Finance

Typically, once people reach their 30s and 40s, not only do they start to feel a little old, but they also come to the realization that their parents are aging. Having older parents can be difficult in many ways because you have to come to terms with the fact that they won’t be around forever, but you want to make sure they enjoy the years they have left fully. One big stressor and often elephant in the room when it comes to aging parents is finances.

If your parents weren’t smart with money when they were younger, you might find yourself worrying about what they are going to do once they reach retirement age. You want to help them, but aren’t sure you know how. Luckily there are lots of small things you can do that will help ease them into their golden years. Here are 3 things you can do to help out your parents financially.

Cover All Of Your Own Expenses

If you have older parents, make sure you are covering all of your own expenses and not relying on them for anything. If you get into a pickle and need to borrow any amount of money from someone, try asking a sibling or friend first and avoid asking your parents. They are going to need all of their savings for their retirement and even if you intend to pay back the loan quickly it could put a strain on them.

Set Aside Some Savings

Your parents paid for everything for you during your childhood, adolescence, and possibly even young adulthood. The least you can do to repay them is to set aside some of your own savings for them. This can be used to cover medical costs, moving into an assisted living community, or even funeral costs. You can let your parents know you have some savings set aside if you think it will ease their minds and not hurt their pride, or you can keep this information to yourself.

Talk To Them About Their Plans

It’s a smart idea to talk to your parents about their retirement plans before they reach retirement age, and this includes the financial aspect of it. It may be an uncomfortable topic for some families, but bringing it up will help to prevent messy and stressful situations in the future. Find out what their plan is if they have one and make recommendations gently. Let them know that you care about them and only want to help. It will be good for all parties involved to know where everyone stands and to have some sort of plan in place.

If you’re in a position to do so, your parents out financially will be rewarding for you and will take a gigantic load off of their shoulders. Show them what great parents they were to you by giving back, and they’ll be grateful to you forever.

Most individuals plan on living on their regular income that usually comes in the form of monthly or weekly paycheck. However, there are occasions when one is bestowed with a windfall of money that they may not be expecting. Some common sources of lumpsums include sale of investments, tax refund, inheritance, bonuses, court settlement, etc. Most investors are clueless on how to use a lumpsum amount. This article aims to answer the same and bring you one step closer to your dreams.

Following are a few ways in which you can use a lumpsum amount:

1. Clear your debt – One of the best ways to invest in lumpsum is clearing off your existing debt. This is especially true for credit card debt which accounts for around 10 to 15% interest per annum. Even if you aren’t able to pay off your credit card bill at once, consider paying down the balance. This will make a huge difference by diminishing your interest costs every month moving forth.
2. Build an emergency corpus – Every individual should always have an emergency fund in place. Having an emergency fund in place ensures that you are ready for any downfall that life has to offer. As a thumb rule of investing, you should have a minimum of six months of your living expenses for any sort of emergencies. You can invest in mutual funds to achieve income on your emergency corpus and beat the rate of inflation. Choose investment options such as liquid mutual funds, high-yield savings account, money market accounts, etc. that have high liquidity.
3. Save and invest – The key to wealth creation is to save as much as you can and invest them in right type of investment. Mutual fund investments are one of the most preferred investment options for most individuals. A lumpsum mutual fund has the potential to generate significant returns and build your portfolio. You can also use a mutual fund lumpsum calculator to understand the future value of your mutual fund investments. What’s more, these lumpsum calculators are fairly easy to use. Depending on your financial goals, risk profile, and investment horizon, choose the right investment option for your portfolio.
4. Treat yourself – Even if you use majority of your lumpsum amount for the above listed purposes, consider withholding a small amount to treat yourself. You can use this to get on your hands on something you have been craving for a long time. It could be anything, ranging from a new bike to a new furniture, new vacation to a new dress – whatever makes you happy. Spending a small amount of the windfall on yourself will provide you with an emotional boost rather than feeling resentful that you weren’t able to do things that you wanted to do.

You must cautiously analyse the several investment options available to you before deciding where to invest your money. Your age and whether you need a monthly regular income are two of the most important factors in choosing the right investment for your lumpsum amount. Happy investing!

 

The rising popularity of Unit-Linked Insurance Plan (ULIP) is a result of its dual advantages, which include a life insurance policy cover and investment options. Read on to know the ULIP meaning and more details about the policy.

What is ULIP?

A ULIP is a life insurance policy, but it has the added benefit of wealth build-up. You have to pay a premium regularly to keep the policy active. Your insurance provider levies a very small percentage of the money as various charges. They invest the remaining capital in different funds, such as equity and debt. You can also choose to diversify your money by investing in a way that combines both equity and debt-based instruments. ULIPs accumulate into a substantial fortune over an extended period.

