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Significance of reviewing your financial plan

Your financial plan is one which chalks out your financial goals and how you plan to achieve them. As the situations in life change, your financial plan also requires regular reviewing and change. Just as how you undergo regular health checkups to review your health and regular service for your vehicle or electronic appliances, your financial plan also needs regular examination. Here are a few reasons on when it becomes important to review your financial plan: Change in financial conditions: The first reason why you should review your financial plan regularly is to reflect any change in your financial conditions - be it internal or external. Sometimes you realise when you review that you have not progressed much towards your goals despite a considerable time having lapsed. This requires you to change your investment plan, and sometimes other goals as well - for instance, you can retire later than you initially planned, or settle to buy a house which is lower in value than what you...

Just sold a home? Here's what to do next

Selling one's home is never a very easy thing to do. Usually, the four walls one is putting on the market are the frame for many fond memories, and one needs to say goodbye to the neighbours and familiar sights that have often defined many years of residence.  But over and above the emotional upset of selling a home, not keeping a record of the actual sale transaction can lead to problems later on.    Maintain a file of all documents pertaining to the property sale. This will ensure that you are able to address all future queries by the buyer, the bank involved and the municipal or tax authorities. Also read: Why Land Bill is giving sleepless nights to developers  You will especially need a seamless financial record while filing your tax returns for the year of sale. The documents should include proof and receipts of payment for items that you had included in the sale price, including parking space, structural modifications or additions which enhanced the value o...

5 parameters of selecting best mutual fund scheme

1. Performance Ranking  More than the recent or long term performance of any scheme its ranking among peers should be looked at. To find out the ranking you need to check out the quartile ranking which will show how the fund has performed quarter on quarter among its peer group. In quartile ranking each quartile comprises of 25 percent of peer group schemes. So one may select the scheme which has remained in top quartile most of the time. If at all you find your scheme going below 3rd quartile in a couple of consecutive quarters it hints that time has come to exit the scheme. You can find these rankings from the factsheets of various AMCs and also on some mutual funds research websites  2. Ratio analysis Risk and return ratios like standard deviation, Sharpe ratio etc.  I have discussed in my earlier article on Measuring Mutual funds risk. Along with those ratios, one also should check out the ALPHA of the fund.  Alpha tells us what extra or less the fund manag...

New RBI Notifications

Cheques are now valid for 3 months With effect from April 1, 2012 you will have to deposit your cheques, draft or pay order within three months of the issue date of the instrument, instead of the current six months. For your benefit, banks have been asked by the RBI to print or stamp this change in the validity period on cheques and other such relevant instruments that will be issued from April 1, 2012. Post April 1, 2012, banks will not honor cheques, pay orders, drafts and bankers' cheques that are deposited beyond the three-month period. Drafts above Rs 20,000 will have to be A/c payee only To check the flow of black money and eliminate third party scams, RBI has also made it mandatory that all drafts for amounts above Rs 20, 000 will be account payee only. This is done so that the amount is deposited directly into the recipient's account rather than any other third party account. The RBI has also asked banks to ensure that account payee cheques and drafts are only credit...

Three Rules of Investments

 Three rules of investment: Invest early Invest regularly Invest for long term and not short term Invest Early : The sooner you start the better. Start investing in small amounts, continuously for a long time, money grows due to the power of compounding. If you start investing when you are single you will be able to save maximum. The best policy is to start saving from the moment you begin earning. Invest Regularly : Develop the habit of adding to your recurring deposit / systematic investment plan of mutual fund / deferred annuity account on a regular basis, perhaps monthly or quarterly. By investing regularly with SIP of mutual funds you take advantage of a strategy called rupee-cost averaging. Regular investing, however, does not ensure a profit or protect against loss in declining market scenario. Invest for Long Term and Not Short Term : If you decide that your money can work for you over a long period of time, then better compounding works. Consider this: Rs...

The ten financial commandments for all seasons

Commandment One: Pay all credit card bills on due date in full In case you do not pay the entire bill amount on the due date, interest is charged from the date of spending, and not the due date for payment. That factor alone can push up credit rates to over 40% per annum; and this makes it probably the most expensive form of credit. Kill the credit with a personal loan if required -- and follow the discipline of no more rollover of credit henceforth. Commandment Two: Close all unnecessary bank accounts How many of us open new bank accounts with each new job, and haven’t even checked the balance in the dormant ones in the past one year? Commandment Three: Keep a maximum of one month’s expenses in the bank account As you may have realized, the bank pays interest on your savings bank account at a rate lower than that of inflation. That’s not to say that the rest needs to be invested for the long-term: I am only stating that you can earn a bit more through fixed deposits or sh...

How to get a better credit score from credit bureaus(CIBIL)

Do not open new accounts rapidly:  Opening new accounts frequently attracts suspicion.  Do not frequently close unused accounts:  Longer lines of credit always positively impact creditworthiness.  Responsibly maintain credit cards:  Credit card payments must be made on time. Do not obtain additional credit cards to increase available credit. Do not make enquiries when unsure of borrowing.  Pay down debt and on time:  It is extremely important to pay down debt, and do so on time. Customers believe that moving balance equates to paying off debt. On the contrary, moving balances need to be settled in a timely fashion to maintain good credit behavior.  Frequently check credit reports:  It is important to frequently check credit reports to remain informed about discrepancies. Rebuilding credit history is a slow and patient process. Given the advanced practices adopted by banks in lending decision making, it is important, as a customer, to rem...