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Here’s how to find the Best Child Education Investment and Saving Plan

For parents, their world revolves around their children. While they work really hard to provide their children the best of the comfort, what tops their priority list is education.
Every parent wants his/her child to get the best possible education without any financial hurdle. But unlike the earlier days when competition was low and education fee in institutions was modest. Now-a-days the cost of higher education is not only high; it’s rising at 10-12 per cent every year. And in order to provide the best education in the coming years, it becomes significant for parents to invest in best options to meet their educational expenses and secure their future. However, the big question is: how to find the Best Child Education Investment and Saving Plan? Well to get the right plan, you got to plan well in advance and take the right kind of steps. And you can take a cue and chalk out your plan from this post.

Pick the career option

The foremost step is to plan for a higher education program. This step comes even before you even think of start saving. It’s early to pick an education option at this stage, sure. But you can identify two or three good career options for your child based on your wish and your child interest. When you do this, you can even get the estimated year when you are likely to spend this savings on the selected program. For instance if you are planning for engineering, you know, you are likely to spend this money when your child would turn 18.

Do the cost calculation

Now that you have picked the tentative education option, figure out the current cost of the program. Going by the engineering option, you can pick any government institute or private college, and find out current education cost applicable. You can get this information from website or from the institute itself. It doesn’t stop here. You have to now calculate the future education cost (difficult to get the exact estimation). You can get a tentative figure though. Consider 8-10% inflation every year and find out future education cost.

Find the yearly/monthly investment amount

The next step is to calculate yearly or monthly investment amount required for reaching the target amount. This is the tricky step as it would need you to assume expected returns from investment options where you will be investing money. The simple way to look at it using the PMT formula (Google will help you understand this better). It is nothing but a financial function that calculates
investment required for an option based on constant payment and constant rate of return. Doing this would give you a fair idea about the amount required for investment.

Pick your investment option

Now the best part of all your hard work – Finding the investment option which can generate a return as per your expectation. Investment in fixed deposit, term plan or ULIP for child education is not suggested. Also if you have a time horizon of less than five years, you will have to rely primarily on fixed income instruments, which are likely to offer a lower rate of return.
However, these offer guaranteed returns and safety of capital. If you have time in hand, mutual fund is one of the best investment options to be considered for child education planning. You should select 2-3 good equity oriented mutual funds and start SIP. Make sure you select mix of a large-cap and mid-cap fund for investment. And with every passing year, keep on increasing SIP on your salary increment. For conservative investors, PPF (a 15-year scheme that helps you to generate tax –free corpus for your child education) is an option to look forward to. You can partially withdraw money from PPF account after the sixth year and you can close the account after 15 years. However, please note that expected return of PPF is lower compared to mutual funds. The bottom-line is you have to plan and start investment at an early stage. It would be easier to achieve the target if you start investing at an early stage. And your children can reap the benefits!

To know more about best Child Education Investment and Saving Plan connect with our financial planning expert for a better and secure future.

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Smart ways to use your Bonus Money

It’s not quite usual that you see in your inbox that certain ‘X’ amount added to your usual salary and credited to your account. Now, intriguingly you call the accounts team or the supervisor and that when you get the good news that it’s the much deserving bonus that you have received for all your hard work this year. ‘Time for celebration’ is the first thing that will strike your mind. Well, that is ought to happen, after all, you totally deserve it. But whenever a large sum of money falls in your lap, you need to have a plan for it (even before you think of a mini celebration), so you don’t wake up a month or two later and realize that it’s all gone. Well, that’s not definitely a way to reward yourself for a job well done. While it may be tempting to blow all that on something fun, excessive spending isn’t the smartest way to handle your bonus. However, allowing your money to work for you smartly is the way to go about it. So here are some of the smart ways to deploy your annual bonus money.

Pay-off earlier debts

It’s kind of a good idea to get rid of financial obligations. And debt kind of priors the list and it should also be amongst your top priorities when you plan to utilize the bonus. Debts like credit card dues, personal loans, business loans etc. should be repaid especially the ones that bear very high-interest rates. Repaying the debts benefit you many ways in return – it helps you save a lot of interest payments, improves your credit score making way for obtaining further loans in the future.

