5 Tips To Optimize Your First Salary

When we first earn our hard-earned salary, our emotions often get the best of us, and we end up spending so much that we’re left with almost nothing, too soon. What’s worse, it might end up as a bad habit and will hurt us in the long run. Relying on well-known baristas every day for coffee, ordering food online might satisfy your urges, but only for a few hours. We know what it’s like to be swayed by our wants so easily, which is why we are sharing these 5 financial tips: 

1. Start Saving Up For Your Retirement- Although you might think that your retirement has ages to come, consider saving up for it NOW. If your company adds a percentage to your retirement savings, then you are lucky, but if they don’t create your own which automatically deducts the amount as soon as your salary comes in. Treat it like you are paying a bill, but the most fun part is- that you are only paying YOURSELF! 

2. Hire a Professional- Creating our own financial goals might be easy, but getting there is difficult, as we need to map very complex financial routes that might be beyond our own bandwidth. That’s where professionals like CAGRfunds come in.  They assess the health of your finances and assign plans or investments that help you get to your goals. Start small with an annual financial check and then build up a relationship! 

3. Accelerate Debt Repayments- Try to pay off your debts as soon as possible. They may be your student loans, credit cards, or any type of personal loan you might have taken. It’s simple- start off with the loans which accrue a high interest, in most cases, they are credit card loans or student loans. Like the retirement option, try automated payments towards these loans so it feels like a monthly bill, so you don’t have to depend on the last moment to scramble over your finances.

4. Invest in a PPF or an ELSS- Under section 80C of the Income Tax Act of 1961, Equity Linked Savings Scheme or ELSS is a tax saving investment wherein by investing in it, you can claim a rebate of up to 1,50,000 and save almost 50,000 a year in taxes! It is the only kind of mutual fund that is eligible for tax benefits under section 80c.   A PPF or a Public Provident Fund is a government-supported retirement saving scheme to help generate small-scale savings towards retirement. It is also a tax-saving investment that helps you build your retirement fund while saving you some money from getting taxed. 

5. Create an Emergency Fund- The pandemic has taught everyone about the dangers of uncertainty and the chaos that it may bring. Any unforeseen circumstance might befall you causing you to incur heavy expenditure. Again, automating your payments towards your emergency funds, and treating it like a bill, helps you to make creating funds easier. 

We hope these 5 easy tips help you forge a path towards your financial goals! Happy saving and investing!

Here’s Why SIPs Are A Great Idea!

We’re all taught how to dream big from day one. Be it your dream house, owning that Porsche or going on that bucket-list trip, we’ve been encouraged to aspire.
While everyone teaches us to dream big, no one shows us HOW to reach these goals.

On some days, we’re confident of ourselves and our dreams. On other days, we feel like we’re working hard for nothing. How does one stay motivated?

Here’s some food for thought : If investing was taught to us as a subject in school, can you imagine how revolutionary the economy would have been, with individuals who were confident of their money management skills?

Aspects like how to have an analytical mindset, how to take calculated risks, how to invest the right way, what are the financial risks involved, how to have more than one stream of income, how to calculate risks v/s returns and more, would have transformed us from individuals to successful investors, do you agree?

At a time like this when we’re left feeling overwhelmed and confused, what we need is an investment strategy that will see us through on a rainy day. Speaking of which, have you considered SIPs?

What are SIPs? How can they help you achieve your goals? How can they help you stay financially independent? Here’s a quick 101:

What are SIPs?
A systematic Investment Plan is an investment tool through which you can invest in Mutual Funds. While in several other investment tools, the individual has to pay a large sum of money at once, SIPs use a systematic method of investing a fixed sum of money over a period of time.
The time of investment could be monthly, quarterly, semi-annually etc.
This gives us the advantage of making many deposits over time without the burden of investing a lump sum at once.

What are the benefits of investing in SIPs?

When you invest in a SIP, you can enjoy a compounding return on your investments. It has substantial practical implications as and when an individual invests in SIPs regularly, the returns they have earned also gets reinvested. Over time this creates a snowball effect which helps an individual get more returns from the investment over a long time. In essence, if you begin investing in SIPs at a young age, the more benefits you can enjoy!

