Financial Planning Archives -

How To Choose the Right Credit Card?

Sat, 21 Jan 2023 14:44:37 +0000

The Buyt Desk

With the ‘Digital India’ initiative of the Indian Government, digital transactions have observed a significant jump. Where everyone is talking about the rapidly increasing use of mobile wallets, credit cards keep on becoming the users’ preferred mode of payment. It can be used to enjoy cashback, amazing discounts, and so many exciting deals.

As per RBI’s data, there were approximately 8.03 crore credit cards in motion in India as of July 2022. This value has raised by 26.5% from the July 2021 end.

How to Select the Right Credit Card?

The perfect way to select the right credit card will depend on the candidate’s investment patterns and rewards interest. Better understand your reason for purchasing a card for effective decision-making. Prefer multiple cards across several brands for numerous requirements over customizable ones.

Decide the card based on your spending habits. If you will use a credit card for shopping then opt for cards with cashback. However, if you are interested in dining out frequently, the cards will help you in availing of good meal offers. For shopping expenses, prefer cards that provide great benefits on expenses with selected brands or merchants, cashback, and reward rates.

Which Bank to Select?

Find a bank where you have opened your savings account and have a good primary relationship. Adhil Shetty, BankBazaar.com CEO, says that your bank will possibly create a preapproved offer for you based on your finances. It will help you in reducing the processing time and documentation. You could apply for them through an app or bank portal, or via a platform.

Consider a well-established bank with several cards. Don’t prefer a bank that has just one or two cards. This is because such banks are either closing the cabinets or experimenting with their card business.

Annual Charges or Lifetime Free Cards?

According to the rough estimates, a bank has approximately 20 credit card products on average. This shows about having 200-400 credit cards in the market. But, it can’t be assured how many of them consist of annual charges or which one is free for life.

Premium cards with annual fees provide more advantages than lifetime-free credit cards. For example, the SBI Aurum credit card offers free membership to Lenskart Gold, Amazon Prime, Discover Plus, Zomato Pro, and more. Even the holder has unlimited access to an airport lounge.

Annual fee cards waive annual fees when you invest a minimum amount yearly. A few cards may also ask you to tie up your utility bill payment to a card to get eligibility for an annual fee waiver.

Beginners should stick to cards with no annual fees. The reason is that premium high-end cards have higher requirements to get eligible. Your application might be rejected if you don’t have a specific income bracket.

Charges

Consider the charges related to owning a card. Interest rate charges, annual renewal fees, and issuance charges help in weighing the costs and benefits.

Issuance fees are zero for first-timers on starter cards. Shetty says that we are noticing that customers give preference for premium cards that cost INR 499 or upwards for several benefits. The annual percentage rate on nearly all cards is more than 40%. The more premium your card, the more its charges, which could go into lakhs in a few cases.

The important thing about credit card use is clearing the dues. Alongside late charges and interest charges, ballooning credit card debt could affect your credit score. The more dues you have, the more negatively it will affect your credit score.

Understand Your Rewards

People using credit cards generally begin from here. But, this is considered only the last step.

A free one-night hotel stay, a welcome voucher, or two airline tickets should not be the only reasons to get a specific credit card if it doesn’t align with other spending requirements. Similarly, vouchers that require you to spend a minimum threshold amount, approximately 2-5 lakh annually, don’t spend more than what you can afford.

So, compare all credit cards in your range. Understand the reward point structure that may be different for different banks and cards.

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5 Takeaways from Robert Kiyosaki’s Popular Rich Dad Poor Dad

Mon, 03 Oct 2022 03:54:15 +0000

The Buyt Desk

Robert Kiyosaki has given many bestsellers. His books mainly focus on personal finance and business aspects. Let us look into takeaways from his books.

Robert Kiyosaki is an American businessman, investor, financial educator, and author. His contribution to imparting financial education is huge. Many bestsellers are written by him. The all-time best financial book – Rich Dad Poor Dad is his bestseller. People who want to get started in their financial education journey consider this book as a guide and motivator. He uses the term – Rich Dad a lot and also named his company The Rich Dad Company. His company aims to educate society concerning personal finance and business.

You need to read his books to understand why he often uses the term – Rich Dad. It is a good time to pick a few of his books and start your journey. If you are not sure which one to pick, you can start with

“Rich Dad Poor Dad”. You will gain more knowledge about finances. All his books have great lessons to learn from and will help you achieve financial freedom.