Invest to earn

A long-term investment pays off well. There are multiple options where you can invest your money. You can opt for a SIP or utilize the amount to purchase stocks or lump-sum mutual funds. If you’re looking for conservative medium (no-risks attached), then opt for long-term investment options that offer not just tax deductions but also tax-free returns. You can choose from PPF, Kisan Vikas Patra,National Savings Certificates. If you don’t want any of these options, consider locking up the money in a fixed deposit.

Fund your Retirement Goal

Apart from the above-mentioned investment options, you can consider parking bonus money in a long-term financial instrument such that the benefits can be reaped post-retirement. Even though retirement often looks like a far away event, the earlier you start saving, better is the retirement corpus you can accumulate. And your older self will thank you for taking such a wise decision. A lot of retirement plans are available in the market, so choosing an appropriate one won’t be a problem.

Start an Emergency Fund

Nothing in this world is permanent or guaranteed and it’s always wise to be prepared for the unexpected. Let’s say your salary takes a hit or your car breaks down or a family member gets hospitalized. To take care of these unexpected events, it is important to have a contingency or emergency fund. And if you still have not created a separate fund for contingency then, you certainly need to create one with the help of the bonus amount received. Experts agree that it’s smart to have three-to-six months;worth of savings tucked away, or even more, to help protect you in case of disaster. So you can utilize this amount to get closer to this goal.

Enhance insurance cover

You need to on and off check whether the current life insurance cover you have is enough to service the needs of the family in the absence of the breadwinner. Now that you have a lump sum amount in hand, you can always get the cover enhanced. In the same way, review the health insurance that you own and go for a top-up policy if needed. Remember, that medical inflation is rising a 10% plus rate every year. Having a health insurance of at least Rs 5 lakh is a necessity in today’s situation.

Invest on Yourself

With the rising competition, self-development at any point in your career will help you stay on the floor. So, investing your bonus money to learn a new skill sounds like a great idea. Something which could be relevant to your job or an area of personal interest, such as photoshop, advance use of excel, an advance course, etc. It could be anything! Basically, anything you’ve been putting off for the longest time. Having said that you can also learn new things that you are passionate about – it could be learning a new instrument or learning photography skills or even culinary skill. All this would boost your confidence and help you grow professionally and personally.

To know more about smart ways to use your bonus money or a long-term financial planning connect with our financial planning expert for a better and secure future.

All that you need to know about Travel Insurance

Whether it is for business trips or holiday with friends and family, traveling in India or abroad these days has become an integral part of our lives. We have become more mobile than ever before. But with the increased number of travelers and rate of travel, the occurrence of multiple travel related risks are also increasing. From misplaced luggage at airports to costs incurred due to transit delays to falling sick at foreign lands, traveling can sometimes offer a lot of inconveniences and one should be prepared! It is important to take measures and protect oneself against unforeseen circumstances so the rest of the trip goes smoothly and as planned.And who can help you in minimizing all these risks? A travel insurance policy. A comprehensive travel insurance policy offers many benefits such as medical expenses and loss or baggage. However, one can also opt for a specific policy that fits the purpose and duration of the trip.

Let’s find out more.

What does travel insurance usually cover?

A travel policy usually allows you to cancel your trip for the following reasons-injury or illness, a missed connection, or an unpredictable event such as earthquake, terror attack, etc. If your trip is derailed for one of these reasons, you’re entitled to a reimbursement for costs that are usually not refundable. It also covers medical expenses incurred during travelling. Some policies may also provide cover for other situations like medical evacuation to India, accidental death or disability benefit, losses due to flight delays or loss of documents or baggage loss and more. In addition, some even provide travel assistance in the form of legal advice or facilitating emergency cash transfers. Some insurers also provide cover for adventurous sports activities.

What travel insurance does not cover?

A common exclusion is a pre-existing illness. It refers to any medical condition that has required attention prior to travel or initiation of the policy. So, if you are suffering from an illness or condition like diabetes, blood pressure, cardiovascular problems and so on, the policy will not be covering that. Also, if complications arise from any surgery, illness or accident you sustained prior to the travel those will not be covered in most of the insurance policy. What else doesn’t it cover? Any losses incurred due to breaking foreign laws or caused due to terrorism or making frauds.

