check for any repair jobs, body damage. There are always chances for damage to some cars in transit. Also check the tax calculations on the dealership invoice. Many Indian dealerships used to overcharging for RTO lifetime tax.
2. Preparations:
2.1. Fix the date of delivery of your car and better reach the showroom only after the car has been ready. If we have a preference for a particular day / time (for auspicious reasons), inform the sales person.
2.2. Daylight: Its better to accept delivery in daylight, since dents may not be visible in the dark. Also we may not get good service in the evening since dealership agents are in a hurry to wrap the day up.
2.3. Documentation: Take the quotation documents to check whether all accessories that are offered are installed. Also take the advance receipt and remember to deduct that before the final settlement.
2.4. Payments: If any payment formalities are to be completed, take enough cash / credit card.
2.5. Third Person: It’s better to take a relative / friend who owns a similar car for suggestions, observations and comments.
2.6. Memories: Take a camera and remember to take snaps of you big moments.
2.7. Music: Carry a CD to check the working of the stereo.
2.8 Minimum four lemon to put under each the tyre just before the first drive, agarbatti, match box etc.
3. At the Showroom:
3.1 Get a Demo - Its the salesperson's job is to give you a full demo of your brand new car's features and how each one operates. Ask him to demonstrate the car fully, top to bottom, in order to understand how everything works on the vehicle. Get familiarized with switches, wiper operations, AC, Horn, Fuel indications, Hood parts, Stereo, internal lighting, seat adjustments etc
3.2 Visit the Service Department: Meet the Sales Manager and Service manager and also get familiarize with the service center facilities.
4. Final Inspection:
4.1 Inspect the car again: Something can happen between the pre-registration inspection and today. It’s best to walk around the car and confirm that the car is clean. Look for any defects in lights, water in lights, signs of repair work / damage such as paint difference, dents etc. Even the interiors should be super clean.
4.2 Check that all lights and electric accessories are working fine.
4.3 Confirm that all the accessories you are offered/ordered are fitted on the car.
4.4 Check that the spare wheel is fresh. And that all related tools (spanner, jack, jack lever) are present.
4.5 Check Wipers, floor matting, first-aid kit and hazard sign board are present.
4.6. Check the odometer reading. It should be less than 100 km.
4.7. Ensure that there is enough fuel in the car. At least to get you to the nearest petrol pump. Also most showrooms used to give FREE fuel coupon, ask whether they have such an offer.
4.8. If the car is already registered cross check your car's registration number on the R.C. Book, with the number plate.
Documentation:
Read the following paperwork carefully. There are chances for spelling mistakes.
1. Invoice. (Check that the Chassis and Engine number of the car matches with the Invoice).
2. Sales certificate.
3. All payment receipts.
4. Registration book or temporary certificate.
5. Insurance: Mostly they will issue a temporary Insurance if the car is not registered. Ensure that coverage is valid and active.
6. Original Pollution Under Control [PUC] certificate. This is valid for one year.
7. Owners Manual.
8. Duplicate Keys.
9. Original warranty with all relevant dealership stamps.
10. Extended Warranty (If opted for).
11. Warranty of third party items such as battery, tyres etc if available.
12. Roadside assistance Contact details.
13. Business cards of dealership and service personnel.
Don't forget to say Thanks to everyone. Drive Safe. Happy Driving.
Thursday, September 16, 2010
Wednesday, September 15, 2010
Buying a NEW Car ?
The customer is King.
The automobile industry is getting more competitive day by day and now we can get all the international brand cars in a showrooms near by. Now if we just start thinking about buying car, we can expect a call from a car dealer. As this is the second most expensive purchase that most of us going to do in our life, let me just list some of the forethoughts and road map that we take while doing a car purchase.
1. Mind Work
1.1 Budget.
Do some research about every brands value depreciation by looking at used car value in our city. Also try to collect information about fuel efficiency, service costs and insurance premiums. Also understand the terms EMI, Auto Loan, things needed for an auto loan, Banks with lowest interest rate, Floating Vs Fixed interest rate etc.
