Why to Use Child Plan Calculator?

The cost of a two-year MBA course in the Indian Institute of Management, Ahmedabad, has risen 400 percent since 2007 and if the same trend continues, it will reach a stupendous Rs. 95 lakhs, according to a report in the Economic Times. Can you imagine how much you would need to save if you wish to send your child to such reputed institutes? An approximate estimate for the amount of funds required by you to meet your child’s advanced education can be estimated using tools like a child plan calculator.

Need for Child Insurance Plans

Rising education costs and high aspirations of parents warrant the need to build a substantial kitty to fund the massive costs of education, co-curricular activities and other requirements. Add to this the cost of their marriages and the total amount required for your children’s welfare shoots up further. What to do in such a scenario? Invest in a variety of options like a child plan and make some investments that offer good growth.

The exact amount of funds that you will need and can invest now can be decided with the help of insurance tools like child plan calculator and retirement planning calculator (if you are looking for an investment for building a post retirement fund). Using these tools is very easy as all you need to provide is the current age of your child, the age at which you need the funds, your current savings, the type of education which you want your child to pursue, the expected tuition fee and the inflation rate. By using this information, the tool provides you with the amount of funds that you need to save. Now, you have a final target and can calculate the amount of monthly savings that you need to target.

Child insurance plans can be regular premium plans or single premium plans. In case of the former, annual premium payments need to be made until the child turns 18 and after that, the insurer pays back the amount in installments or in one go, depending on the terms of the policy. Such policies generally cover the life of the parent and in case the parent dies before maturity, the premiums are waived off but the sum assured is paid on maturity.

While some child plans are money back plans, others are unit linked policies, which invest in the market to create wealth for the policy holder. Most insurance companies offer varied options with different risk profiles to cater to the requirements of all types of investors.

Apart from offering life cover, several child plans come with options to add various types of riders, so that you can combine the goal of saving for your children with other aims like taking accident insurance or critical illness insurance.

4 Things to Ensure You Have a Fun & Relaxed Retired Life

Your ability to save and invest while you are working will decide whether you can lead a happy retired life or have to struggle to meet even your regular expenses post retirement. The key to successful investing is to start as early as possible and save from the day you start working. The compounding effect of your early savings will prove to be very fruitful and go a long way in helping you build a safe and healthy corpus for your retired life.

Use the Right Tools to Plan

By using tools like a retirement calculator or a pension plan calculator, you can easily determine the amount of funds you would need post retirement and how much need to invest to achieve that goal. The earlier you start, the better it will be for you to build a reasonable corpus to spend your retired life in a relaxed manner, without any kind of financial worries.

Tips for Retirement Planning

Here are some tips that will help you enjoy your retired life:

• Always keep a specific percentage (say about 10 percent of your earnings) for saving purposes and invest them in long term investment options. This could be done via investment in a public provident fund or pension funds. Increase the amount saved with every increase in your salary. This will help you deal with the impact of inflation on your post retirement expenses.
• Avoid using the funds kept aside for your retirement to fulfill any other needs or expenses that come up during your everyday life. Also, try to use only a small percentage of your retirement corpus in the first few years of retired life. This is important to ensure that you don’t outlive your savings and have to struggle for funds in the later years of your retired life. You can use a retirement calculator to keep track of the savings too.
• Ensure that you have repaid all your loans or debts before you retire. Also, modify your investment from equity to debt as your age increases or you near retirement so as to reduce the risk involved.
• Invest in a health insurance plan so that you do not need to borrow from your retirement kitty to pay hospital and medical expenses. Buy a plan that offers you the maximum coverage, since getting health insurance is difficult as you age and develop chronic ailments like high blood pressure and diabetes. Buying a term insurance or life insurance plan is also recommended to protect your dependent family members from any kind of financial worries if something untoward happens.

So, using retirement planning calculators, saving consistently, investing wisely in insurance products and repaying all debts before retirement are the prerequisites to a happy retired life.

Home loan facts: 5 things to know before you sign up

We list the five most important facts that you must do before you formally apply for the home loan.

