Finance

Retirement is supposed to be the best period of your life when you get to relax and spend fulfilling moments with your loved ones. However, this is not always the case, as finance can become a cause of headache after you retire. The biggest challenge of retired life is adjusting to not receiving regular payments.

To tackle this, you must start planning your retired life as early as possible. If you invest in the right instruments, it is possible to build a corpus, which is significant enough to fund a comfortable retirement. The most popular options to achieve this objective are Unit-Linked Insurance Plans (ULIPs) and pension plans. Here, we explain which alternative can benefit you more.

What is ULIP?

ULIP is one of the most profitable investment avenues available today. Its best feature is that it combines life insurance with wealth creation. When you purchase the plan, ULIP fund managers use a portion of that to invest in debt, equity, or a mixture of both types of funds. The ULIP plans returns from these funds enable you to earn a large corpus, supporting you financially after retirement.

The insurance company also provides a life insurance cover, which secures your loved ones’ future in your absence. This quality of dual advantages makes the ULIP investment plan an ideal financial product for retirement planning.

What are pension plans?

Pension plans serve the purpose of offering you a steady income after your retirement. The high inflation rate in India makes it quite challenging to maintain a comfortable life post-retirement. This is why financial experts advises you to not rely on your savings only and ensure that monthly payments continue after retirement.

The workings of a pension or retirement investment plan are relatively simple. You pay a portion of your income towards the pension fund until the day you retire. On reaching the retirement age, you will start to receive frequent returns from the pension plan. This can help you take care of your daily expenses and you can continue to lead a luxurious life.

Which one should you choose?

Now that you know the differences between a ULIP investment plan and a pension plan, it is time to determine which one will serve you better. Here, we have compared these plans based on aspects, like:

• Tax exemptions

The retirement plan comes with tax deductions. Under Section 80CCC of the Income Tax Act 1961, the money you pay towards the plan is tax-free. Even though it has a maximum limit of INR 1.5 lakh, the money saved on tax can prove beneficial for you. However, the withdrawals received from this plan are not entirely tax-exempt. You do not have to pay any tax on the lump sum received immediately after retirement, which is one-third of the total corpus, but the annuity or regular payment is subject to tax.

In this regard, ULIP has an advantage over the pension plan. Apart from the tax-exempted premiums under Section 80C of the Income Tax Act 1961, Section 10(10D) ensures that you do not have to pay any tax on the ULIP’s maturity benefit.

• Flexibility

Another ULIP benefit is that it gives you the opportunity to select how the fund manager can distribute your money into different instruments. You also have the choice to switch between the types of ULIP funds, depending on your changing risk tenacity and market condition. All these points make ULIP a more suitable choice for building a retirement fund in comparison to a pension plan.

Before you decide on where to invest, take some time comparing the pension plan and ULIP plans returns along with their additional benefits. This will help you opt for the appropriate investment vehicle.

 

Getting approved for a home loan, especially for the first time, can be stressful and daunting. Luckily this is something that many people go through, so there are a lot of helpful tips and tricks out there.

As with all money matters, it’s normal to feel nervous when you are trying to get approved for a home loan, but you should also be excited! Securing a loan is often the very first step in home ownership.

Start Saving For A Down Payment

In order to get approved for a home loan, you’ll have to put some money up front for a down payment. This amount can range anywhere from 3% to 20% of the total cost of the home, but keep in mind that the more you are able to put down, the lower your mortgage payments will be. Make sure you have enough money saved up before you try to secure a loan.

Check Your Credit Score

Having a good credit score will attract the best lenders and help you secure the best deal on a loan. Make sure to obtain a copy of your credit report before talking to lenders so that if repairs need to be made on your credit you can make them beforehand.

Research Loan Options

There are many various types of home loans. It’s best to do your research on all of them before you begin contacting lenders and decide which type is best for you. Fixed-rate loans and adjustable-rate loans are probably the most common, and people have different reasons for preferring one over the other.

Compare Offers

Once your financial documents are in order, your credit score is high enough, and you have enough saved for a down payment, it’s time to start shopping for a loan. But don’t just take the first loan that is offered to you.

