Posts tagged ‘Personal Finance’

November 10th, 2012

Benefits of Investing In Recurring Deposits

by Edwin Rosenthal

Recurring deposits(RD) are for those people who want to invest regularly for a certain period of time and earn a better returns of higher interest. Many banks are offering to open recurring deposit accounts for making investments on a long-term basis. It is something similar to a Fixed Deposit, where instead of making a lump-sum investment, you invest part of the fixed investment every month. This popular periodic investment is available only in India.

In case of recurring deposit certain fixed amount must be paid in every month on or before the accepted date and this amount is invested for a specified period. At last the total invested amount is repaid to the investor with interest at the end of the particular fixed period. This period can be a minimum of six months and maximum of ten years.

The minimum and maximum amount to be paid varie from bank to bank. However, you can open an RD account for a minimum of Rs.100 and multiple installments of Rs.100/- up to Rs.1 lakh can be chosen as installment amount that will be fixed for the entire tenure of the RD. Your money is locked as withdrawals are not permissible. However, the bank may also allow you to close RD account before the maturity period. Some banks provide loan facility, for RD account holders. They can give loan up to 75% of the amount standing to the credit of the account holder.

The major benefits of recurring deposits are:

  • Recurring deposit make people to save regularly. Encourages saving habit.
  • Suits to a low income investor, as small periodic investments can grow to a large sum on maturity.
  • Recurring deposit account holder can avail the facility of getting loan easily.
  • Some banks offer extra benefits in the form of an additional 0.5% rate of interest to senior citizens.

Major banks, post offices and insurance companies have been offering this scheme in India. Hurry, tart investing today. Better late than never!

November 1st, 2011

Important Tips For Long-Term Investments

by Edwin Rosenthal

There are many investment strategies that help to grow your investments and create wealth. One of the best method of investing is the long-term investment. Mostly long-term investments reaps average benefits and sometimes if the market is in your favor, it can even provide above average benefits. Expecting large amounts of returns can be possible only through the long-term investments but it needs your patience and dedication towards your investment. Here are some tips on building a long-term investment portfolio.

The most important tip in long-term investments is to diversify your investments to reduce investment risk. You can diversify your risk by investing in different assets, industries and sectors. As investment is subjected to unexpected changes, putting money only in one asset does not give better gains and sometimes you may lose your entire capital that is invested.

The other important tip is to have a clear idea on asset allocation. Don’t invest in the asset on which you dont have complete information about the underlying asset. Develop a good strategy in allocating the assets for growing your investments and think before allocation.

The necessary tip for long-term investment is to time the market. Although, it is difficult to time the market, for getting large returns, you need to do it. Don’t sell your stock just because market is low. Wait till the stock reach its peak, when the stocks go back up, your return will be even higher than your original investment. Do research before investing in stocks.

The last most efficient tip is to invest regularly on a monthly basis. Make a habit of investing small amounts regularly from your monthly income. If you find difficult to get better information on long-term investment, seek advice from personal financial adviser before investing your money.

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October 30th, 2011

Simple Ways to Reduce Financial Stress

by Edwin Rosenthal

Financial stress is a significant problem that is faced by individuals at least once in their lives. Before you find ways to reduce financial stress, you need to recognize the symptoms of stress. It may include severe health problems like depression, frustration, anxiety, sleepless nights, lack of energy, etc. Sometimes people even get addicted to bad smoking and drinking, as they think this habits can reduce their stress.

Remember that not all stress is bad. A little stress may help in motivating you to make changes that would help in your situation. But reducing a big financial stress is really hard task and even take much time to eliminate. Below are some simple ways to reduce financial stress.

The first way is to identify the problem that makes you feel stressed. For example: Your problem may be a huge debt, performance or loss of job, job dissatisfaction, spending problems, retirement worries, child marriage, any other reason that make you get deeper into stress.

Now find the way to control your money. If you are in large debt, then try to learn how to eliminate the debt and pay off everything that is owed by you. If you are spending more, then prioritize your expenses depending on your needs and learn to live frugal. If the problem is about retirement, then plan for retirement as early as possible to get better retirement income.

Never compare your financial situation with others. As it is waste of time and different individuals have different finances, so, it is more important to know how to make best of your income. Develop a savings and investment strategy by seeking advice from a well professional personal financial adviser to create wealth. Follow the above important ways to get rid of financial stress.

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June 7th, 2011

Role of Fear and Greed in Trading Psychology

by Debbie Harry

It does not matter how good your trading strategy is, and how much knowledge you have on trading, as there are other factors which will always influence your outcomes. They are your own emotions. The emotions of fear and greed plays a vital role in the trading psychology. These two factors can change a winning trader into a losing trader. It is very important for every trader to know about the role of fear and greed in trading psychology.

The role of fear: Fear is the emotion that prevents the trader from initiating a trade in the first place. Fear in trading basically takes on two basic forms such as, the fear of loss and the fear of missing out. The fear of loss changes the traders mindset to sell existing stocks/ positions prematurely and as a result, the traders are not able to get profits and recover full returns on their investments. They get fear to hold their positions for too long. It is very common in early stages of trading. Even if there is a possibility for winning, most of the traders due to their fear of losing they sell their positions. Therefore, they loose the chance of making profits in trading.
On the other hand, the fear of missing out also changes the traders mindset to abandon their rules, so that they do not loose out an another stock move. Due to this fear of missing out they can enter into the other stocks which are not there in their trading plan. Sometimes it can help for the trader, but always it is not good. Because when they are looking for other stock move, there is chance to lose on their existing stock.
However, these fears need to be dealt with, because they will impact a trader entry and exist decisions.