Are you about to apply for a home loan? We have only three activities to suggest: Research, research and research! Consider the following five points to get you started:

1. Understand what loan eligibility means. Banks and lending institutions offer about 60 times your current income as the home loan amount. You may have a high salary, but that may not automatically translate into a high loan eligibility. The lending institution will consider the prominent components of your pay package, while setting aside the LTA and Medical Allowance. The eligibility is then calculated on the basis of the remainder amount. Use a loan eligibility calculator to find your eligibility.
2. How much EMI is too much? Normally, any EMI that exceeds 30% of your finances is not ideal, and an amount exceeding 50% is a stretch. Your monthly budget must not be strained owing to the EMI payable. Use a home loan EMI calculator to compute how much you will pay the lending institution every month basis the loan amount, tenure and interest charged on it. You can keep manipulating the figures using the home loan calculator to arrive at a figure that suits your budget.
3. A pre-approval is important – here’s why. Normally, people apply for a home loan after they have found a suitable property. This is a good approach, but taking a pre-approval is even better. Taking a loan approval tells the lender that you are a serious buyer who is about to take a loan in the next few months. The loan approval checks your personal eligibility and helps you understand how much your borrowing limits are.
4. An expert must see the property documents. It is always a good idea to appoint a lawyer to study the property documents. This is important to verify the document’s layout, authenticity, chain of agreements (in case of two or more past buyers), permissions (in case of under-construction projects), titles and freehold, etc. Get any lacunae corrected before you apply for the loan – unsuitable properties are not liable for home loans. Rectifications at a later date will result in delays.
5. The interest rate is everything. Ultimately, the interest charged on the loan amount decides the monthly outgo. A lower rate of interest helps you save more money. You can opt for a floating rate of interest if the market rates are expected to slide in the next few months. Another good measure to save money is to repay the loan early, i.e. before the tenure ends.

Term Plan – The best New Year gift for your family

Leave the expensive home appliances and new mobile phones – get your family the greatest gift ever, a term insurance plan.

Whenever we think of celebrating a milestone or gifting a special someone, we often think of buying big, expensive presents. While that is a great thought, the impact of that gift is only short-lived. After all, how long can one revel in the thought of a new mobile phone or a TV set?

But some gifts have a much more enduring value. They have a permanent good effect and they can be veritable life savers. We are referring, of course, to buying a term plan.

The best present this season – a term insurance plan

Your family may initially be puzzled if you whip out a term insurance policy document and say ‘Surprise!’ But a few minutes of explanation will help them realise the value of your decision to buy a term plan. If you are unsure of how to explain it to them, allow us to give you a few pointers:

• A term plan is an insurance policy that has a high sum assured and a low premium payment.
• It pays a substantial amount of money on termination. Hence, even if you are absent from your family’s world in the future, the term plan money can pay all their expenses and also for such things as children’s education, house maintenance costs and also repay loans.
• The term insurance nominees get the entire sum assured on termination of the plan, based on the pay-out option you choose.
• Once the plan tenure ends, the plan is terminated even if the policy holder outlives the plan.

How to buy term plans online

All reputed insurers today encourage prospective clients to buy term plans online. The applicant must fill out an online form, use the term plan premium calculator to find the best combination between sum assured and premium payable, and proceed to pay for the plan. Once the first premium is paid and processed, the term plan is deemed purchased.

Buying a term plan online also results in cheaper premiums. The premiums can be paid online every year and the insurer sends a reminder about due dates.

The premiums paid for the term plans are liable for tax benefits under Sec 80C of the Income Tax Act, 1961.

And so, it makes the best gift this season…

What would you rather choose – a gift that gives your loved ones momentary happiness, or a gift that protects their future with a substantial sum of money? We bet it is the latter option – after all, wouldn’t you want somebody to watch over your family when you are no longer around to protect them?

A term plan is that protector!

The easy guide to applying for loan against securities

Your LAS application process can be a breeze after understanding the features of the loan.

There comes a time in the growth cycle of every business, when taking a business loan becomes imperative to upgrading the business, acquiring new machinery, or purchasing new commercial premises. At this juncture, a deft solution is to take a loan against shares.

The loan against shares, as the name suggests, is a loan offered to you after you pledge your shares as collateral with a bank or financial institution. This option lets you monetise your owned securities at short notice, so that your business goals remain on track and you don’t have to liquidate your other assets. The only stipulation is the shares you pledge must be your own, and before applying for a loan against shares, find out from the prospective lending institution about their:

1. List of approved securities. Every bank and financial institution has a list of approved securities that they can offer a loan against. It is prudent to ask for this list from your preferred financial institution before you apply for a loan against shares. This will save valuable time for both you and the lender.
2. Rate of interest. The lending institution will offer you the loan against shares at a certain rate of interest. Find out the rate of interest being offered by at least three other comparable lenders before you make your decision. Interestingly, the interest charged on this category of loans is lower than that of personal loans or credit card loans. You are charged interest on the balance loan amount in your overdraft account.
3. Terms of use. Once the loan is approved and disbursed, you have the freedom to withdraw the funds as you wish. You are not required to withdraw the entire loan amount at once. You can use the money in stages as per your requirement. If you apply for loan against shares from a bank, you will be given an ATM card linked to the overdraft account, and you can withdraw money using the ATM card. Also, you can repay the money in equated instalments and incremental sums paid every few months.
4. Special factors. In most cases, the charges for processing the loan application, maintaining the overdraft account, stamp duty and registration of the loan agreement between you and the lender, etc. will be mentioned in a separate schedule of fees.