2. Low initial investment.
Through SIPs, you can invest in Mutual Funds with a monthly cost as low as ₹500, making it very affordable while not hampering daily needs. You could also increase the amount of investment if you have a raise in income. Meaning you can start with an amount as low as ₹500 – ₹1000 and then gradually increase the amount of investment through which you can reach your dreams at a faster rate.

3. SIPs are super convenient.
So many of us do not have the time, knowledge and tools required to study the market and do extensive market research. You will have to choose a good fund and let the platform you’ve chosen do its job of automating the payments. It will save a lot of time and effort, making it more convenient.

4. Rupee cost averaging.
When you invest in a SIP, the funds are purchased according to the market rates. It means that you can buy fewer units of the fund when the market is high and buy more units of the fund when the market is low, averaging the cost of the units in the long run. This makes investing steady and helps keep your investment away from market volatility.

Simple tools like SIPs are helping people invest small funds over a long period of time, taking it easy on their bank balances while turning dreams into reality. SIPs will definitely help you achieve your goals making it suitable for your investment needs.

Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.

Smash The Patriarchy: Here’s Why Indian Women Are Buying More Homes.

Owning a home is perhaps one of the biggest accomplishments for anyone. Apart from creating an asset under your name and building a safety net for yourself, there are several reasons why it’s important to own a home, especially in today’s times. Interestingly, studies suggest that more and more Indian women are now opening up to buying their own homes, stepping away from the shadows of their fathers and husbands. In fact, owning a home is one of their top preferences when it comes to correctly investing their money. This amazing and welcome change has resulted in home loan providers designing exceptional benefits and opportunities for women. What are they? Read on to find out! 

Lower Interest Rate 

Women enjoy the privilege of paying a lower interest rate on home loans. A home loan is a big deal, and an exception to the interest rate can be a huge support. The interest rate is lower by 0.05 to 0.1%, making it relatively easier to pay the EMI and repay the entire amount within time.  

Lower Stamp Duty Charges

Stamp duty is a compulsory tax that the state government imposes on the property during its sale or transfer. While every state may have a tax rate that varies from each other, status of the property, type of property, usage of the property, location of the property etc. are all interconnected to the stamp duty charges. Majority of the states in India offer an allowance on stamp duty if the property is registered in the name of a woman, whether it is a sole proprietorship or a joint proprietorship. 

The difference in the rates usually scales from 1% to 2%, and this can make an enormous difference in the property price. 

Tax Benefits

Women also enjoy tax benefits on their home loan repayments. 

The maximum tax deduction is Rs 1.5 lakh on the principal and Rs 2 lakh on the interest repayment under section 80C and under Section 24. 

If a husband and wife are co-owners of the property and have different streams of income, the deductions on the home loan tax for the couple would sum up to Rs. 3 Lakhs on the principal amount and Rs. 4 Lakhs on payment of interest under the same. 

Access Large Amounts With Longer Repayment Tenors 

Arranging funds to buy a house is not a piece of cake. It may take years and sometimes, a decade’s savings to build one. But because of schemes like these, women can build their dream house effortlessly. 

One can access home loan amounts right from Rs. 30 Lakh to Rs. 3.5 Crores to build or buy a home. Further, home loans for women are offered for tenures of up to 30 years and till the age of 70. 

Schemes like PMAY (Pradhan Mantri Awas Yojana) 

Under the ‘Housing for All’ scheme, those with an annual income of not more than Rs.18 lakh can apply for it. Giving a higher preference to women, the PMAY makes co – ownership mandatory offering a subsidy to women up to Rs. 2.67 Lakh and this has taken a massive rise in the number of women applying for home loans in India. 

Apart from these, women enjoy numerous profitable add-on offers such as a free holiday, gold coins, vouchers and a lot more that are here to encourage women to step up on the road to women empowerment.

Feelings & Finances – the domino effect

Women, emotions and the impact of that on the relationship with money.

The Law of Attraction is the ability to attract into our lives whatever we are focusing on. It is believed that this law uses the power of the mind to translate whatever is in our thoughts and materialize that into reality. In basic terms, all thoughts turn into things eventually. If you focus on negative doom and gloom you will remain under that cloud. If you focus on positive thoughts and have goals that you aim to achieve, you will find a way to achieve them with massive action. The Law of Attraction dictates that whatever can be imagined and held in the mind’s eye is achievable if you take action on a plan to get to where you want to be.