What about the cost?

The price and duration of the trip, your age, and optional add-ons–these are the factors that determine the cost of your insurance. A policy typically costs 3 to 5 percent of your trip’s prepaid,non-refundable costs. Whereas a “cancel for any reason” policy (an option provided by many) can run you 7 to 10 percent of the non-refundable cost. Some plan provisions are available only if you buy the policy within 14 days of your initial travel purchase. Some policies are more expensive if you’re older or are engaging in risky activities like bungee jumping, rock climbing, paragliding, etc.

What should I look for when picking a policy?

Consider what kind of a traveler you are and pick a policy accordingly. Say, if you are a frequent traveler (if you take more than two holidays a year), it is best to take an annual travel policy as it will be cheaper than a single trip policy. A single-trip policy is ideal for a one-time vacation or business tour! Also, if you or a family member has a medical problem that could require a cancellation,confirm that your policy includes a waiver for pre-existing conditions (this is the most common reason claims are turned down). These are few factors that you can look forward to when selecting a policy.

Where can I find a good policy?

Travel agencies offer policies that will generally cover you for the duration of your trip, but you should definitely do your homework before picking that up. Most airlines, cruise lines, and tour operators offer optional insurance (also called wholesale policies) that tend to have more exclusions.You can also go through multiple websites for reviews and compare policies. You can also buy direct through one of the travel insurance companies.

Wondering about your travel Insurance ?? Want to know more about travel insurance and plan. Feel free to write us on contact@sbsfin.com

What do Millennials save for?

Millennials—people born between 1980 and 2000. People whose traits are positive—they are earnest, positive, seek new experiences, and display a high level of social consciousness. They have expectations from life (positive ones), they work and strive for the best, they use technology, they crave for work-life balance and give a lot of attention to new experiences in life. Millenials are go-getters, hard-working, they are careful about their spending and saving. They are also known to handle responsibilities better, take challenges as opportunities and face competition which otherwise their previous generations haven’t had to face so intensely. Our Millennials are pretty thrifty when it comes to saving money and they know exactly where to spend that. Let’s find out how financial planning for millennials can help them for a better and secured life ahead.

Saving to see ‘The World’
Travel is a wonderful thing. It broadens your horizon. It helps you get a better perspective. It takes you out of your routine life and what not! Millenials, the generation of go-getters are the ones who soulfully believe in this concept and totally live for this. For Millennials traveling matters more than anything. The backpacking trip to Indonesia, biking trip to Ladakh, solo trip to Canada would have been unthinkable choices for the Generation-Xers. But for Millennials the bucket list is getting bigger and better with each passing year. So it’s quite natural that saving for travel is a priority for millennials. And thanks to the economy that has made travel a cheaper and more flexible affair, the love for traveling among Millennials is only growing. They would rather take regular holidays than save for a home or car. Their motto lies in Saving, Exploring, Getting Amazed, and Repeating the same.

Saving to buy more experiences
Millennials tend to define themselves by their experiences more so than other qualities or factors. And it’s not just travel or adventure sports or cultural experiences that they are addicted to. In fact, they value all sorts of experiences—live performances, sporting events, concerts, social events, food fairs, photography and the list goes on. More than aiming to spend on possessions, they love saving for varied experiences of life. They aren’t spending our money on cars, TVs, and watches. In fact, they are renting scooters and touring Goa, rocking out at music festivals, or taking part in Marathons. So after aiming to tour in maximum cities or countries, saving for experiences comes as a high priority for them.

Saving to take better care of themselves
Although open to new experiences in life, Millennials avoid getting addicted to things that seem to harm their body in more ways than one. Millennials are, by and large, eating more healthily than any previous generation. They eat more ethically and are aware of what’s served on the platter. They are also more likely to take part in healthy behaviors (social media influence for good), such as exercising regularly and maintaining a healthy weight. For millennials, value and product quality are important too and they favor things that are natural and organic (from food to cosmetics). So, it’s an obvious thing that they save up to invest in taking better care of themselves. Plus staying healthy helps them save a lot more too.

