Normally when you approach a bank or a home finance company for a mortgage loan, they will insist on some margin from your side. That is meant to reduce the financer’s risk and ensure that your own money is also committed to the asset. The margin required may range from 10% to 20% and depends on the age of the customer, the income level and the price of the property. Remember, the home loan value is calculated on the overall cost of the apartment including the cost of the house, cost of interiors, registration and stamp duty. Most banks will fund up to 85% of this value. Some banks travel that extra mile to finance you for your furniture and woodwork within the house. Either ways, the principle should be to reduce the loan to the extent possible by bringing in as much money as you can afford as margin. After all, your home is a lifetime asset and you have to put your best foot forward.
Normally, for a small apartment costing ₹75 lakhs in a metropolitan city in India, your personal margin will be close to ₹10 lakhs. Obviously, nobody carries this kind of liquidity and hence you need home loan down payment assistance.
Here are some ways you can do it with the pros and cons of each one of them:


This is a very smart and intelligent way of planning for your home loan down payment. When you are planning to purchase 5 years down the line with a margin of ₹10 lakhs, then you can start a SIP with around ₹12,000 per month. Instead of taking the risk of an equity fund, you can opt for a balanced fund, which will give you an average return of around 13% per annum. By saving just ₹12,000 per month in this SIP, you invest a total of ₹7.20 lakhs of your money while the balance ₹2.80 lakhs comes in the form of market returns. Of course, you can also get a higher return by opting for an equity fund but then 5 years is not exactly a time frame during which equities will necessarily generate returns as per your expectations. Hence a balanced fund will hedge your risks better. The moral of the story is that when you plan your home purchase well in advance, you can make the power of compounding work in your favor.


This is an option you do have provided you are sitting in the midst of a bull market and are sitting on healthy profits from your equity holdings or your equity mutual funds. The question is whether you should be taking money out of your investments. Remember, buying a home is one of your major lifetime goals and you can always make that exception. Again, we are not suggesting touching the principal amount invested. You can just swipe the profits out and use to pay the margin money.


Not many are aware of this but premature withdrawal from your provident fund is permitted for special purposes and purchasing a home is one of them. The entire process of withdrawal takes about 21 days. While the PF department promises to release the funds in 1-week time, it is always safer to provide for delays since this request will have to be forwarded through your employer. When you plan to use your PF money to pay for the home loan margin, provide for the extra time of 21 days. Also, remember that if your PF has been continuing for more than 5 years only then you can withdraw the money without any tax implications. Else, the withdrawal is treated as an income in your hand and you will have to pay a steep tax on that.


Normally, the bridge loan to finance your home loan margin is given provided you are willing to give some hypothecation against the loan. If you have another property ownership or shares or bonds or even endowment policies with assured surrender value then you can hypothecate these assets with your bank and actually get a much lower rate for the margin loan. Normally, secured loans attract a relatively lower rate of interest compared to unsecured loans. However, in principle you will still be adding to your overall debt and you need to be cautious about that.


Personal loan is an unsecured loan your bank will provide that is based on your credit history. A basic caveat needs to be understood here. Personal loans being unsecured are high cost loans. The average cost of the loan can range from 16-18% and is best avoided unless it is absolutely inevitable. Many home buyers use the personal loan as an interim financing measure till the time other sources of money can be brought in. Here you need to remember that personal loans carry a 6 months lock-in and there is an exit load of up to 5% on these loans for premature closure. All these can substantially add to your costs.
So, in reality there are a variety of ways to finance your home loan margin. But as prudent investors we suggest to use the SIP route to plan your margin well in advance. That way your money also works hard for you.
Source : Angel bee

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7 Things You Need To Stop Doing To Be More Productive, Backed By Science

Working smarter, not harder, is the key to better results

When I was 17 years old, I used to work and study for about 20 hours a day. I went to school, did my homework during breaks and managed a not-for-profit organization at night. At that time, working long hours landed me countless national campaigns, opportunities to work with A-list organizations and a successful career. As I got older, I started to think differently. I realized that working more is not always the right, or only, path to success.

Sometimes, working less can actually produce better resu

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Volatile Markets ? What to do? Read on

Volatility is a part of investing. There is no need to get afraid of it. Volatility acts as small bumps in our investment journey.

  • Control your emotions. Don’t Panic.
  • Call your financial advisor and understand the reason behind the volatility.
  • Don’t listen to the noise in the market. Stay focused on your goals.
  • Look at the big picture:

The most common mistake which an investor does is to think about exiting current investments. Remember that you have invested for fulfilling the dreams of your loved ones and exiting current investments will compromise that objective.

  • Use volatility as the opportunity:

Don’t stop your SIPs or STPs. This is an opportunity to accumulate more units through SIPs or STPs. So, let your SIP or STP run.

  • This is the time to be greedy:

Remember the quote by Warren Buffet – As an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.” So, this is the right time to top-up your investments through lumpsum and SIP mode.

And lastly, don’t forget that in the long term, market rewards disciplined and patient investors.