So how does any of this relate to money? Simply put, money is not about finances but all about emotions. And our emotions are largely driven by how we think. Women are generally known to be  the more emotional gender and therefore, led by it. A study done by the National Center for Women and Retirement Research (NCWRR) showed a direct correlation between a woman’s personality characteristics and her financial habits. Assertiveness, openness to change and an optimistic outlook are the qualities that tend to lead to smart money choices.

But somehow, as a financial advisor I have often found the topic of financial management to be a stumbling block among women. Well, to a large extent it’s ignorance about long-term money management techniques that still prevails among them. A big part of this can also be attributed to negative emotions like fear, shame and anger which lead to knowledge gaps and anxiety. Looking at these closely, here are some of my observations.

  1. Loss of confidence – if women are not earning members or the breadwinner of their families, there’s a high probability of feeling low on confidence when it comes to making decisions about investments. There’s a self-imposed restriction of feeling that they don’t have enough of a say in larger and more important financial decisions that concern the future.
  2. Fear & anxiety – these are the big bad wolves of money emotions, and they come in different guises, often both together. Being afraid of making mistakes while trying to invest and hence, letting someone else (read the husband in most cases) handle it, is a sign of succumbing to these emotions. In such situations, when faced with money problems women tend to feel powerless and anxious of dealing with the problem.
  3. Shame & confusion – Financial illiteracy being the root cause of such emotions, women are often embarrassed to even admit if they don’t know something or feel confused about whatever little they know in parts. Owing to this, women relinquish all money matters to their husbands as if it’s part of the division of labor.  

These emotions can often deter women to overcome their confidence gap (the measure of women’s confidence in their ability to attain their financial goals or simply to have sound financial knowledge). Added to that is the lack of any form of financial education in schools. As a result of this, it’s commonly observed that women still throw their hands up when it comes to making long-term financial decisions about savings and investments.

The truth about money is determined by how we approach it, how we think about it and how we handle it. Going back to the Law of Attraction, if people constantly think negatively about money, they are bound to be plagued by money problems their whole life. But people who feel like money is something that’s within their control, they are more likely to become successful and create more wealth for themselves. Those are the people who instead of complaining about their lack of money, educate themselves about money. Financial intelligence is the basis for growing wealth.

As rightly put by Benjamin Franklin, “An investment in knowledge pays the best interest.” This would be the very basis to conquering the mental block arising out of all the negative emotions for anyone, but more so for women. A change in our financial situation starts with a change in how we think about money and that can easily be achieved if we arm ourselves with financial literacy. Understanding the basics of savings & investments (that go much beyond just FDs or LIC savings), by getting familiar with financial products and industry jargon, by talking to financial advisors to widen that knowledge base and learning how to use online money management tools are all the steps that can help women to have a view on long-term financial planning and also contribute towards making sound decisions about their future.

This financial education also eventually empowers women and teaches them not to necessarily rely on the male figure in the family for financial security. The empowerment also lends itself to having conversations around larger financial goals, establishing an emergency fund, techniques of handling the repayment of loans and so many of such important decisions. Using that knowledge to improve the current financial situation and not letting emotions come in the way is also a critical thing to note.

Emotions often work to sabotage the rationale. It’s obvious that having a lot of money can make one feel good about themself. But that feeling is fleeting. That high can lead to unnecessary and excessive spending. Instead of seeking that feeling through spending money, it’s far more important to realize that spending less on what’s not needed is the secret to creating wealth. And that realization can only come when you know at least the basics to wealth creation. Most importantly, this knowledge can remove fears, of losing money, of failure, or whatever is holding you back from making a financial plan and investing.

Emotions among many other things shape our personalities. In a critical aspect like financial planning, it’s important that women are in check with their emotions and get down to the simple basics of understanding the do’s and dont’s of it. Knowledge always helps to overcome the most negative feelings. So never shy away from stepping out of your comfort zone and learning more about what you don’t know enough of. It’s a simple logic. You’re accountable for your own financial future. Take ownership.