As per financial experts one can set the car budget equivalent to ones annual salary. Also its better to plan and save enough money say 50% or more as down payment before buying a car. Keep in mind CAR is a liability, 25% of its value will be reduced on the next day of the delivery. Another 10-20% will be reduced every year.
1.2 The right car:
Once the budget is ready we need to decide what sort of car best meets our needs. If our family is of four members there is no need to buy a large MUV like the Toyota Innova. Also consider how long we plan to keep our car and how our needs may change with time, kids can make a big difference here. Its always better to keep a new car for atleast for 8 to 10 years. So analyze our needs before we decide on a car.
1.3 Diesel or petrol:
This can be decide based on our future running per day. If we are doing more than 70 km per day diesel engine will be suitable and other wise chose only petrol engine. This is because Diesel engines are usually 1 lakh + more costly than petrol engine. Considering this and the difference in petrol and diesel price can be compensated in 3-4 years if the daily running of the car is more than 70 km.
2. Test Drive
2.1 Do it yourself:
Never buy a car jsut on our relatives opinion, even if it is that of an automotive expert. What is right for someone else may not be right for us; check details like the comfort of the driving position, engine responsiveness, boot space. A one-kilometer test drive may not be enough, go for a comprehensive test drive in traffic, on open roads and up and down hills.
Check turning radius, visibility and cornering efficiency etc. Even if you are not inclined toward any other choices, just do a test drive so that you may not regret in future.
2.2 Take a second opinion:
It can be valuable to bring a friend who own any car [better a different brand car] with you on the test drive. They can offer unbiased comments or opinions that will help you in making the right decision.
2.3 Everything in writing:
It’s a common practice that the dealers marketing agent to promise discounts, free accessories etc, but not deliver on the delivery day. Make certain that every commitment made by the dealer is written down and signed on their letter-head. The agent usually have a quota for free accessories for each customer. If we are smart we can get the maximum discount and accessories.
Its better to make then write the cost of all free accessories and ask for that much cash discount. With that discount you can select better accessories from a good accessories shop.
3. Fix the Deal
3.1 Shop around:
For the best deal, nothing can replace comparing one offer against another. Do research on dealers discounts, manufacturer price cuts, free accessories etc. You should also consider calling Sales Agents from different dealers for a quote, they work in a close collaboration with dealerships and survive on fringe margins.
3.2 Buy insurance ourself:
Dealerships got fat commissions on every insurance policy sold. Don't buy insurance coverage from the showroom, instead, shop around and take quotes from 3 - 4 insurance companies / agents. You stand to save anywhere between 20 - 40% on insurance by shopping yourself and bypassing the dealer here.
3.3 No Claim Bonus (NCB):
The NCB of our old car can be utilized while taking insurance for the new car. The old car must be sold or transferred to make this possible, this will save thousands on insurance premium. We can use the NCB even for any succeeding insurance premium but only once. So don't rush to sell your old car at a lower price to claim this benefit.
3.4 Exchange Bonus:
Once you have sell or exchanged your old car, just keep a copy of old RC book and New RC book and apply for exchange bonus. You can get this benefit within 6 months from the purchase of the new car. This will also save few thousands.
3.5 Check before registration:
You must do a pre-delivery checking before sending you car the Regional Transport Authority for registration. Always check for any dents, scratches, overall working etc and also note down the engine number. Once it is registered its your liability. Also its better to make the dealer to complete the registration formalities as doing that ourself will be a big headache. You can see a detailed Pre delivery check list at http://mytipstowardswealthy.blogspot.com/2010/09/pre-delivery-check-list-for-your-new.html
3.6 Accessories:
If you are buying accessories from showroom always compare prices between the showroom and accessories shop. Some dealerships used to charge 2-3 time more prices. Also verify the quality and brand of accessories.
The automobile industry is getting more competitive day by day and now we can get all the international brand cars in a showrooms near by. Now if we just start thinking about buying car, we can expect a call from a car dealer. As this is the second most expensive purchase that most of us going to do in our life, let me just list some of the forethoughts and road map that we take while doing a car purchase.