The role of greed: Greed is the motivation for over – confidence. Greed can raise traders expectations too high, by which, they abandon the rules of their trading system in the hope that more money will come in their way. Whenever a trader is getting in to winning position, then he is greatly influenced by greed. When a trader is greedy, he/she can make more and more buy and hold their positions even if they are getting loss in the hope of more profits to come. Sometimes it can be beneficial to the traders to wait for profits but not always.

In the above way, fear and greed play a vital role in trading psychology.

June 2nd, 2010

Know About Investment strategies

by Edwin Rosenthal

An investment strategy is a set of rules, procedures or behaviors, these are launched to guide an investor’s selection of an investment portfolio. Generally this strategy is designed according to the investor’s risk return trade off, some investors prefer to reduce the risk, some investors prefer to maximize the returns by investing in risky assets, but most select strategy somewhere in between.

Types of investment strategies:
Types of investment strategies can be defined as:

  • A passive investment strategy make effort to reduce or minimize transaction costs.
  • An active investment strategy suggest to maximize or increase returns depending on moves like proper market timing. This generally mean selling in the highs and buying in the lows or selling investment instruments when their price appreciates and buying them when they are cheap. But this strategy not very useful to small time investors.

Buy and hold strategy can be adopted by small time investors to invest in equities, which though changeable in nature gives favorable long term returns. For small time investors, investing in equity markets is associated with the investors holding on for very long periods. The holding period extends the lifespan of the mortgage in case of real estate.

May 14th, 2010

What If a Fixed Deposit Is Broken

by Debbie Harry

Breaking the fixed deposit means withdrawing the money from the account before maturity expires. If you require money urgently or there are any better investment opportunities then it become necessary to withdraw the funds from account. You have to pay some cost means you may get 1 percent lower interest rate than standard interest rate on the fixed deposit for breaking the fixed deposit.

Suppose if you invested in fixed deposit of three years with 9 percent interest and if you break this deposit then you may get only 8 percent of interest rate for three years.

There is an alternative to break the fixed deposit that is taking loan on fixed deposit. These loans are available with amount of ranging to 90 percent of the principal and aggregated interest.

Any better alternatives to Fixed Deposit:
There are low risk investment products, which offer better return than fixed deposits like stocks and mutual funds give higher returns with low risk. Financial experts believe that fixed maturity plans are better alternative to fixed deposits.

Fixed maturity plans have pre-determined period it may from few weeks to few years. In this your money is invested in government bonds and securities and money market instruments which give fixed income with low risk.

May 7th, 2010

Managing Money – Budget Basics

by Jonathan Cogley

Budget is a plan that allows us to know how much money we have and how it is coming and how and where it is being spent. If we don’t know how much money we have and how it is coming and how it is being spent, then our path of financial success will be a difficult one. Budget is a plan which has outlines of operational goals of an organization. So budget can be felt of as an action plan. Budget helps the business in allocating resources and formulating plans and evaluating performance.

Tracking income:
Determining how much income we have is the first step in creating budget and it is easy. And difficult task is that we will have to view our expenses. If we have any sources of income like interest, dividends, a side business and so on then we can also include those.

Tracking Expenses:
We know about our income and now we should know how much expenses are there in monthly basis. We can start with fixed or regular payments like rent or mortgage, insurance, payments, debt and taxes. A particular amount that is not changed for spending monthly is called as fixed payment. Remaining money should be found out and where it goes after listing the fixed payments. Analyze how cash was spent on things such as groceries, utilities, subscriptions, entertainment and so on. This type of handy work sheet will help to maintain track of expenditure.

All the information which helps to formulate budget should be known by everyone. We can get a positive number or negative number by subtracting the total expenses from the total income.

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October 1st, 2009

Tips to Claiming Your Moving Expenses In Tax Returns

by Debbie Harry
Most of us don’t know how to claim moving expenses in tax returns. But you are able to claim moving expenses from your taxes if your move has to fit in one of the following categories.

  • Your original spot of house is at least 40 kilometers closer to your workplace or school than your past house.
  • If you moved to your new apartment to do the job or attend a full time course classes.
  • If you are moving to Canada itself.
  • The cost of storing and insuring domestic goods and personal effects for any 30-day period after they are moved from the old home and before they are moved to the new home.
  • The Canada Revenue Agency allows you to subtract rational amounts that you paid for moving yourself, your household and your family effects, including the transportation costs associated with moving from your older house to your original one. And storage cost of your household effects, also the cost of modify your legal documents like driving license and the cost related things like cable, Internet, phone, hydro and gas bills.
  • If the expenses go beyond the reimbursement, the surplus expenses are deductible.

But some expenses are not deductible in tax returns, they are,

  • A loss on the sale of your previous home and also expenses for job done to have your past house much saleable.
  • Transportation charges for house-hunting trips before your move new apartment.
  • Expenses to supplant items such as drapes, carpets and tool sheds.
  • Expenses of buying or selling a home and also temporary living expenditures.

Make sure to hold all of the receipts and documents supporting your claims. I followed these suggestions when I moved to Miami to Atlanta apartment and get the maximum tax deductions.