Personal finance manual: 5 rules to live by

We compile five financial planning rules that will help you amass wealth and keep you safe from future uncertainty.

Most of us wish that there was a manual we could follow that told us exactly how to get rich using the money we make. While you may or may not subscribe to the ideas that many financial experts put forth in books and TV shows, you must agree on one fact: your fiscal health needs a rulebook to live by!

And so, we compile 5 personal finance rules that will help you create wealth for the future:

1. 1 The 10% post tax rule. Rule #1 of your personal finance manual should be ‘Pay yourself first’. This means that you must set aside savings the moment you get paid. Most people do this in reverse – they try to save money from whatever is left of their income at the end of the month. Instead, set aside 10% of your post-tax income per month for a couple of years. When your income increases, you can increase this percentage to 15% for more savings.
2. 2 The 50% only rule. How much of your income should you spend on daily living? As much as you need, or as much as you can afford – or a little of both? The answer is: Spend only about 50% of your income on bills, groceries, travel, occasional recreation, children’s expenses, other household costs, etc. The remaining can be split into savings, children’s education fund and emergency fund.
3. 3 The emergency fund. Emergencies always strike without warning – there are no cautionary bells and whistles to tell you that a disaster is on its way. And so, it is vital that you prepare for any future crisis with an emergency fund that you build along with your savings. Aim to invest at least 5% of your income in this fund every month. You could operate a seldom-used bank account to stow away this money.
4. 4 The loan conundrum. Rare is the person who has not had to borrow a loan to finance a personal or professional need. From buying a home, to investing in your start-up, and from needing money for your child’s education, to paying for your parent’s hip surgery, a loan can finance a variety of needs. If you want money to pay for your own wedding, or book a special holiday or even to buy a new bike, you can simply opt for a personal loan. Do check your personal loan eligibility first!
5. Lifesavers’ special. Life and health insurance have become vital in today’s world of lurking health conditions and rising inflation. Stress, undiagnosed illnesses and high living costs all strain your resources when you fall ill. Your loved ones might also be left floundering if you are not in their midst in the future. So if you are thinking of investments, think of life and health insurance.

Things to Know Before You Opt for a Home Improvement Loan

About 833 million people, accounting for 69% of India's total population, live in rural areas. Out of this, 75% have a monthly income of less than Rs. 5,000. About 51% of them make their living through annual labour and 70 million do not have access to socio-economic benefits.

According to The Times of India, a vast majority of the population still lives in per capita space of equal to or less than 10x10 feet. This space is not just used for living but also for sleeping, cooking, washing and toilet needs. It comes down to 103 sq feet of space per person in the rural areas and 117 sq feet in the urban parts.

Although cities have slightly better facilities, not even a single city provides 24-hour water supply to its citizens and about 400 million people do not have proper toilets. With an estimation that 7 in 10 people living in cities by 2050, this poses a serious threat and home improvement loans are your best option to ensure that you kids grow up in a healthy environment.

Here are a few things you should consider before opting for such loans.

It is for Improvement and Not Addition

A home improvement loan is sanctioned for repair work that needs to be done and not to buy new items like furniture or kitchen equipment. It can be used to fix a leakage in the pipes, paint the walls, etc. In simple words, it is for the purpose of renovation. Therefore, read all the fine print on the application form thoroughly before signing it.

The Amount of Money to be Borrowed

Usually banks in India pay up to 80% of the total cost of renovation. You can calculate the total expenditure using a home improvement loan calculator. It is easier to acquire if you are already a home loan customer of a bank.

Eligibility Criteria

Just like other types of loans, your monthly income, age and credit history decide the amount that a bank will be ready to lend. If you already have a home loan which is 6-12 months old, you can approach the bank for an improvement loan too.

Benefits over Personal Loan

Unfortunately, a majority of the people in India are not aware of this product and thus opt for a personal loan instead. However, unlike a personal loan, an improvement loan allows you to extend the repayment tenure up to 15 years from 7 years, which means you have to pay a lesser amount as EMI.

Interest Rate and Processing Fee

The interest rate for this product is between 9.5% to 11%, while the processing fee can be anywhere between 0.5% to 1% of the loan amount. It varies from lender to lender.

Tax Exemption

Up to Rs. 30,000 is exempt under Section 24b of the Income Tax Act, but limited to home loan exempt of Rs. 2 lakhs.

There are no prepayment charges for this type of loan and you can choose between fixed and floating rates of interest. So, learn about the amount you need and the EMIs you are likely to pay for it using a home improvement loan calculator and make an informed decision to make your house a better place to live in.