1. Mind Work
1.1 Budget.
Do some research about every brands value depreciation by looking at used car value in our city. Also try to collect information about fuel efficiency, service costs and insurance premiums. Also understand the terms EMI, Auto Loan, things needed for an auto loan, Banks with lowest interest rate, Floating Vs Fixed interest rate etc.
As per financial experts one can set the car budget equivalent to ones annual salary. Also its better to plan and save enough money say 50% or more as down payment before buying a car. Keep in mind CAR is a liability, 25% of its value will be reduced on the next day of the delivery. Another 10-20% will be reduced every year.
1.2 The right car:
Once the budget is ready we need to decide what sort of car best meets our needs. If our family is of four members there is no need to buy a large MUV like the Toyota Innova. Also consider how long we plan to keep our car and how our needs may change with time, kids can make a big difference here. Its always better to keep a new car for atleast for 8 to 10 years. So analyze our needs before we decide on a car.
1.3 Diesel or petrol:
This can be decide based on our future running per day. If we are doing more than 70 km per day diesel engine will be suitable and other wise chose only petrol engine. This is because Diesel engines are usually 1 lakh + more costly than petrol engine. Considering this and the difference in petrol and diesel price can be compensated in 3-4 years if the daily running of the car is more than 70 km.
2. Test Drive
2.1 Do it yourself:
Never buy a car jsut on our relatives opinion, even if it is that of an automotive expert. What is right for someone else may not be right for us; check details like the comfort of the driving position, engine responsiveness, boot space. A one-kilometer test drive may not be enough, go for a comprehensive test drive in traffic, on open roads and up and down hills.
Check turning radius, visibility and cornering efficiency etc. Even if you are not inclined toward any other choices, just do a test drive so that you may not regret in future.
2.2 Take a second opinion:
It can be valuable to bring a friend who own any car [better a different brand car] with you on the test drive. They can offer unbiased comments or opinions that will help you in making the right decision.
2.3 Everything in writing:
It’s a common practice that the dealers marketing agent to promise discounts, free accessories etc, but not deliver on the delivery day. Make certain that every commitment made by the dealer is written down and signed on their letter-head. The agent usually have a quota for free accessories for each customer. If we are smart we can get the maximum discount and accessories.
Its better to make then write the cost of all free accessories and ask for that much cash discount. With that discount you can select better accessories from a good accessories shop.
3. Fix the Deal
3.1 Shop around:
For the best deal, nothing can replace comparing one offer against another. Do research on dealers discounts, manufacturer price cuts, free accessories etc. You should also consider calling Sales Agents from different dealers for a quote, they work in a close collaboration with dealerships and survive on fringe margins.
3.2 Buy insurance ourself:
Dealerships got fat commissions on every insurance policy sold. Don't buy insurance coverage from the showroom, instead, shop around and take quotes from 3 - 4 insurance companies / agents. You stand to save anywhere between 20 - 40% on insurance by shopping yourself and bypassing the dealer here.
3.3 No Claim Bonus (NCB):
The NCB of our old car can be utilized while taking insurance for the new car. The old car must be sold or transferred to make this possible, this will save thousands on insurance premium. We can use the NCB even for any succeeding insurance premium but only once. So don't rush to sell your old car at a lower price to claim this benefit.
3.4 Exchange Bonus:
Once you have sell or exchanged your old car, just keep a copy of old RC book and New RC book and apply for exchange bonus. You can get this benefit within 6 months from the purchase of the new car. This will also save few thousands.
3.5 Check before registration:
You must do a pre-delivery checking before sending you car the Regional Transport Authority for registration. Always check for any dents, scratches, overall working etc and also note down the engine number. Once it is registered its your liability. Also its better to make the dealer to complete the registration formalities as doing that ourself will be a big headache. You can see a detailed Pre delivery check list at http://mytipstowardswealthy.blogspot.com/2010/09/pre-delivery-check-list-for-your-new.html
3.6 Accessories:
If you are buying accessories from showroom always compare prices between the showroom and accessories shop. Some dealerships used to charge 2-3 time more prices. Also verify the quality and brand of accessories.
