The Reasons Why You Need Emergency Fund

Saving up your hard-earned cash to stash away an emergency fund? 

Saving up your hard-earned cash to stash away an emergency fund?

Well, it can be a hard sell. Spare cash can be hard to come by, and, after all, taking a vacation is a heck of a lot more fun.

Or at least a lot of us seem to think so. The idea behind an emergency fund is to store at least six months of net income for the sake of “just in case.” Just in case your job goes “poof.” Just in case your car conks out. And a select few other things we’ll explain below.

Does that mean an “emergency” outfit for the film festival (rumor has it Jude Law will make an appearance)? That big trip your teen suddenly wants to take this summer because “everyone else is”?

Not exactly.

We’ve written before about exactly what counts as an emergency. One of the biggest reasons to have an emergency fund is to avoid going into debt for a cost you just can’t avoid (i.e, not celebrities or peer pressure).

In our survey above, 31% of respondents said that credit card debt was a significant impediment to reaching their financial goals, and they each had an average of $5,000 to pay off. Well, guess what? If they had an emergency fund, they shouldn’t need to get so far in the hole in the first place.

Don’t believe us? Planning to spend your money on something sexier? Nothing’s sexier than being worry-free.

Here are the top seven reasons you need an emergency fund:

1. You’ve received a Pink Slip

It usually isn’t as dramatic as Donald Trump proclaiming “You’re fired!” In recent years, it’s looked more like rounds of layoffs spurred by economic turmoil. Or maybe you chose to resign because your job is taking a serious toll on your mental health and you were burning out. Whatever the reason, you need a way to pay your bills until you establish another source of income–and your emergency fund should be it.

2. You Can’t Shake That Cough

Robitussin isn’t cutting it anymore. You need to go to the doctor, and then maybe the doctor again, and possibly even the hospital. Most health insurance plans only go so far–when it comes to hospital visits or other major medical costs, it’s likely you’ll be required to supplement your coverage (if you have it). With an emergency fund, you won’t have to choose between your well-being and your rent.

3. The Only Job You Can Get Is Three States Away

According to our survey, 60% of respondents have, at some point, had the experience of being unemployed and looking for a job. And as we all know, when things are getting financially tight, we need to consider any suitable position that crosses our path … whether it’s where you live … or in Portland. Between finding new housing, arranging to transport your things and the million other little costs that come up along the way, a move is expensive, but it can be unavoidable.

How can you help finance an emergency move? You guessed it.

4.You find yourself with a debilitating illness.

If you’re too sick to work, you could lose your job. And even if you qualify for short-term disability, you could wind up living on less than your full salary. An emergency fund could help you make it through

5. You Need to Get to the ER. Stat.

Did you know that in many cases, you have to pay for some or all of an ambulance ride to the hospital? (And if you don’t have health insurance, it’s even more likely you’ll be responsible for covering the whole cost.) If you get hurt enough to spend time in a hospital or emergency room–maybe even hurt enough to need surgery and physical therapy–you can’t always rely on insurance to cover the full cost.

6. Someone Close to You Passes Away

No one likes to plan ahead for mourning, but if someone you love does pass away suddenly, “I can’t afford the plane ticket” is the last thought you’ll want to have. If you have to travel to (or pay for) a funeral, burial service or any other bereavement-related expenses, your emergency fund can keep those charges off your credit card.

7. Your Roof Starts Leaking

If you own your home (like 70% of you said you did in our survey), you know that there are few things more ominous than watching the paint swell and crack above your head. It’s right up there with discovering a flood in the basement or setting the kitchen on fire before a particularly ambitious dinner party. First, make sure you have homeowner’s insurance. But, then, if an unexpected home-related expense pops up, rest assured that that’s part of what your emergency fund is there for.

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BUY -- Don't Hold

 "Be fearful when others are greedy, and be greedy when others are fearful!”

The temptation for excessive money has always propelled investors into the lap of stock markets. However, making money in equities is not that easy as it not only requires huge amount of patience and discipline accompanied by a great deal of research and a profound knowledge of the market, among others.

Adding to this fact, the volatility in stock market has left investors in a state of confusion in the last few years. In such a scenario, investors are in a dilemma whether to invest, hold or sell.

The typical buyer's decision is heavily influenced by the actions of his acquaintances, neighbours or relatives. There is a tendency that if everybody around is investing in a particular stock, there will be an automatic inclination for potential investors is to do the same. Nevertheless, this strategy is bound to play like a boomerang in the end (long run).