Talk to multiple different lenders and ask lots of questions. This will allow you to find the lowest interest rates possible. It’s also smart to look out for fine print and hidden fees. Weigh all of your options before saying yes to a loan.

Respond Promptly

During the loan securing process, it is common for a lender to reach out and ask you for additional information or paperwork. It is important that you respond to these requests promptly in order to avoid causing delays in closing your loan.

Overall, buying a home is a very exciting process. Try to remember this if you are stressed or overwhelmed during the home loan process, and lean on the hundreds of thousands of people who have been there before.

 

Many of us know that money is a good thing; however, fewer of us know exactly what the best things to do with it are. If you’ve ever wondered what the smartest things to do are with the money you have, you’ve come to the right place.

Take a look at some of the best things you can do for your finances.

 

Invest

Saving for your future is a critical part of being an adult. The best way to save is to invest your money in the right places. Whether you want to invest in real estate or start a retirement account, the idea is to put your money somewhere that it will grow. The earlier you start investing your money in something, the more time that it will have to increase in value.

 

Create a Budget

One of the most common reasons why people run into problems with their money is because they don’t have a budget set in place. A budget is there to make sure that you’re not overspending in certain areas that could get you in trouble.

The great news is that creating a budget for your money is as simple as downloading an app that helps you keep track of your spending. After tracking your expenses for several months, sticking to your budget will start to become like second nature.

 

Stay Out Of Debt

One of the worst things you can do for your finances is getting yourself into an unmanageable amount of debt. Pay off your debts as soon as you can, without letting them get out of control.

Even though you might be tempted to put off repaying your debts, you only end up spending more money in the long run. Whenever possible, pay money towards your outstanding debts, and make it a priority to pay them off entirely as soon as possible.

 

Put Away Monthly Savings

A lot of people don’t like the idea of saving because they’d rather live in the moment. However, what a lot of people don’t realize is that saving can add up in small amounts over time. By putting away a small amount each week or even month, you can see your savings grow exponentially over the years. Try to get into the habit of putting away a little bit after each paycheck. Slowly and steadily, you’ll see your hard work pay off.

 

Avoid Impulse Purchases

It’s not uncommon for people to see a product or service that they are convinced they can’t live without. In the heat of the moment, they throw all of their money away for one single thing. However, impulse purchases are your worst enemy. Before you spend a lot of money on anything, make sure that you’ve thought well and hard about it.

Some people assume that selling a home is as easy as putting it on the market. However, it’s not as simple as you might like to think. There are all sorts of factors that can lead to your home staying on the market. The longer it stays on the market, the harder it will get to sell it. So, how do you get your home sold to a buyer as fast as possible?

Take a look at some of the most practical tips for selling your home as fast as you can.

Take Care Of Problem Areas

Before you put your home on the market, it’s important that you address any issues that could push potential buyers away. Whether there is a pest infestation, or a leak in the roof, the sooner that you get rid of problems, the sooner the buyers will be interested.

Rarely do buyers want to buy a home that will require a considerable amount of work. Make things as easy as possible for someone purchasing your home, and they’ll be much more likely to buy from you.

Get an Agent

Many people trying to sell a home may avoid getting a real estate agent because they don’t want to pay a commission. However, a real estate agent is one of the best tools you can have for increasing your chances of a faster sale.

A real estate agent will know exactly what it is that you need to do to make your home sell quickly. From helping you get your home appraised to helping you choose the best selling price. Choosing a real estate agent who knows what they’re doing is probably the best favor that you can do for yourself in terms of selling quickly.

Pull Out The Paint

It’s a good idea to slap a new coat of paint on your house to give it a fresh breath of air. If you’re not sure what color to paint your house, consider consulting with your real estate agent. They might know what a great color is that tends to sell faster. In general, darker colors aren’t as appealing. Go for a light and airy, and you’ll immediately make your home feel newer.

Boost Curb Appeal

Curb appeal is what makes your home appealing to someone walking down the street. It should be the first thing that catches a buyer’s eye when they see your home from the outside. The better curb appeal that your home has, the more likely that you are to appeal to buyers. You can try anything from painting your front door to adding fresh flowers. It’s all about giving your home a little extra pizzazz.