Unique Identification Authority of India [UIDAI]
As per Nandan Nilekani, the chairman of UID project, UID is not just a number, but it is an identity.
1. What does this unique identification means ?
2. How the society is going to be benefited from this project ?
Within a few weeks we can expect the first set of unique identification numbers to be released. Then in the next 4 to 5 years UID project is supposed to come up with 600 million identifications.
Its around 13 months since they had announced for the first release and they had promised the first release within 12 – 18 months. Hence we can say the project is running as per the schedule.
The budget for this year is around 1900 crore and the overall budget is about 3000 crore for the first 10 million customers. As per Nilekani this is great value for money, because it is giving every Indian an acknowledgement of their existence by the state and this has huge social benefits.
We can consider the UID as a mobile identity. The advantages of UID can be like the advantages of mobile phone over land line. Here every Indian's identity can be verified at any place he is residing. Any body who has the UID will be allowed to open a no frills bank account and this may be sufficient for KYC [Know your client] for lumpsum investments in Mutual Funds too.
Monday, September 13, 2010
Virtual Stock Market Games
Do you have any plans to taste the stock market ?
YES ?
Then its better to know the bitter and sweet of investing our money into stock market through Virtual Stock Market Games. This help us
1. To know the concept of stock markets
2. How dangerous speculations can be.
3. How to pick a good company at the right price.
Here are the list of some of the Virtual Stock Market Games I came across.
1. http://sharebaazi.economictimes.indiatimes.com/
2. http://marketwiz.rediff.com/
3. http://moneybhai.moneycontrol.com/
First of all we need to register in one of the Virtual Stock Market games website. Sharebazzi used to give 2 lakh rupees, while moneybhai gives 25 lakhs virtual money for us to trade.
Now do some research by checking winners portfolio and gain some knowledge about companies and sector allocation strategies. At the beginning stage try selecting companies which you are more familiar . Its better not to invest in too many companies because gains from some companies will be nullified by losses from other companies.
Just try to select 4 good companies which are selling on loss. Never sell a company when it is on loss. Also dont be too gready. Set yourself an upper marging, say Rs10. When ever the stock you are holding crosses the upper margin sell it if you are interested in day trading otherwise hold good stocks for a long time you can see its growing.
These exercises are just to get rid of our fear from stock market. Also keep in mind don't make this as an addict. Just get familiarize with these games and gain some confidence in equity investment and also learn the danger of doing speculations in stock markets.
My advice is if you are very much confident in virtual stock market investing then only you should go for the real stock market investment using demat account. Till now I am not confident in direct stock market investment or Day trading. I always believe in Mutual Funds.
YES ?
Then its better to know the bitter and sweet of investing our money into stock market through Virtual Stock Market Games. This help us
1. To know the concept of stock markets
2. How dangerous speculations can be.
3. How to pick a good company at the right price.
Here are the list of some of the Virtual Stock Market Games I came across.
1. http://sharebaazi.economictimes.indiatimes.com/
2. http://marketwiz.rediff.com/
3. http://moneybhai.moneycontrol.com/
First of all we need to register in one of the Virtual Stock Market games website. Sharebazzi used to give 2 lakh rupees, while moneybhai gives 25 lakhs virtual money for us to trade.
Now do some research by checking winners portfolio and gain some knowledge about companies and sector allocation strategies. At the beginning stage try selecting companies which you are more familiar . Its better not to invest in too many companies because gains from some companies will be nullified by losses from other companies.
Just try to select 4 good companies which are selling on loss. Never sell a company when it is on loss. Also dont be too gready. Set yourself an upper marging, say Rs10. When ever the stock you are holding crosses the upper margin sell it if you are interested in day trading otherwise hold good stocks for a long time you can see its growing.
These exercises are just to get rid of our fear from stock market. Also keep in mind don't make this as an addict. Just get familiarize with these games and gain some confidence in equity investment and also learn the danger of doing speculations in stock markets.
My advice is if you are very much confident in virtual stock market investing then only you should go for the real stock market investment using demat account. Till now I am not confident in direct stock market investment or Day trading. I always believe in Mutual Funds.