What are 5 takeaways from Robert Kiyosaki Book?

Takeaway 1 – Do what is necessary irrespective of whether you like it or not.

Robert never moved back from doing things that were necessary all through his life. He has done things to achieve financial freedom but not because he liked to do something. You must do things even if you hate them. He learned many subjects like taxes, accounting, law, and many more even when he didn’t like them. He is a bestselling writer of bestsellers but he hates writing. He still writes because writing is giving him financial freedom and through this medium, he can spread his knowledge. He is passionate about imparting knowledge to people so that they can achieve financial freedom. He says that people should never consider some jobs less respectable. If one wants to be Rich, they may have to do jobs that they don’t enjoy or consider less respectable.

Takeaway 2 – Discipline is a must for Success

His books tell us that discipline is above everything. To be successful in career, life, and finances, discipline is a must. The power of discipline is beyond knowledge. He learned about this by observing his young friends who were partying and enjoying themselves and understood the lack of discipline in their life. At a very young age, he understood that to be successful he needs discipline in his life. To learn a disciplined lifestyle he joined the military and later worked at the Marine Corps which is a branch of the US Armed Forces. These experiences gave him unshakable discipline lessons for life.

Takeaway 3 – To be Rich you have to focus on building assets not income

Robert says, most people have a misconception that to be rich, they have to focus on increasing their incomes and just keep working to increase their income. But it is not viable as it is a rat race. As a person’s income increases, his expenses and taxes also increase. This is a vicious cycle that never stops and doesn’t make anyone rich. The money you are building should work for you and you should not work to grow that fund. To get rich one should work on building their assets as the assets will make the money work for you. Only assets will give you financial freedom. Rental properties, stocks, gold, and silver are examples of income-generating assets.

Takeaway 4 – Your mind is your supreme asset

Robert says to be rich one should never stop working on one’s mind. By giving your brain tough challenges and problems to solve, you should work your brain and exercise it daily. Keep learning constantly. You have to work on your greatest asset daily to strengthen it. Even at the ripe age of 75, Robert still works on his mind regularly and it has given him everything he has today which his biggest assets didn’t give.

Takeaway 5 – Work to Learn and not to Earn

Robert says people mostly work to earn. Instead, they should work to learn. When one works to earn, they may fail to encash the opportunities. When you focus all on earning, you don’t learn much and soon the job becomes boring. When you work to learn, your growth is guaranteed. As you grow you will have better opportunities to explore both career and money per se. Robert says that everyone must learn regularly and upgrade their skill sets.

Summing up

Robert Kiyosaki stresses more on learning, discipline, and building assets. Keep doing what is needed to grow even if you do not like doing it. Have discipline in every aspect of life and this will take you a long way. Never stop learning and give good exercise to your brain. When you take up any job, look for what you will learn rather than what you will earn. Hope you have got a good picture of what it takes to be rich and financially independent.

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Financial Blunders Made In the 30s Can Jeoparadise your Future Plans

Tue, 23 Aug 2022 04:01:49 +0000

The Buyt Desk

Financial planning is important and sticking to it is more critical. Making financial blunders in your 30s will put you off track from achieving financial goals.

The first step is to have a financial goal as per your needs. And then have a financial plan to reach your goal. Keep updating and revising the plan as the events of economic change. Do consider the inflation while setting goals. You need to understand the importance of investing and the magic of compounding. Sticking to the plan and not deviating is most important to achieving the financial goal and so is avoiding committing a few mistakes. Financial mistakes made in the 30s will be blunders as they will impact the plan. To have a happy, relaxed and peaceful retirement, avoid making these financial blunders in your 30s.

Avoid These Financial Mistakes-

Saving and not investing – Youngsters consider saving as investment, which is a mistake. Just saving your money in a bank account will not earn you anything beyond 4-5% annually. This is less than the current inflation rate. Over years money loses its value when not invested. To increase the value of your money it is necessary to invest it in the market and growth should beat inflation.

Not having a PPF Account – Public Provident Fund (PPF) account is a good option to invest in as it has a fixed and high rate of interest with less risk. PPF has tax-saving benefits. Its interest rates range between 7 and 8% which is much higher compared to bank fixed deposits. The amount of investment made in the PPF account, the interest earned and the maturity amount are tax-free. The tax benefit is one of the most important rewards of investing in PPF but it is capped to Rs 1.5 lakh annual contribution. One can open a PPF account either in a post office or any bank. The maturity time of PPF is 15 years and you can keep extending it by 5 years.