Saving to maintain the same lifestyle post retirement
The ability to maintain a similar lifestyle in retirement in a satisfying and fulfilling way is one of the biggest concerns for millennials. The key to achieving financial comfort in retirement is to have a clear understanding of the financial resources and the demands on these resources both now and in the future. It is kind of given that Millennials do understand the importance of retirement planning and getting an early start on building retirement security. Many surveys have also shown that when searching for a job, they look out for retirement benefits or make sure to save a certain percentage of their salary in PF accounts.
Additionally, it has been found that millennials purchase their first mutual funds at a younger age compared to their earlier generation. Millennials are still in their prime years to start investing, so you can expect this number to rise at a faster rate than older generations that should have been saving for decades already.

Team SBS Fin is working constantly to help you plan finances better and to help the millennials with setting financial goals as per their bucket lists. Wondering about your travel wish-list?? Feel free to write us on contact@sbsfin.com.

Important things a Tax Payer should not miss!


Make sure you pay your taxes; otherwise you can get in a lot of trouble.– Richard M. Nixon

Well no one could have said it any better. Not paying taxes correctly and making mistakes in doing the right calculation may cost you bad in future. So, it’s important to be completely aware of the basics of income tax. Deadlines of filing income tax returns, knowing the income tax slab, sharing the right information and many more important things like these are crucial and missing such details can result in scrutiny and adverse action by the I-T department. Our purpose here is to not just warn you but help you with the nitty-gritty of tax matters, so that your journey as a tax payer remain smooth and hassle-free.

Your bank or banks’ interest income counts!
This is a common mistake that most taxpayers do while filing their Income Tax Return (ITR) – They forget to include interest earned from savings bank account, fixed deposits or interest earned from
loans given to acquaintances. Now if you think all this is tax-free, you are so wrong. Interest up to Rs10,000 earned from the savings account is allowed as a deduction under Section 80 (TTA), but you
need to mention such income in the ITR. Also tax-saving fixed deposits although help save tax under Section 80C, the interest earned from them is fully taxable. So, don’t forget to include such income while filing ITR.
Also, it’s mandatory to report all your bank accounts (you can skip the dormant account which is not operational for 3 years) in the ITR. While mentioning the bank detail, you should provide the account
number, IFSC code, name of the bank and account type (current or saving) in the ITR.

Never ignore TDS claims
Now, it’s a known fact that any tax deducted on salary appears on Form 16 provided by the employer. However, for tax deducted on all other incomes, a person needs to check out his Form 26AS online. Besides TDS, 26AS also reflects the payment of advance tax made. If you notice a mismatch or a difference, you should immediately notify your employer before filing return and get it rectified.

Never hide your assets
Taxpayers earning above Rs 50 lakh are required to disclose the details of the financial assets (including movable and immovable assets) which they own as on date. It could be in India or foreign lands (although you live in India, you may earn income from investment abroad). This is the duty of such taxpayer. If you miss any material information especially related to foreign belongings or transactions, which needs to be part of ITR, then you can be penalised for such mistake.

Original documents, not required
There is no need to submit any document in original to the I-T department during the process of filing income tax returns. They are also not required to be given to your CA (you can always deny, if
asked for originals), if you are taking any such assistance. Just keep the copies of the documents ready in your file as the IT department may ask you to furnish the same at a later stage. And that’s
about it!

Previous employer’s information is very crucial
Now once you move from one company to another, you may forget to collate and pass on information from your previous employer to your new employer. And it may so happen that your new employer also doesn’t take into account the income earned from your previous job. Tax is then deducted on the assumption that income for the remaining months is the only income for the year.
But problem arises when you go ahead and file your tax returns at the year-end. At that time, the incomes from the two employers are added and the deduction and exemption are halved and tax
liability arises. So to avoid that make sure to pass on exact information from the previous company to the current one!

ITR filed. Now verify it.
One of the most crucial things that you cannot miss. Your work doesn’t get over once you file your income tax return. You need to verify your ITR. You have two simple options to achieve the same.
Either do it manually (sending ITR-V to CPC Bangalore) or electronically (E-Verification) through net
banking, Aadhaar OTP etc. Missed date is actually not a miss!
If you have missed the I-T return filing deadline of July 31, you can always file a belated return within a year. For instance, belated return for the financial year 2017-18 can be filed by March 31, 2019. You must ensure that you do not miss this crucial deadline.