Now that you understand the ULIP meaning, let us look into some of its plus points that make the policy a preferred choice among Indian investors.

1. Builds good investment habits

ULIPs have a five-year lock-in period, ensuring that you stay invested in the policy for at least this duration. You need to pay your premium on time to maintain the policy during this tenure without the option to withdraw money. This ULIP feature helps you develop a disciplined investment habit and patience. These skills can make you a wise investor. Once you have good investment habits, you can earn high returns in the long run.

2. Tax benefits

One of the ULIP benefits that make it a profitable investment option is its tax exemptions. ULIPs offer multiple deductions, such as:

• Your premium is tax-deductible up to INR 1.5 lakh per year according to Section 80C of the Income Tax Act, 1961
• You get a tax-free maturity payout if you bought the policy before February 1, 2021, as per Section 10 (10D) of the Income Tax Act, 1961
• Your maturity benefit remains tax-free if you pay an annual premium lower than INR 2.5 lakh; however you have to pay a 10% Long Term Capital Gains (LTCG) tax on the maturity proceeds if your yearly premium exceeds this amount; this applies to policies bought after or on February 1, 2021
• Your family members will receive a tax-free death benefit, irrespective of when you purchase the policy

3. Flexible investment options

ULIPs let you decide whether to invest your money in equity, debt, or a combination of funds. This versatility permits you to choose an investment avenue depending on your financial goals and risk tenacity. Equity funds are risky but have the potential to provide higher profits. Debt funds attract lesser risk and offer moderate returns.

4. Fund-switching

One of the unique ULIP benefits is the fund-switching facility, giving you more control over your investments. With the switching alternative, you can reallocate your money among equity and debt funds at any time during the policy tenure. However, your insurer may allow only a few free switches per year and charge for additional switching.

Types of ULIPs

The forms of ULIPs depend on their premium payment and fund options. This list will give you a better idea:

• Regular premium

Here, you need to pay multiple premiums during the policy tenure. Insurers let you choose between yearly, half-yearly, and monthly premium payment choices.

• Single-premium

While purchasing a ULIP with the single-premium option, you have to pay the entire amount as a lump sum at the time of policy initiation. Once you pay it, the policy will remain active for its entire tenure.

• Equity and debt fund-based funds

The type of ULIP you have depends on your investment choices. If you put your entire capital in risky but high-returning avenues, such as shares, it will be an equity-based ULIP. In the case of a debt-based ULIP, the insurer will invest your money in less risky fixed interest instruments, government securities, and similar products.

Now that you know its advantages, it is easy to understand why you should invest in ULIP now.

 

 

 

The ideal situation would be to enjoy a fun and fulfilling retirement, though the road to success is paved with potential roadblocks. In the year 2021, the ongoing pandemic is the biggest issue, as it has driven many businesses to the brink and forced an introverted lifestyle on most homeowners. That said, even with all of the potential problems, the opportunity to successfully save depends on your willingness to stay disciplined.

It can be challenging to get started on the road to a full wallet and a happy retirement without the proper mindset. Fortunately, even a simple understanding of how best to move forward can help those struggling to save find their rhythm. Here are just a few ways to help develop a solid saving plan for retirement.

Setting the groundwork with a proper retirement strategy

The first thing to consider would be your current age, and when you intend to retire. While it is true that most young workers would not want to consider planning for retirement right away, keep in mind that saving for retirement can simply mean saving in general.

In a lot of ways, setting the groundwork with a proper retirement strategy is about committing to a savings plan. No matter how young or how old, there is always the potential to start saving for a rainy day — the younger the better. While it might not necessarily be about retirement, the idea of financial freedom is a fantastic enough goal to start saving as early as possible.

The power of thinking small

You have likely already heard of the term, “life is all about the little things.” When it comes to saving up for retirement, the saying rings truer than most. The idea of compounding funds over time can seem like a big challenge, but it can yield incredible results, especially for those looking to save up for retirement. If it is possible to save as little as ten per cent of earnings a month, it is possible to save up for retirement. For those considering money audits, saving even a little amount over a twenty-year period with an eight per cent return rate can yield great results.

The potential of retirement funds for ex-pats

One of the most common scenarios involves an individual travelling to another country for the sake of their work. Over time, they develop a positive relationship with the country and eventually might want to retire. That said, it can be a little tricky to figure out how best to build a pension in a foreign country. For the ex-pat looking for solutions, www.pensionsforexpats.co.uk offers plenty of potential solutions. It is still entirely possible for an ex-pat to benefit from pension options.

While it might be somewhat intimidating to consider a retirement plan for young workers, it is not necessarily just for retirement. Saving money, in general, is a great idea. Learning all about how to let your money grow provides opportunities not just for you, but for your family.

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