Thursday, September 9, 2010
How to Start Mutual Fund investment ?
Many of my friends have investments in ULIPs, Pension plans, Life insurance endowment plans, Chit funds, FDs etc. I have a lot of online friends too which are investing in Mutual Funds, Stocks, ETFs, etc. Why is this difference in approach towards investmets?
I think the difference is because there are many agents and even our own relatives who are forcing us to invest in ULIPS, Pension plans and endowment policies, because they are getting hectic commission. But no one is there to direct us towards mutual funds since SEBI banned the entry load for MFs. If you are a fresh investors in Indian Mutual fund, then this article is exclusively for you.
1. How to Select a Best Mutual Fund ?
The first step of buying a mutual fund is to select a good mutual fund scheme, which itself is a tedious job. If you are not able to take a calculated decision, take the help of a good financial advisor. For others my advice is to visit Valueresearchonline.com website. This website is considers as an unbiased mutual fund rating agency.
a.First choose open ended funds
b.Select equity diversified category
c.Select 3/5 year return.
Now we can get a list of the Top 10 funds. From that select the 4 or 5 star rated mutual funds. The good thing here is that these people have done all the hard work to rate the best performing mutual fund. They are rating the funds based on past performance, performance with benchmark, performance with peers, fund manager, advanced portfolio stats and many more. So we don’t have to analyze all the above factors.
2. How to Buy Mutual Funds DIRECT + Online ?
We need to buy and sell MFs through the fund houses like HDFC, Reliance, DSP BR, IDFC, Birla Sun life, BNP Pariba etc. They are called AMCs [Asset Management Company]. Just search the web via Google and find out the website of the selected fund house or AMC.
Now download the MF application forms like
a. SIP form
b. ECS form
c. Online PIN request form etc.
Fill up those forms completely. Don't leave any questions blank, fill up PAN number, Nominee, Bank account number, E-mail ID, Signatures, and even the Bank IFSC code, SIP start date, end date, office telephone numbers etc.
SIP Registration date or SIP starting date = form submitted date + 30 working days.
Also DONT forget to mention the Broker code as DIRECT on top of the SIP enrollment form. If any of your friends have a broker code, put that code so that they will get a trail commision.
Most fund hose have tie ups with CAMS or Karvy which are mutual fund distribution house. In that case you go to the nearest CAMS/Karvy branch and submit the
a)Duly filled Application forms.
b)Crossed check for the first installment
c)Self attested copy of PAN card
Other wise go to the fund house directly. They will immediately return back an acknowledgement receipt. Now with in few weeks you will get an acknowledgement from the fund house with an alloted folio number, and online PIN number.
Don't worry the above steps are just one time hard work with respect to a fund house. With the folio number and PIN number you can purchase / redeem any number of funds with the fund house just by the comfort from our home. Here the main advantage is that we dont have to pay any commision to any broker or Bank for the monthly SIPs and no need of any demat account.
3. How to Buy Mutual Funds Broker + Online?
I am not joking, till now I dont have an online demat account. I always use the offline method to get folio number and then enjoy the online benefits. But now a days, most of the investors have an online demat account and they can buy the mutual funds online. Here are the list of some of the online demat services.
a. Sharekhan,
b. Indiabulls,
c. ICICIDirect,
d. Kotak Securities,
e. SBI Online Demat,
f. Motilal Oswal
Here we can place the MF purchase order, start SIP, stop SIPs online. The major disadvantage here is that we have to pay commission for even monthly SIPs to the broker. Some brokers may avoid commission for high volume investments. So for small investors the offline method will be more suitable.
I think the difference is because there are many agents and even our own relatives who are forcing us to invest in ULIPS, Pension plans and endowment policies, because they are getting hectic commission. But no one is there to direct us towards mutual funds since SEBI banned the entry load for MFs. If you are a fresh investors in Indian Mutual fund, then this article is exclusively for you.