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Various Investment Options

When you first start out to plan your finances, it is likely that you are overwhelmed with the options there are. There are a number of instruments that will help you grow your money, but how do you choose which ones are appropriate for your needs? We’ll give you a brief on the popular investment avenues and tips on how you can make your decision.

To understand this, the following will help you put investments in perspective. Investments are all split into “asset classes” – primarily these are equity, debt, gold, and real estate.

Equity refers to the stock markets. Debt refers to an investment that is linked to fixed returns for a particular maturity period.

Now, on to the main investment product options available and what they are:


Public Provident Fund (PPF) comes with a fixed interest rate for each year, which is pegged to prevailing government bond yields. With an upper limit of Rs.1,50,000 per year, it is meant to inculcate small saving habits. The investment amount is locked-in for 15 years and is eligible for tax saving deduction under 80C. Current rate of interest on PPF is 8% per annum. EPF is similar to PPF.

The positives: With a long lock-in period, PPF ensures that you put aside some money for the long term. Apart from being eligible for tax deductions, the interest on PPF is also tax-free.

The negatives: Being a debt product, its returns are limited and even investing the maximum amount each year may not be enough for your retirement corpus.2.

Fixed Deposits

FDs issued by banks are more common, but corporates issue FDs as well and often with higher interest rates. FDs have fixed maturity and can range from 7 days to even 10 years. A few bank FDs have become more flexible with premature exit options but largely they are locked in for the maturity period. Prevailing interest rates in popular banks is around 6.5%-7% per annum while the higher risk counterpart corporate deposits offer around 8.5%-9%.

The positives: FDs are low-risk, offering a guaranteed return. Setting up recurring deposits and using your bank’s sweep facilities are a great way to build up investments. FDs ensure that your money is not idling in savings account earning minimal interest.

The negatives: For longer time periods, FDs aren’t great. Historically, they haven’t given inflation beating returns. Interest income is also taxed at your tax slab. Depending on FDs alone for all your needs means you need to save up a high sum or you may miss your target.


Insurance in its true sense is a risk cover. But some life insurance policies like endowment and money-back policies place themselves as investments. This is because they offer some benefits on maturity even on survival. ULIP is a hybrid product where a part of the amount gets invested and a part goes for the insurance cover. ULIPs have different schemes which invests in equity and debt market.

The positives: Insurance provides a protection. Premium payments qualify for tax deductions.

The negatives: They are not investments. Variants which give lumpsum amounts at the time of maturity may look attractive, but the returns are poor given the time you stayed invested. ULIPs give you a life cover and returns from your investment. Unfortunately, the life cover you get for the premium paid is minimal, when compared to plain term insurance. In a ULIP, you get neither adequate insurance nor investment. Liquidity, transparency, and comparisons of ULIPs are also poor.

National Pension Scheme (NPS)

NPS is a pension scheme which invests in a combination of equity, corporate bonds and government securities. You can decide the allocation between each yourself, or you can allow the system to choose it for you. The scheme matures when you turn 60 or 10 years from the time of account opening, whichever is earlier. At that time, up to 60% of the amount can be withdrawn and the rest is compulsorily invested in annuity. Even though premature withdrawal is possible for a certain amount, it comes with a lot of rigid clauses.

The positives: NPS gives an additional tax deduction of Rs.50,000 under 80CCD. Similar to PPF, the long lock-in period ensures that there is a retirement fund is in place. The addition of equity helps improve returns compared to PPF or EPF.

The negatives: For disciplined investors who don’t need such constraints, NPS is a bit too rigid. Compulsory conversion of a large portion of the end corpus into an annuity is not tax efficient nor attractive in terms of returns.  


Gold has traditionally been used as a savings avenue. But physical gold is not an investment because of challenges arising in purity, storage costs, wastage costs, and liquidity. Financial gold is more effective in capturing movement in gold prices without having to deal with physical gold. These include Gold ETF and gold mutual funds. Gold sovereign bonds issued by the government are also another way of investing in gold, and comes additionally with a small interest component and taxation benefits.

The positives: Its low correlation with stock prices and its counter to inflation makes it a good hedge against market risk.

The negatives: Gold as an investment does little to your overall portfolio. Their prices move solely based on global equity market sentiments and the exchange rate. Gold prices can and have stayed stagnant for long periods of times.


By investing in shares (equity) of a company, you become a shareholder. The returns you reap will come from the growth of the company which will reflect in the price of the stock. There is no cap to these returns and stock prices can rise multi-fold. A small amount, therefore, can grow in very large sums. You need a trading and demat account to transact in stocks.

The positives: Equity has historically been the highest returning asset class. Higher returns mean you can invest lower amounts – so a large corpus target can be achievable even if your savings capacity is lower.   

The negatives: Picking stocks comes with high risk. It requires market expertise. Stocks can be very volatile and therefore require both risk appetite to stomach rapid change in values as well as conviction to hold on to the stock. While volatility evens out over the long term, it still needs time. It can be safely said that equity investing is not for all and you should refrain from investing directly in stocks if you don’t understand the equity market well.

