Some lessons on loans

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Hi….remember you got a Surplus or a Shortfall….!!!! What if you get a shortfall !!!

If there is a shortfall, then it would mean your expenses are more than your income…which is not a good situation financially. There is also a possibility that you have taken a loan …..a Home Loan,  a Personal Loan, EMI running on your  Credit Card or a Car Loan.  There could be also an Educational Loan which would eat into your income. It could be single or multiple.

There are a few important points to be kept in mind while taking a loan.  The largest number of loans  taken are mostly Home Loans.

Some tips while taking a Home Loan :

  1. If the loan is in joint ownership, it is important to take a legal advice before going in for a co-ownership.  In a joint ownership,  it is recommended that you keep an account of how much each one has contributed should a dispute arises in the future.
  2. Shop for a competitive interest rate. Remember you can always negotiate the interest rate and bring it down by .10-.50 basis points.  It sounds very little but if you compound it for a long period, it is quite sizeable.
  3. You must take an Amortization schedule from the bank/ financial institution offering the loan which gives a break up of Principal and Interest schedule payable till maturity.
  4. If you are salaried or self employed, then there is a cap on the EMI which can be drawn.
  5. Incentives are not taken into account while determining the eligibility criteria for taking a loan.
  6. There are no tax benefits for buying plots.

Look out for more such tips….

Till then…will be back soon….

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Goal Set !!!! But wait what’s a Risk Profile ?

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Have you listed down your goals ? Good….before we put your money to invest…..do you know what is your Risk appetite ?

What is your Risk Profile ?

Is it Conservative , aggressive or mid way which is moderate or balanced……?

You need to find out what is your Risk Profile ? What is a Risk Profile ?

•The degree to which various risks are important to a particular individual.
•What questions should I ask myself as I prepare to develop my risk profile?
•Ask yourself when you plan to use your investment—in a few years to buy a home, start a business, or pay for college, or in the future for retirement.
•After you have decided how long your money will work, the focus of your preparation should shift to personal preferences:

•Is capital preservation more important to you than outpacing inflation?
•Are you willing to accept fluctuating values when investing for the long term?
•Are you more comfortable with dividends and income, or with growth through capital appreciation?
•Will you accept above-average risk to generate above-average returns?

These are some of the questions you must ask for determining your Risk Profile…..

There are several Risk Profiles which are available online and your results can vary if you try more than a couple of them…

A Risk Profiler is mainly indicative of how you would behave given a particular scenario…or various scenarios.

Each Financial Plan written will start with a Risk Profiling questionnaire since based on the results your investments would be made.
They would vary from person to person.

e.g.

If you have invested Rs 5 lakhs in a company’s shares and they go down by 20% in value, what would you do ?

questions like these help you to assess your behaviour towards money which might surprise even yourself.

Do go online and try some Risk Profile exercises to give you a better understanding.

Share the results and we will then carry out the next step…..

Cheers