Men and women have been created as equals and have equal rights. Unfortunately, for most of us, the financial and social status of women in India comes second to men. The women around us - be it daughters, sisters, mothers or our better halves, have a special place in our hearts and our lives. But many of them are likely to "not" be financially sound, literate or independent.
In today's world, where society is undergoing a big change, women continue to be most prone to financial crisis and are financially most vulnerable. We believe that it is very essential for women to be financially literate and independent, for many reasons like...
- The average life of a woman is more than the average life of a man.
- There is a growing number of single women. This may occur anytime due to career choices, divorce or death / disability of husbands.
- In absence of earning male members, females often carry the burden of the family.
The work life of women is less than men because of various reasons like raising a child, family problems, health issues, etc. Generally women also receive less pay than men.
- Women are more likely to come under pressure /influence of others in financial and inheritance matters.
- Financially literate and independent women can be of great support and financial help to their families, especially husbands. Women have been known to be smart savers and money managers at home.
One needs to look at the numerous examples before judging women as not being smart enough to handle financial matters. A financially independent woman can today support herself and her family with income. Such a person would have good control over finances and would attempt to shape the financial future for the betterment of all.
Most women are totally dependent on their husbands and families, not only for their day to day expenses but also for their financial future. Women generally don't have any clue about their family finances and are left totally dumbfounded in case of an emergency. Irrespective of how much money is the father or husband making, you are never fully financially independent without your own money. Being economically independent will boost your confidence, taking decisions for yourself, will increase your risk taking ability. You can satisfy your whims with your own money and might be the bread earner for your family in times of need.
Women generally have a different work life than men. Some are freelancing or working part-time or the hours of work are lesser or are more prone to taking leaves and sabbaticals. All these head to small savings for women. Clary Boothe Luce said "A women's best protection is a little money of her own". However, if not properly managed and directed into the right investment channels, these hard earned small savings will be futile.
What to do?
Proper savings and investments can help you become financially independent over time, even if you are not earning. The following are the steps that one should take...
Learn about money: Never feel shy or hesitant to learn more about money - savings, investments, investment products, mutual funds, etc. In case your family is not supportive, you can always reason with them. It is better to know about the financial holdings /assets /insurance policies and bank/demat accounts in your family to be ready for any emergency.
Be Active: The idea is to get more engaged in financial matters of your family, with the support of your spouse. Open your own bank account or have a joint account with your husband. You can also have your own credit card / debit cards for managing your regular expenses. Also start a demat & trading account with which you can make your investments.
Get Covered: Most often we find that the women, not having financial earnings are neglected when it comes to insurance coverages. This is a wrong perspective to adopt as every girl /woman has to be adequately covered with insurance.
Start Saving: The first step is to start saving and then investing those savings. The easiest way to save for long term wealth creation is by starting an equity mutual fund SIP. You can start with a very small amount, say R500 every month. Invest small savings in mutual funds through SIP and see your savings grow. You can also increase the amount of the SIP with the increase in your savings / income. Plan for your goals: You may have many short-term or long-term financial goals. Try to invest for your goals through mutual funds which offer different types of funds which will easily match your investment objectives and horizon. The investment horizon can range from few days to double digit years.
Old Age: A regular inflow of funds or a huge corpus is necessary for your maintenance in your old age. Just imagine being at the mercy of your son /daughter-in-law in future in absence of your husband. We don't even want to imagine that! No matter how much you love your family and children, you should not leave to fate what you can prepare for your tomorrow by investing smartly.
Emergencies: As the pillar of your family, women are likely to find themselves in emergency situations like accident, ill-health, loss of income, etc. of their husband or other family members. Having some money saved for emergency can prove to be be immensely helpful and you would not be forced to beg for money from others. Keep aside some liquid investments for emergencies only.
Conclusion:
Every person has an equal right to dignity, respect, freedom to pursue own dreams and independence, including financial independence. Financial independence and empowerment of women can not only bring great benefits to a family but also to the entire community and country at large. Let us work towards ensuring this, beginning first at home.
The year 2016 is ending in a day. It was a wonderful year, full of excitement, joy and surprises. When 2016 started, most of us made new year resolutions, we decided to be nice to others, quit smoking, start going for a morning walk, and bring in discipline into our lives. We also decided to bring in financial discipline and start saving, among others. Many people did follow their resolutions, did a proper financial and tax planning, while others forgot about it.