You may have heard the expression “save for a rainy day,” and you certainly should. But how much should you be saving, and how much of that money should you be keeping in your checking account?

Generally speaking, it’s a good idea to keep your savings and your checking separate. After all, you don’t want to be tempted to spend the money that you’ve worked so hard saving on a frivolous impulse buy. But at the same time, you should keep a little extra on hand in your checking account. This will help you avoid overdraft fees, for instance, if you make a mistake and draw too much from your account.

So what’s the right amount? Well, that depends on a few things. Here are our five tips for knowing how much money you should keep in your checking account.

1. Maintain the Required Minimum Balance

Some checking accounts have minimum balance requirements. Before signing up for an account, check with your financial advisor to see what, if any, requirements are associated with the account. The minimum amount required often varies based on the financial institution and the particular type of account you have.

For instance, Rivermark Community Credit Union offers a Free Checking Plus account with a minimum opening balance of $25. Once your account is funded with the opening deposit, however, there are no further minimum balance requirements. If you do have a checking account with a minimum balance requirement, you should make sure you always have at least that amount in your checking account to avoid any penalties or fees.

2. Calculate Your Monthly Bills

Once you’ve made sure that you have enough money to cover any minimum balance requirements, make sure you have enough in your account to cover your monthly bill payments. Many people use the auto-deduct option for payments such as rent, utilities, and debt obligations, such as credit cards or student loans. Using auto deduct not only ensures your bills get paid on time, but you may also get an interest rate deduction by using this option.

This can save you quite a bit of money over time. But only if you have enough money in your account to cover these bills. If you forget you’re signed up for auto deduct and you don’t have enough money in your account to cover the payments, then you’ll likely incur late or overdraft fees. That’s why you should add up your monthly bills and always keep enough money in your checking account to cover the total.

3. Account for Monthly Expenses

Once you know how much you’re spending on your monthly bills, you’ll also want to add up how much money you need for other monthly expenses. For instance, you probably use your checking account to pay for things like gas, groceries, and other basic living expenses.

If you have a monthly budget, great. You can use that to know how much you spend in an average month. If you don’t have a monthly budget, now is a good time to sit down and create one. This free budget worksheet from Consumer.gov is a good place to start.

You can look at your checking account for the past few months and total up how much you’re spending on food, gas, entertainment, and any other regular expenses. Then create a budget with categories for these things, as well as for your monthly bills. Assign a maximum spending amount for each category in your budget and then add up all these amounts. This is how much money you’ll need each month to cover all your expenses.

If you see that you’re spending more than you’re making, you may need to cut back in certain areas. Your financial advisor can help you do that. Once you know how much money you need to cover all your average monthly expenses, you should aim to keep that total amount in your checking account.

4. Add a Little Extra

Remember that your budget is based on an average month. There will always be some months when you spend a little extra. You could have a water leak, for instance, that may cause your water bill to be higher one month. Or you may have certain expenses that only come around once or twice a year, like property taxes or membership fees. You’ll want to account for these extra expenses as well and add them to your overall monthly budget amount. If you have an annual expense, divide that amount by 12 and add that amount into your monthly budget.

Once you have a new monthly budget that accounts for all your annual expenses, add at least 10% to the total monthly budget amount so that you can cover unexpected expenses without having to dip into your savings.

5. Put Your Savings Elsewhere

In general, you should plan to keep a full month’s worth of expenses plus 10% extra in your checking account at all times. It may be tempting to keep more money in your checking account. However, you should set any extra aside in a separate savings account. As we mentioned before, this will help you avoid the temptation to spend the extra cash and will help you save for bigger-budget items, such as a vacation, car, or new home.

Most Americans live paycheck to paycheck. Wouldn’t it be nice to instead have enough cash in your checking account to use the money from this month’s paychecks for next month’s expenses? Doing that will keep you one step ahead of the game. It may take some time and work to get to that place, but we can help. Our financial advisors can come up with a plan to help you find extra savings, cut back on your spending, and plan for the future. So give us a call and we can put you on the path toward future financial success right now.