1. How to Select a Best Mutual Fund ?
The first step of buying a mutual fund is to select a good mutual fund scheme, which itself is a tedious job. If you are not able to take a calculated decision, take the help of a good financial advisor. For others my advice is to visit Valueresearchonline.com website. This website is considers as an unbiased mutual fund rating agency.
a.First choose open ended funds
b.Select equity diversified category
c.Select 3/5 year return.
Now we can get a list of the Top 10 funds. From that select the 4 or 5 star rated mutual funds. The good thing here is that these people have done all the hard work to rate the best performing mutual fund. They are rating the funds based on past performance, performance with benchmark, performance with peers, fund manager, advanced portfolio stats and many more. So we don’t have to analyze all the above factors.
2. How to Buy Mutual Funds DIRECT + Online ?
We need to buy and sell MFs through the fund houses like HDFC, Reliance, DSP BR, IDFC, Birla Sun life, BNP Pariba etc. They are called AMCs [Asset Management Company]. Just search the web via Google and find out the website of the selected fund house or AMC.
Now download the MF application forms like
a. SIP form
b. ECS form
c. Online PIN request form etc.
Fill up those forms completely. Don't leave any questions blank, fill up PAN number, Nominee, Bank account number, E-mail ID, Signatures, and even the Bank IFSC code, SIP start date, end date, office telephone numbers etc.
SIP Registration date or SIP starting date = form submitted date + 30 working days.
Also DONT forget to mention the Broker code as DIRECT on top of the SIP enrollment form. If any of your friends have a broker code, put that code so that they will get a trail commision.
Most fund hose have tie ups with CAMS or Karvy which are mutual fund distribution house. In that case you go to the nearest CAMS/Karvy branch and submit the
a)Duly filled Application forms.
b)Crossed check for the first installment
c)Self attested copy of PAN card
Other wise go to the fund house directly. They will immediately return back an acknowledgement receipt. Now with in few weeks you will get an acknowledgement from the fund house with an alloted folio number, and online PIN number.
Don't worry the above steps are just one time hard work with respect to a fund house. With the folio number and PIN number you can purchase / redeem any number of funds with the fund house just by the comfort from our home. Here the main advantage is that we dont have to pay any commision to any broker or Bank for the monthly SIPs and no need of any demat account.
3. How to Buy Mutual Funds Broker + Online?
I am not joking, till now I dont have an online demat account. I always use the offline method to get folio number and then enjoy the online benefits. But now a days, most of the investors have an online demat account and they can buy the mutual funds online. Here are the list of some of the online demat services.
a. Sharekhan,
b. Indiabulls,
c. ICICIDirect,
d. Kotak Securities,
e. SBI Online Demat,
f. Motilal Oswal
Here we can place the MF purchase order, start SIP, stop SIPs online. The major disadvantage here is that we have to pay commission for even monthly SIPs to the broker. Some brokers may avoid commission for high volume investments. So for small investors the offline method will be more suitable.
Wednesday, September 8, 2010
Electronic payment modes
With the increasing popularity of Internet banking the various electronic payment modes are gaining huge popularity. The most popular modes are
1.RTGS
2.NEFT
3.ECS
RTGS - Real Time Gross Settlement
As the name indicates we can transfer funds in the real time. This is the most speediest mode of funds transfer currently available. However, the system is meant mainly for high-value transactions.
The minimum amount prescribed is 1 lakh. You have to pay small charge for this service.
For fund transfers between 1 lakh and 5 lakh, the fee is 25 per transaction. A transaction above 5 lakh will carry a fee of 50.
NEFT - National Electronic Funds Transfer
Under this system, the fund transfer takes place at designated time slots — six times a day during weekdays between 9 am and 5 pm, and thrice a day between 9 am and 12 pm on Saturdays.
Transactions up to 1 lakh will entail a fee of 5, while those exceeding 1 lakh will attract 25. Certain banks may charge even slightly more charges.
To transfer money through NEFT, we need certain details like
1)The beneficiary’s name
2)location of his/her bank branch,
3)IFSC code of the branch,
4)Account type
5)Account number.
ECS - Electronic Clearing Service
This is meant for payments of recurring nature such as Systematic Investment Plans (SIPs) in a mutual fund , Electricity bills, Telephone bills, EMI payments etc.