We declared our 80C investments under random heads in April, because we did not plan ahead, and then we relaxed, since those investments were being considered in salary calculations and TDS was not being deducted upto that extent.
Now is the time when the HR mails have started entering our mailboxes or will start soon, asking for tax proofs. Now we realize, we should have planned for taxes earlier. If we do not plan for taxes and invest now, the accumulated TDS will be deducted from our salaries, which will be a huge amount. Since the time is less, we take decisions in a haste, and tendency to take wrong decisions increase. We might invest in random tax saving instruments in which our friends are investing, not realizing that those instruments may be suitable for them but not for us. Some businessmen paid their advance taxes, while others did not, and will be investing in random instruments in the month of March, because there is no HR to remind them.
So, if you are the one who did not plan for taxes earlier, do not waste time and start planning now.
You must keep in mind a few factors before beginning investing:
1. Calculate: Assess how much you need to invest. Calculate your total annual income, including the expected income for the next three months. Also consider the expected bonus, if any. Now work out how much you need to invest in tax saving instruments to save maximum taxes.
2. EPF: You must remember that every month, an EPF deduction was being made from your salary, so you should minus the total EPF contribution from the total investment that you have come up to, in the first step and plan for the rest.
3. Insurance: Though you get tax deduction in some insurance policies, yet you must remember that insurance is meant to protect you and it is not an investment. You need insurance to protect you, your dear ones and your assets in case of emergencies. It is very important to have adequate insurance, but while you are tax planning, you must focus on products which will give you tax benefits as well as maximum returns. You shall also consider health insurance while planning for taxes as apart from giving you a medical coverage, it entitles you to claim Rs 25,000 under Section 80D for premiums paid for self, spouse and kids. You can also claim an additional Rs 25,000 for premiums paid for your parents (an extra Rs 5,000 if your parents are senior citizens). Health insurance deduction is over and above the Rs 150,000 deduction under Section 80C.
4. PPF, Bank FD, etc.: Before investing in PPF, you must consider the fact that you cannot withdraw your investment for the next 15 years. Secondly, in traditional investment options like FD, PPF, etc. the return that you will be getting is around 8% and there may be options which can offer a higher rate. So evaluate all investment options before moving ahead.
5. ELSS: Equity linked Saving Schemes (ELSS) in Mutual Funds lets you save tax under Section 80C of the Income Tax Act. You can invest upto Rs 150,000 in a year in ELSS and get tax deduction and the best part is it has the shortest lock in period of 3 years, as compared to other tax saving instruments. You shall contact your financial advisor and he will guide you in selecting the best schemes for you.
6. Other Sections: The Income Tax Department allows you save tax in a number of ways under a number of sections. You must evaluate if you can save some extra tax with those sections.
Remember, Tax Planning isn't rocket science, you just have to plan in advance, you may use the above tips and save taxes and do follow your resolutions from the next year.
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The government has banned Rs 500 and Rs 1000 notes, which constitutes 86% of the total currency of our country. The move is aimed to curb black money and wipe out corruption. This bold step has left us perplexed as 14% of the currency alone cannot provide for the earlier 100%. We have been spending in cash, not only for our daily petty expenses but also for bigger expenditure like electronics, vehicles, or even buying a home. Now, we are left with no other option, but accepting the digital platform. We all are hesitant, we feel insecure without cash. We get cold feet when we go to a general store or a salon with nothing but a Debit or a Credit card. It feels like we have to cover a generation gap overnight.
But once you are over the fear, you would realize it is so convenient and easy, and you would wonder why at all, were you ferrying cash from your home to the market, or a city to another, or a country to another, since so many years. Digital Payments are so quick and hassle free. Yes, going Digital is the need of the hour, but like every other coin, it has a flip side too.
Our online accounts are protected, there is strong cyber security, but inspite of the vigorous cyber protection, there have been cases of cyber attacks too. Recently, the Twitter account of Rahul Gandhi was hacked, and inappropriate comments were posted from his account, it took some time before the account could be restored. Considering Gandhi's prominent position, if it can happen to him, it can happen to you and me as well. So, we have to be vigilant while we dwell in the digital space.
