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- Don't Let Money Idle In A Savings Account
- Take Advantage of Tax Benefit From Inflation
- How to get right education loan?
| Don't Let Money Idle In A Savings Account Posted: 01 Jul 2014 07:23 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300
Don't Let Money Idle In A Savings Account
Even if it is lying in your bank account, your money is not safe. Inflation nibbles into its value every day, eroding its purchasing power. The value erosion would be greater if you have cash lying inside a locker but even in a savings bank account it loses value. Here is a perspective of what 10% inflation can do to your savings.
If you have `50,000 in your bank account, it will grow to about `52,000 in one year. But one year from now prices will be higher and `52,000 will buy only goods worth `47,270 today. So, don't let your money idle in a savings bank account. Never mind the attractive 6-7% being offered on the balance by some banks. Your money must grow faster than that to retain its purchasing power. Opt for a sweep-in bank account. These accounts combine the high returns of a fixed deposit with the liquidity of a savings bank account. You can also put your money in a short-term debt fund for higher returns.
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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| Take Advantage of Tax Benefit From Inflation Posted: 01 Jul 2014 05:17 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300
Curiously, investors also stand to gain from high inflation because it helps reduce their tax on capital gains. Tax rules allow investors to adjust the cost of an asset to the inflation during the holding period. The cost inflation number for 2013-14 is 939, and could be roughly 10% higher at 1,032 for this year. This means if you choose the indexation option, you won't have to pay any tax even if your investment earned 10% annualised returns in the past five years. What's more, you can book a notional loss if the investment lagged inflation during the period and adjust it against gains from other investments. If it can't be adjusted in the current year, this loss can be carried forward for up to eight financial years. However, only certain investments (debt funds, FMPs, gold funds and debt-oriented hybrid schemes) are eligible for indexation benefit.
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Leave a missed Call on 94 8300 8300
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
H. International funds Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF |
| How to get right education loan? Posted: 30 Jun 2014 08:47 PM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300
"Neither a borrower nor a lender be," William Shakespeare had written in Hamlet. Trying to go by this today, however, seems an impossible task.
Whether it is for buying a house or a car or pursuing higher studies, loans are common today. With college fees increasing every year, many have no option but to opt for education loans. For undergraduate engineering courses, the fees could be ₹ 510 lakh, while for a five- year medical course at a private college, this could go up to ₹ 50 lakh. For post- graduate courses such as those on management, fees could be more than ₹ 10 lakh.
Fees at private colleges are higher than in government colleges. We have been noticing a surge in the number of students going abroad for undergraduate studies. Many students have started opting for the US for undergraduate studies.
Banks offer loans of up to ₹ 10 lakh for courses in Indian colleges and up to ₹ 20 lakh for studies abroad, according to Indian Banks' Association norms. But for postgraduate courses in premier management colleges in India, such as the Indian Institutes of Management, banks offer loans of up to ₹ 20 lakh. While the size of a loan depends on the course and the college, the ticket size of student loans in India ranges between ₹ 2 lakh and ₹ 22 lakh, the average ticket size being about ₹ 5 lakh.
These loans cover fees for tuition, examination, library, laboratory and hostel; money for purchasing books, equipment, instruments and uniform; travel expenses for studies abroad; caution deposit or refundable deposit, etc. In some cases, there are limits on some of these items. The loan also pays for expenses on study tours and project work.
Conditions for sanctioning a loan
While sanctioning a loan, a lender will check if a student has actually secured admission to a course, the quality of the college and the course (whether it is recognised by the University Grants Commission or the All India Council for Technical Education), if the student has the ability to secure an appropriate job after the course and the credit history of the co- applicant or guarantor. In case the loan is backed by collateral such as property ( in case of high ticket loans), lenders also consider the value of the property.
Under education loans, fees for tuition, examinations, library, etc, are paid directly to colleges.
Co- borrowers and guarantors
All education loans must have a co-applicant, usually a parent. In some cases, a sibling or spouse suffices.
If the loan amount is less than ₹ 4 lakh, for instance, loans for nursing courses, the lender doesn't seek a guarantor or security. For loans of ₹ 4 to ₹ 7.5 lakh, a third- party is guarantor is required, while for loans exceeding ₹ 7.5 lakh, lenders insist on collateral, usually property. Defaults in education loans affect the credit histories of both the borrower and the co- borrower.
The guarantor has to be someone other than the parent, with a sound financial condition. We insist on this because we are not sure of the student's ability to repay. There are cases of wilful default in which a student goes abroad after studies and does not repay the loan. In such cases, we recover the money from the parents. If there is collateral such as property that has been mortgaged, we can use Sarfaesi ( Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, 2002.
Interest rates
Currently, interest on education loans is between 11.75 per cent and 14.75 per cent, depending on the loan amount and the college concerned. For premier institutions, lenders offer a discount of 25 basis points. Public sector banks offer a discount of 25 basis points to female students, says the bank official.
Repayment terms
After the completion of the course, those taking education loans get a moratorium of six months to a year, before they start repaying. In the case of an engineering course, students get four years ( the course duration), along with an additional year, to start repaying. The repayment has to start a year after the course is over, even if the student doesn't manage to secure a job. Once the repayment starts, the borrower can avail of benefits under Section 80- E of the Income- Tax Act.
Why should you take a loan?
While a loan might not be sufficient to meet the entire cost of an educational course, it could be a great help.
These days, many parents decide to let their children take education loans just to ensure they learn financial discipline. Parents tend to retain their savings for emergencies or unforeseen expenses.
Usually, it is the first loan a student avails of and, therefore, by repaying on time, students can build good credit histories; this will be of immense help when they seek to avail of automobile loans, home loans, credit cards, etc. With timely education loan repayment histories, students have been building great credit scores for themselves. In many cases, they get pre- approved loans for other requirements, based on impressive credit scores.
Overseas studies
In the case of studies abroad, students must consider additional sources of funding such as scholarships or part- time jobs, as the funds required are quite high Given a postgraduate course in a country such as the US could cost up to ₹ 30 lakh, or more, per year, it is not possible for parents to fund a child's education on their own. And, dipping into their retirement savings for this purpose is not advisable. That is why in many cases, even if the student takes a loan, we advise them to look for a part- time job.
If the tuition fees for a college in India are between ₹ 50,000- Rs 2 lakh, the same outside India could be five to 10 times,. While undergraduate diplomas in some countries, like New Zealand and Canada, can be completed on bank loan, for graduate courses additional funds are a must.
Insurance, which is compulsory for foreign studies, is another added cost. The sum assured can vary between a minimum of $ 50,000 to $250,000 (₹ 30 lakh to ₹ 1.5 crore).
The sum assured will depend on the kind of college. Some colleges insist on a particular amount of insurance and some even insist that the student buys it from a local insurance company. That can be more expensive than buying a policy from an Indian insurance company.
The premiums can vary from ₹ 8,500 - 10,000 per year for students travelling to UK, Australia and from ₹ 20,000- 30,000 per year to those travelling to USA. Typically, the insurance covers study interruption, sponsor protection, compassionate visit apart from accident and sickness reimbursement and personal accident. The policy also covers expenses if the student is hospitalised for drug abuse or for rehabilitation. We have seen incidents like this, since in most cases the students are going abroad for the first time.
There is always a risk the student may not get a job immediately after completing the course. So, parents have to be prepared for such a scenario
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Leave a missed Call on 94 8300 8300
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
H. International funds Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF |
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