Mutual funds

A mutual fund is a pooled investment vehicle which invests in equity, debt, or gold and is managed by investment professionals. Choice of investments and their management is made by fund managers. Mutual funds charge a fee for such management. Eventual returns will be decided by which asset class you invested in. Broadly, returns from equity mutual funds will be market linked whereas debt oriented mutual funds will be a notch or two higher than that of fixed deposits.

The positives: Mutual funds give you professional management of both equity and debt markets without you having to make choices yourself. The variety of mutual funds means that you can find a fund that matches all your requirements. Open-ended funds can be exited anytime, giving you flexibility to structure your investments around your needs. Debt mutual funds have lower taxes than bank or corporate FDs.     

The negatives: The same flexibility can turn harmful if not used prudently. Easy-exit and no lock-in feature of mutual funds can hamper long term wealth building if not used for the right purpose. You will also need to track your mutual funds from time to time to ensure that they continue to be good performers. 

What you should consider

Now that you understood features of different products, you need to see which ones suit you. For that, you need to consider two important things – your needs and your risk appetite.

First, let’s understand what risk here means. It is the uncertainty in returns and probability of losses. For example, returns from any equity product is volatile and cannot be predicted beforehand. Whereas debt-oriented products, like PPF and fixed deposits, are more predictable and low risk. The more you’re able to withstand volatility in returns and losses, the more risk you can take and vice versa. But why should you take higher risk? The trade-off here is higher returns. So, while equity (stocks and equity mutual funds) is risky, returns over time compensate for this. While debt (FDs, PPF, debt mutual funds) is low-risk, so are its returns.

Second, your needs. You can think of your needs as the purpose for which you need money. Split this into what you would need in the short term versus money that you can put away for your future. To keep it simple, call anything longer than 7 years as long term. If you don’t have a well-defined goal and you just want to save up your surplus, consider it to be long-term as you have no definite use for it.

How to make the choice

Two simple rules. One – longer the timeframe, higher the risk you can take and vice versa. Two – the more risk you can take, the more equity investments you can make and vice versa.

Here are a few pointers. For short term needs and contingency (emergency) funds, you’d need a stable source of returns, easy conversion into money, and low risk. You can consider bank FDs or debt mutual funds for that purpose. PPF is unsuitable because of its long lock-in. Don’t use equity-oriented products for short-term goals, no matter how attractive the 1-year or 3-year returns may look.

For long term wealth building or a timeframe of 5 years and longer, include equity as it delivers superior return and you can build more wealth. Be it through NPS or mutual funds or direct stocks, up your equity exposure longer the time frame and the more comfortable with the market. You can include an exposure of 60%-80% in equity for a period more than 5 years, depending on your risk level. Put the remaining in debt-oriented products like FDs or debt funds. Don’t put all your investments into equity – that’s just exposing your entire portfolio to high risk with no means to limit volatility.

Insurance products for the purpose of investment can be written off the list. Simply hold adequate term insurance (thumb rule is your sum assured should be 10 times your annual income) and medical insurance.

If you get confused by the array of products out there and whether you should invest in those, just do this – look at how it gets its returns, the risk level it involves, how long you can give that investment the time to perform, and how easily to can liquidate it either to meet your needs or if it is not performing well. Then blend these products to create a portfolio that suits different aspects of your needs.

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Plan your Retirement with Mutual fund

Mutual fund companies are coming up with Retirement plans in recent past , insurance companies have already flooded the market place with plethora of products which say they are made for your retirement planning. Do you really need all these or you need just simple mutual funds which can solve your purpose ? By the end of this article you will get the answer.

A decade ago it would have been unimaginable that a person in his 20s talk about retirement planning.  Well that’s not the case any more things have changed now.

 Now people have started to look for retirement solutions from staring year of their earning cycles. Gone are the days when Government use to give pension to employees after their retirement.  Life expectancy has also increased with better medical facilities available so in turn you require a larger nest egg to take care of your sunset lives.

So how do you start planning for it. Well the answer is SSIP (Small Systematic Investment Plan) in Equity mutual fund. A small sum invested regularly over a long period of time will create wealth for you and in turn your retirement corpus. Equity Mutual funds provide inflation-beating better post tax returns over a long period.

Return offered by Various Equity Mutual funds over 10 Year:  Large Cap category offered around  15% ; Multicap Category gave 18% and Mid and small caps gave 20% during this period.

Investment can be made after considering your risk profile and time horizon. For a conservative investor Large cap category offer better risk reward. For an Moderate Investor Multi Cap category will be rewarding  and for an aggressive investor a portion of portfolio in small and mid cap will also do wonders.

Choose your scheme wisely which suits your goal and risk profile category and start SSIP  for long term and sit back and relax.

Now coming to funds which are specifically created for retirement savings , these funds have typically lock-in period of 5 years. So if you think that in future you can face the urge to redeem your investments before reaching the retirement age , that you should definitely choose these retirement mutual funds to achieve your goals as they will not allow you to redeem before the lock-in or reaching your retirement age. Otherwise open ended mutual fund are equally good for you.

You can start your mutual fund investments using sign up on

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