For any assistance or an appointment with financial expert, feel free to get in touch with our team on contact@sbsfin.com

Common Mistakes To Avoid While Taking A Home Loan

Buying a dream home isn’t easy. And considering a home loan is even tougher!
Borrowing a home loan requires careful planning and analysis. Sometimes, you need to spend months and months to
get everything streamlined. You should do some preparation and background work to avoid hassles in your home loan process. Here we are discussing some common mistakes one should avoid while
taking a home loan.

Choosing your property first? Choose it alongside a lender.
Imagine you find your dream house and then discover that the lender that you had chosen will not fund that property due to some legal or document issues. Won’t that break your heart? Most of the
banks (lenders) provide loan for ready-to- move-in property and even for under-construction properties with renowned and approved builders and projects. But if the property is unapproved or
unauthorised or if there are legal issues, chances are the bank will reject your application and refuse to give loan.
Also, if the property is very old or it is developed by a relatively unknown builder, the bank might have an issue with providing a property loan. The best way is to select your property and
then simultaneously find out if any other lender has funded for another flat in the same building.
That lender should anyway be a part of your consideration set. Also if you approach lenders alongside, you are likely to get better rates as lenders reserve their best rates for immediate disbursement cases.
You can also approach a property agent to help you in finding the lender.
Another thing to consider here is to not consider the bank where you have an active account as a first preference. It may sound as a convenient option, it may not necessarily be the best option.
Always approach multiple lenders to see who is offering you the best interest rates and other services. Remember that even a difference of few decimals points in interest rates can help you save a lot over the loan tenure.

Confused between fixed or floating? Choose according to your requirement.
Now as you choose your lender, remember you can avail a loan either on fixed rate of interest or floating rate of interest.
Fixed rate of interest remain unchanged irrespective of the changes in the rate of interest in future years.
Whereas floating rate of interest suggests that rate of interest will
change if the RBI will make changes in the interest rates. How to zero down on one? Here’s the formula.
If you are taking the loan for a shorter duration (5-7 years), choose a fixed rate of interest.
But if you are going to repay the loan in say 20 years or more then you should take a loan on floating rate of interest as you can’t predict the changes for such a long duration.

Borrowing more than you can afford? Not a good idea!
Don’t make the mistake of borrowing more that what your income level permits. While determining your loan eligibility, banks would most definitely consider your income and liabilities but they may
not consider your existing expenses.  You need to consider that. It is always better to consider your budget according to your current income and expense levels. If your existing expenses are high and you take a loan which results in high EMI payment, you may end up in a financial crunch. Yes, you read that right. Now, we don’t want to make you all nervous here.
Just do a simple calculation of all your fixed monthly expenses. And add this to the amount of EMI on your proposed home loan.
If the total expenses are way too close to your monthly income levels, you should settle for a less expensive property.

Not planning to read the loan agreement? You may end up signing for something you didn’twanted
It’s lengthy, it’s going to take time. Yes. But make sure you invest that time and effort. After all you are signing up for your dream home! Almost 80 per cent of home loan borrowers do not take the
pain of reading every clause in the agreement.
This can have serious repercussions,  if the bank official fails to mention something that may be critical for you when discussing the terms orally.
Don’t fall into that category. Spend some extra time in reading every aspect. Also, it is always advisable to clarify all doubts before you sign the agreement.

Not taking insurance cover for the home loan? You are putting your family in trouble
Your home is for you and your family. But I am sure you don’t want to put the burden of home loan to your family in case something unfortunate happens to you during the tenure of the loan.
So, it’s most important to take an insurance cover or a life cover on home loan that includes coverage of your home and other liabilities.
The cover will provide monetary benefit to your family in case of an
unfortunate incident and ensure that your family members inherit your home not your home loan.
You should also consider taking a personal accident or critical illness cover. In case, your income gets interrupted due to any critical illness (Cancer, Stroke, Heart Attack, Major organ transplant, etc.), the policy will take care of your home loan liability.