Following are some tips which can help you navigate smartly between the hubbub:
Passwords: The most crucial thing that you have be attentive to is your passwords. Your password should be strong, it shouldn't be "12345678". If it is your ATM pin, it shouldn't be your date of birth. Ideally you should have a combination of letters, numbers and symbols as your password. Having a strong password will make it difficult for the hacker to guess it.
You should change your passwords periodically. And the changed password should not be same as an earlier password.
Never share your passwords with anyone. Even if it is your closest friend, do not give away your password.
Don't write down your password on a piece of paper and hide it somewhere or in message drafts, because there is always a change of it being leaked. You must always memorize your password.
Credit/Debit Card Swipe Transactions: Whenever you are making a card payment at a store, do not tell your pin to the cashier, because he might not misuse it but the person standing behind you in the queue might.
Digital Wallets: Paying through Digital Wallets like Paytm, Freecharge, etc., are gaining popularity because of the alluring discounts and cashbacks plus they are very easy to operate, you just have to authorize the transaction and you are done. You don't need to enter any pin or OTP or account details, etc. The number of wallets and cash handling through them is on the increase, standards of security are not as high as banking transactions, therefore they are vulnerable to fraud. Fake accounts can be created, and people's people can be stolen. Therefore it is advisable to keep limited money in your Digital Wallets.
Online Payments: Be careful while making online payments. Check for the 's' in 'https', as that "s" stands for secured, check the URL of the website make sure it is not icicii instead of icici. Be careful while downloading Apps, there can be apps which can skim your personal data, or your passwords from digital payment gateways. Download authorized Apps only from official App Stores.
Terms & Conditions: Whenever you download an App, even Apps like Paytm, they would seek certain permissions, make sure you read and then give the permission, do not go with the flow, because the App may be seeking permission to access your browsing history or your contacts and sms'. Even while you make online payments, some websites may ask you to agree to terms and conditions, or ask for saving your passwords. Make sure you read the T&C's and take informed decisions, and make sure you do not save your internet banking password on someone else's computer.
Demonetization's coolest byproduct is making India go cashless. It is indeed a blessing, you just have to be a little cautious to savor the advantages of thriving in the online era.
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It almost pulled the rug from under the feet of many Indians on the evening on 8th November 2016, when PM Modi announced the demonetisation of Rs 500 & Rs 1,000 notes. All the cash that was stashed in our homes, our wallets would be worthless within the next 4 hours. Then a ray of hope shined through the dark clouds when the government announced that people don't have to worry and they could withdraw new currency or exchange and deposit their old notes, but with limits on withdrawals. Since then, there are long queues outside the banks and ATMs, people start waiting hours before the banks open, people are collapsing in the queues, some are making friends for life in the queues, some are gratifying their philanthropic spirit by serving tea or water to the subjects of misery standing in the queues, etc. And at the end, they receive a skimpy amount which might not even provide for essentials that can last for a week.
In such a situation what do we do?? Queue up with others Or Play Smart?? Do we really need cash to survive?? The answer is No. Technology will help us survive without cash. The Demonetization move is aimed to eradicate black money and corruption from our country, by transforming us into a cashless economy, and technology is the only means through which this move can be implemented.
In the present day scenario, we are not left with a choice, but to adopt technology. There are various digital tools at your disposal which will effectively handle your cash requirements. Following are a few popular techniques which will help you 'Go Cashless':
- Electronic Wallets: You don't have to go to a mobile shop to get your phone recharged, you don't have to stand in long queues to pay your electricity bill, water bill, mobile bill, etc. Thanks to the digital wallets. You just have to transfer money from your bank account to your wallet and you are good to go. Book movies, flights, hotels; pay bills; purchase groceries, clothes, medicines, toys; pay to the autowalas, retail stores, coffee shops, etc., with your digital wallets. You get the convenience of doing everyday transactions through these wallets, plus you get discounts, plus you get a Cashback on your purchase, which is a cherry on the cake. Paytm, Mobikwik, Freecharge are the popular Digital Wallets.