Here we need to inform our service provider, say, our Mutual Fund House, by submitting a form to confirm our willingness to make payment through ECS along with the application form for a new Folio number. This need to be done only once for a typical Fund house.
After that we can use of the Folio number to start / redeem SIPs using PIN numbers provide by Fund House and make full use of ECS. What’s more, most banks will execute our ECS instructions usually FREE of any service charges.
1.RTGS
2.NEFT
3.ECS
RTGS - Real Time Gross Settlement
As the name indicates we can transfer funds in the real time. This is the most speediest mode of funds transfer currently available. However, the system is meant mainly for high-value transactions.
The minimum amount prescribed is 1 lakh. You have to pay small charge for this service.
For fund transfers between 1 lakh and 5 lakh, the fee is 25 per transaction. A transaction above 5 lakh will carry a fee of 50.
NEFT - National Electronic Funds Transfer
Under this system, the fund transfer takes place at designated time slots — six times a day during weekdays between 9 am and 5 pm, and thrice a day between 9 am and 12 pm on Saturdays.
Transactions up to 1 lakh will entail a fee of 5, while those exceeding 1 lakh will attract 25. Certain banks may charge even slightly more charges.
To transfer money through NEFT, we need certain details like
1)The beneficiary’s name
2)location of his/her bank branch,
3)IFSC code of the branch,
4)Account type
5)Account number.
ECS - Electronic Clearing Service
This is meant for payments of recurring nature such as Systematic Investment Plans (SIPs) in a mutual fund , Electricity bills, Telephone bills, EMI payments etc.
Here we need to inform our service provider, say, our Mutual Fund House, by submitting a form to confirm our willingness to make payment through ECS along with the application form for a new Folio number. This need to be done only once for a typical Fund house.
After that we can use of the Folio number to start / redeem SIPs using PIN numbers provide by Fund House and make full use of ECS. What’s more, most banks will execute our ECS instructions usually FREE of any service charges.
Goal Based Investments – A must to do in everyones life
All of us are working hard with different goals. One day we may dream about buying a car, the nest day we may think buying an apartment should be my first priority. But after visiting our friends BIG LCD TV we forget all our goals and rush to buy the TV during the festival seasons.
Now my concern is
1. Do we need any investment goals in our life ?
2. Should we set priorities to our goals ?
Yes, we should have investment goals. The key to investment is to identify, prioritize and plan our goals and work towards it else we might lose track of our goals. If we haven't set any goals, we may be forced to divert our saving, like the case of BIG LCD TV. Hence every one should master the art of goal based investments and should also maintain a disciplined approach to keep saving.
How we may do goal based investing?
1. Write down the major events in our life which are our goals. Then set priority to these goals.
2. Calculate how many months/years it will take to realize every goal.
3. Calculate the cost involved to achieve each of these goals today.
For example, 25 year old Biju has two simple goals: an apartment in the next 20 years and a car in the next 3 years. Today the cost of a 2 bedroom apartment in Biju's area costs around Rs.30 lakh. And a car of his choice is around Rs. 5 lakh.
4.Calculate the impact of inflation as this will affect the real value of your savings.
For the goal of buying an apartment in next 20 years we may assume the rate of inflation based on the average inflation for the past few years, say 5 percent.
To buy a car in the next 3 years which is relatively a shorter duration the rate of inflation could be assumed to be around 3 percent.
Make use of the compound interest rate equation.
Saving require = Current cost * [ 1+ (Rate%/100) ] ^ Number of years.
Saving required for apartment = Rs. 80 lakh.
Saving required for car = Rs. 5.5 lakh.
5. Calculate the tax impact on our investments for each goal.
Biju's goal for APARTMENT is for long Term. Hence he can start a SIP in an equity diversified Mutual fund. Since there is no long term capital gain tax. This investment will be totally Tax Free. Here he can get 18-20% return for the long term investment in equities.
Bijus second goal, CAR is just 3 years away, hence a Recurring deposit with 6% rate of interest will be better. There is also no Tax liability for Recurring deposit.