For any assistance or an appointment with financial expert, feel free to get in touch with our team on contact@sbsfin.com

Common Myths About Fixed Deposits

Fixed Deposits, also called as Term Deposits, are one of the most traditional investing options.

While we may be hearing a lot of noise around other investments like Mutual Fund SIPs, Liquid, Balanced and Debt Funds, Tax Free Bonds, PPF, EPF and what not! To some nothing beats the assurance and simplicity of a Fixed Deposit.
It’s a popular choice when it comes to showing investments on paper at the end of a financial year. But all that simplicity and assurance comes at a price! This article will help you remove some of the most common myths surrounding the Fixed Deposits and the interest accrued out of them. Read on, so that you are well aware next time you are investing in one.

 

Myth 1 – Fixed Deposits are only offered by banks

Fact – Fixed Deposits are also offered by other companies

It’s quite a general believe that Fixed Deposits are only offered by Government or Private sector banks. In fact, you can approach multiple leading companies and NBFCs (Non-Banking Financial Companies) who offer Fixed Deposits for retail investors.  And the catch is you are likely to enjoy better interest rates with these institutes as compared to bank deposits. Although these institutes may not give you attractive features like flexible tenure options, online account access and insurance cover on your fixed deposits.

 

Myth 2 – TDS (Tax Deducted at Source) on Fixed Deposits is mandatory

Fact – Knowing the mandates well could help avoid Tax Deduction

This is no myth that fixed deposits are taxable, however, not everyone needs to pay taxes. Yes you read that right! Returns from Fixed Deposits are included as a part of one’s total income under ‘income from other sources’. So, if your interest income exceeds Rs. 10,000 in one financial year, TDS will be 10%. For company deposits, TDS is deducted once interest exceeds Rs. 5,000 in one financial year. Minors, housewives, senior citizens, and people living on zero taxable income or no income, can most definitely avoid TDS. In that case, one needs to submit form 15G or form 15H to avoid TDS. If you’re over 60 years with no income, you won’t be losing any of your money on taxes, and can even enjoy a better interest on FD returns.

 

Myth 3 – All FDs Offer Tax Benefits

Fact – Select 5 year deposits offer tax benefits

Now if you are looking for tax saving, you will have to know that not all FDs offer that benefit. Tax benefits under section 80C of the Income Tax Act are offered only on specific deposits – for instance you’ll need to lock in your money for at least 5 years for this purpose. And during this time, the deposits cannot be pledged nor withdrawn.

 

Myth 4 – Regular interest payments on Fixed Deposits fetch more returns

Fact – A cumulative Fixed Deposit with returns only on maturity would fetch you more

Fixed Deposits come with two options, one where you receive interest payouts at regular intervals, and two a cumulative deposit where the whole amount (principal amount + bank’s interest) is received on maturity. The latter fetch you more returns. How? Well, that’s the magic of compounding. What happens in a cumulative deposit is the interest paid by the bank is compounded or multiplied at regular frequencies. So, higher the frequency of compounding, higher the yield on investment.

 

Myth 5 – Investing on an FD in the name of a family member helps saving taxes

Fact – Investing on an FD in the name of a family member doesn’t help saving taxes

Money gifted to spouse or children doesn’t attract tax. But when it comes to investment the income it generates is clubbed with the income of the giver and taxed accordingly. So, if you are thinking to invest in fixed deposits in the name of any family member, remember the interest will be taxed as your income. So, it’s best to avoid.

 

Myth 6 – In case of cash crunch, premature withdrawal is the only way

Fact – Fixed Deposits have other options in times of emergencies

If at any time you require money from your Fixed Deposits, most banks offer part withdrawal of funds, so that you could withdraw the amount you require taking care of the emergency, and the balance would continue to earn interest.

Henceforth, investing helps your savings grow – only if you truly understand how the concept works. At SBS Fin, we want our investors to indulge and understand wealth management as well as the money market instruments. Try and inculcate the habit of being up-to-date with the trends of the stock market and analyzing its ups & downs for better investing strategies. The same can be followed and assessed on our mobile app SBS FinFit, the same is available on Google Play and App Store.