Not starting SIPs – Systematic investment plans (SIPs) help you visualize your investment multiplying in a short duration. This is an investment you should start very early in life as soon as you start earning. SIPs are best when you are able to stick to regular investments. Significant savings can be achieved through SIP which otherwise would be difficult. SIP makes you invest your money for a long period of time and this helps to grow your money. With SIP only financially disciplined people can make it big. You should not be emotional when it comes to investments. You can choose small-cap funds, large-cap funds, mid-cap funds, debt funds or money market funds to start SIP. Based on your risk appetite and the time you have, you can keep building your portfolio with different funds.

Not having Health Insurance – As the costs of health and medical expenses are getting costlier, health insurance is a must for all. Health insurance will provide you with financial support in case of a medical ailment or medical emergency. Hospital expenses will drain you both financially and emotionally. Having medical insurance early and when young have a lot of benefits. Health insurance premiums are cheaper when you start young. Having health insurance will be the best financial decision you can make in your 30s. Always have your individual health insurance despite the employer-provided medical coverage as that will be insufficient.

Not having Term Insurance – After your death, all your liabilities will be taken care of by the term insurance you have brought. It pays the sum assured to your nominee only after your demise. To have a large amount of sum insured at a lower premium you should buy term insurance very young. Premiums of all insurances go very high as the age of the insured increases for the same amount of sum insured. Hence the later you purchase term insurance, the higher premium you have to pay.

Making impulsive investments – Youngsters just invest for the heck of it or just because some friend is investing or because parents are asking to. This is a very wrong way of investment. Investments should be based on your financial goals and planning. Take professional help when in doubt. Financial advisors will help you make good financial decisions and save you a lot of money.

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Financial Documents Your Family Must Know About

Fri, 15 Oct 2021 04:52:40 +0000

The Buyt Desk

You work hard all your life, save and invest money to support your family and fulfil their dreams. But how much information does your family have regarding your investments? If a situation arises where ‘YOU’ the sole earning member is no more then what happens? Especially if your family is not aware of your investments. You may have accumulated enough money to take care of their needs atleast for a few days till they find their way out. It could turn out to be a financial mess with no access to these investment and above all no knowledge about if they have a safety net or not. To make sure it does not happen to your family, you must take care of the paperwork and nomination details.

Nomination

Nomination is a very important part of forward planning. You must ensure that right from your insurance to bank account and mutual fund investment or fixed deposit all of them have a nominee. The nominee may not be the legal heir. They are the trustee of your money and play the bridge between the institution and the legal heir. They ensure that if something happens to you money reaches the legal heir. Generally the nominee is the caretaker of the money but in case of insurance and employee provident fund nominee is the legal heir of the money in case something happens to the primary holder of the account.

The financial record that your family should know about-

Insurance Policies: Maintain the list of all insurance policies you have. It includes health insurance, life insurance policies, personal insurance, and other policies such as LIC, keeping them in one place could be a good idea. If any broker is involved, keep the contact number of the broker along with his name and address so that family members can reach him easily.

Cheque Books and Bank Details: Cheque books, passbooks are crucial financial documents you must keep in a safe place and inform your heirs about the same. They might need it to close your account permanently after you. If you have more than one bank account, keep your family informed about the same.

Bank Lockers: If you have a locker in the bank where you keep your documents and valuables, keep your family informed about the same. If you dont want to tell them then also you must write down the details and keep it at a place where you store all your financial documents. Do not forget to mention the passcode of the locker, the pin of your debit card, etc.

Investments: You must keep a record of all your investments. For this, you can either prepare an Excel sheet on your laptop or keep documents of all the investments you have made along with their heir’s name. E.g. If you have made a particular investment for your daughter, mention her name in the document to avoid confusion.

Property Records: Property disputes, we all know how bad they are and how long it goes to get fixed. And it is also prone to encroachment if left unattended or unclaimed for a long time. To avert this situation, keep the record of every property you have with full address and buying agreement. If any broker is involved in the deal, keep his phone number and other details as well with the record.

Keep all the original financial documents of the property with you in a safe place.

We cannot predict the future, but with thoughtful planning, we can control its impact. In a situation of an emergency, accident or even death, your family must be aware of all your financial details and use them at the right time. Being in the dark about finances will add up to their problems in an already difficult time.

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