6. Calculate how much to save every month.
Make use of the Future Value formula in excel. Take an excell sheet.
1. Set first column as Rate of return.
2. Set second column as Years From Now.
3. Set third column as Amount needed per year.
4. Set FV formula in fourth column, ie “=FV(A1;B1;C1)”.
5. Now try changing 3rd column till we reach the required future value in fourth colum.
6. Amount need each month = Obtained Amount needed per year / 12.
For Biju's case
Amount need for apartment per month = Rs 4600 per month.
Amount need for car per month = Rs 8300 per month.
7. Start investing for the specific goals.
Here the calculations mainly depend on two factors: the inflation rate and the rate of returns on his investment.
Here we can see the Amount need for apartment is much less, we may even think is it possible to buy an apartment of 80 lakhs after 20 years with Rs 4600/month. But this is possible, because that is the power of compound interest.
But since he want to buy a car in short term and hence he need more monthly installments via safer recurring deposit with lower interest rate.
Hence one should calculate the goals and priorities and most importantly do regular investments into different avenues like Mutual Funds via SIP, RD/Debt Funds and achieve our financial goals. Happy Investing.
Now my concern is
1. Do we need any investment goals in our life ?
2. Should we set priorities to our goals ?
Yes, we should have investment goals. The key to investment is to identify, prioritize and plan our goals and work towards it else we might lose track of our goals. If we haven't set any goals, we may be forced to divert our saving, like the case of BIG LCD TV. Hence every one should master the art of goal based investments and should also maintain a disciplined approach to keep saving.
How we may do goal based investing?
1. Write down the major events in our life which are our goals. Then set priority to these goals.
2. Calculate how many months/years it will take to realize every goal.
3. Calculate the cost involved to achieve each of these goals today.
For example, 25 year old Biju has two simple goals: an apartment in the next 20 years and a car in the next 3 years. Today the cost of a 2 bedroom apartment in Biju's area costs around Rs.30 lakh. And a car of his choice is around Rs. 5 lakh.
4.Calculate the impact of inflation as this will affect the real value of your savings.
For the goal of buying an apartment in next 20 years we may assume the rate of inflation based on the average inflation for the past few years, say 5 percent.
To buy a car in the next 3 years which is relatively a shorter duration the rate of inflation could be assumed to be around 3 percent.
Make use of the compound interest rate equation.
Saving require = Current cost * [ 1+ (Rate%/100) ] ^ Number of years.
Saving required for apartment = Rs. 80 lakh.
Saving required for car = Rs. 5.5 lakh.
5. Calculate the tax impact on our investments for each goal.
Biju's goal for APARTMENT is for long Term. Hence he can start a SIP in an equity diversified Mutual fund. Since there is no long term capital gain tax. This investment will be totally Tax Free. Here he can get 18-20% return for the long term investment in equities.
Bijus second goal, CAR is just 3 years away, hence a Recurring deposit with 6% rate of interest will be better. There is also no Tax liability for Recurring deposit.
6. Calculate how much to save every month.
Make use of the Future Value formula in excel. Take an excell sheet.
1. Set first column as Rate of return.
2. Set second column as Years From Now.
3. Set third column as Amount needed per year.
4. Set FV formula in fourth column, ie “=FV(A1;B1;C1)”.
5. Now try changing 3rd column till we reach the required future value in fourth colum.
6. Amount need each month = Obtained Amount needed per year / 12.
For Biju's case
Amount need for apartment per month = Rs 4600 per month.
Amount need for car per month = Rs 8300 per month.
7. Start investing for the specific goals.
Here the calculations mainly depend on two factors: the inflation rate and the rate of returns on his investment.
Here we can see the Amount need for apartment is much less, we may even think is it possible to buy an apartment of 80 lakhs after 20 years with Rs 4600/month. But this is possible, because that is the power of compound interest.
But since he want to buy a car in short term and hence he need more monthly installments via safer recurring deposit with lower interest rate.
Hence one should calculate the goals and priorities and most importantly do regular investments into different avenues like Mutual Funds via SIP, RD/Debt Funds and achieve our financial goals. Happy Investing.
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