- Unified Payments Interface (UPI): UPI App is a GOI initiative, through which you can pay or receive money from and to any bank account through a mobile App. You can transact anytime and from anywhere, simple and quick. You don't have to enter ifsc code, transaction passwords and wait for the payment to complete. You just need to enter a PIN to execute the transaction.
- RTGS, NEFT: In UPI, there is a transaction limit of Rs 1 Lakh. In case, the transaction is of a higher amount, then you have the option of RTGS or NEFT.
- Bank Apps: Many banks have their apps to enable their customers go cashless. Like Digital Wallets, you can add money from your bank account and start paying your bills, movie tickets, buy investments, etc. through your mobile.
- *99#: You just have to dial *99# from your mobile phone, and you can transfer funds, check account balance, etc. without internet connectivity. This facility is available in 11 regional languages. This is called USSD based mobile banking and you can transfer an amount as low as Rs 1 to the max Rs 5,000 in a single transaction. The service is available 365*24*7.
- Plastic Money: You can always use your debit and credit cards for payments, be it online payments or through a swipe machine. Most departmental stores and even small retailers have a card machine. You don't have to carry heaps of cash with you, your wallet becomes lighter, and the risk of theft is also minimised.
Though Demonetization has caused a short term turmoil, but you can escape the clutter through the above tools. In the long term, it is for the benefit of all. Using Digital methods will not only help us in battling against the cash crunch but will also help in boosting economic growth. When we start paying electronically, it will help in avoiding tax evasion as the sellers have to pay tax on all online transactions. This will result in more tax to the government and more development. Less Paper also means more trees, and a healthy environment.
Go Digital, Go Cashless!
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Compared to equity market, bond market is considered to be stable and less volatile. But events such as falling currency makes the market volatile, depreciation and appreciation of currency against dollar is the most happening event and most of the time regulator RBI take measure to balance it time to time. And such measures often affects the bond price movement adversely.
Certainly the volatility in debt market creates doubts in minds of investors about debt market and its functionality. The base of debt market is interest rate movement. Interest rate scenario affects bond prices and so debt funds return. There is an inverse relationship between interest rate and bond prices. As interest rate moves up, bond prices come down and vice versa. This is one of the reasons why bond funds delivered negative return recently with unexpected spike in short term rates due to RBI action. So investment in long duration bond funds is recommended when interest rates are likely to fall.
There are few important things to consider before investing in debt funds :
- Investment duration of investors
- Average maturity period of bond/debt fund
- Interest rate scenario
- Understanding of the product
If you want to invest for one year, you will go to bank and invest in 1 year bank F.D. In the same way if your investment horizon is 1 year, you should opt for debt fund suitable for 1 year investment horizon. Investing in long duration bond/gilt fund for 1 year can prove risky for retail investors. So matching investment horizon with category of bond fund is very essential for bond fund investor.
Short Term Money Market Funds:
These types of funds invest in very short maturity bond papers, typically less than 91 days maturity. So interest rate risk practically does not exist for this category of funds. These are ideally suited for investors who are looking for investment of less than 1 year with low level of volatility.
Long Term Bond Funds:
Duration Funds:
Duration based funds are the ones, which take long term call on interest rate movement. Fund manager of duration fund is active in bond trading and he/she takes call on bond portfolio based on interest rate movement. i.e. if interest rate scenario looks falling, fund manager increases the duration of the portfolio by buying long maturity bond paper and vice versa. Normally they hold long duration papers of above 5 year maturity.
Accrual Based Funds:
In Accrual based funds, fund manager does not play or rely on interest rate movement. Here they try to identify high yielding/high interest paying and high credit quality bond paper, and hold them till maturity. They play on accrual and not on interest rate movement. High yields earned on portfolio get reflected in fund performance. Normally the tenure of the bond paper remains on the shorter side, less than 3 years. So this category of bond fund is less vulnerable to interest rate risk.
Both duration funds and accrual funds are for little longer horizon of above 2 years and volatility remains on a little higher side in duration funds compared to accrual based funds.
As explained in the above matrix, as an investor one needs to match his/her investment horizon with a suitable product within debt fund category.
Conclusion:
As discussed, mutual funds have different products within debt fund category catering to investor requirements across time frame. Ranging from one day to 2 years, investors can look at debt funds, which suit their investment requirements to generate tax efficient return compared to other fixed income products.
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