1) We do not need to mention every time about the hard-earned money in stock market whether investors are going through a rough patch. The world's greatest investor Warren Buffett was surely not wrong when he said, "Be fearful when others are greedy, and be greedy when others are fearful!”

2) Appropriate research should be and suitable inquiry should be arrived with before investing in stocks. However, unfortunately, that is rarely done. Investors are generally stimulated by the name of a company or the industry they belong. This is the most foolish way to put one's money into the stock market.

3) Investors should never invest in a stock instead, they should check up on the business in. Most importantly, invest in a business one understands. In other words, before investing in a company, people should know the status of the business the company is running in.

4) Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. Level of diversification depends on each investor's risk taking capacity.

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How To Avoid Emotion While Investing?

Fear is one of the most primal human emotions and plays a huge role in emotional investing.

Investing is an emotional experience. With so much at stake, it can be an emotional roller coaster to watch the stock market gyrate from day to day.

Investors are often torn between their guts and their heads. While there’s nothing inherently wrong with consulting your emotions when making purchasing decisions, stock buyers do need to beware of relying too heavily on their guts. Bank runs, flash crashes and stock market surges are just some of the ways in which emotions can impact the market for the worse.

Why does this type of emotional investing happen and how can investors avoid both the euphoric and depressive investment traps? Read on for some tips on how to keep an even keel - and keep your investments on track.

1. Bad Timing

The lag between when an event occurs and when it is reported is what typically causes investors to lose money. The media will report a bull market only once it has already hit; unless the trend continues, stocks will retract in upcoming periods.

Investors, influenced by the reports, often choose these times of premium valuations to build up their portfolios. It is worrisome when the daily stock market report leads off the mainstream news because it creates a buzz and investors make decisions based on "opinions" that are often outdated. Market uncertainty creates fear and brings about an atmosphere of emotional investing.

2. Fear

Fear is one of the most primal human emotions and plays a huge role in emotional investing.

“I find that fear is probably the most detrimental emotion,” said Bruce Ailion, a real estate marketing expert. “It might be the fear that prevents making a good investment. It might be the fear that causes an exit at the first sign of trouble that prevents realizing the full profit of the investment.”

3. Hope

Just as being too fearful can jeopardize your investment success, being overly hopeful is problematic. Hope can turn negative when it inflates expectations. Whether you’re a brand-new investor or one with years of experience, being too optimistic can lead you to take on too much risk with the idea of scoring a big payout.

Further, people who are too hopeful often experience something called recency bias, in which they assume that what has happened recently will continue to occur in the future.

4. Stubbornness

Believing in yourself is one thing, but stubbornness rarely pays off in the world of investing. In fact, stubbornness often inspires investors to purchase a stock that isn’t ideal or stay with a stock that has already shown signs of dropping.

“Part of the problem people have with giving up hope is that they’d have to admit they were wrong,” said Kirk. “If the investor were to sell it at a loss, they’re admitting they made a bad decision. Worse, a bad financial decision. Admitting this is very tough for people. In reality, often it’s best to cut your losses and move on.”

It’s good to have faith in yourself and your abilities. However, if you stubbornly refuse to listen to reason, you could quickly put your investments — and your money — at risk.

5. Write Down Your Rebalancing Plan

If you don’t rebalance your portfolio, it will drift over time from your plan. The drift can become significant during extremely good or extremely bad markets when our emotions can get the better of us. Rather than waiting until this difficult times to decide when to rebalance, come up with a plan now and commit it to writing. It can be as simple as rebalancing once or twice a year.

Rebalancing will force you to sell asset classes that have risen in value and buy others that have fallen in value. It’s exactly what we should be doing, but it can be difficult. Who wants to sell stocks when they are going up and up, only to buy miserly bonds A written rebalancing plan puts this decision on autopilot, taking our emotions out of the equation.

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Things That Women Should Know About Life Insurance!

There is a myth in india that life insurance is only for men

There is a myth in india that life insurance is only for men. In simplest form, life insurance means protection against risks in life. While men might not give it due attention, risks also exist in a woman’s life, sometime even more than a man’s life.

Even though a woman may not be considered a breadwinner in the conventional manner, she also needs to protect against life’s risks, and thus needs life insurance.

In today's world, a woman's contribution to the finances of a family cannot be ignored. Besides, they provide much more than men in household matters. But women are seen to be holding themselves back when it comes to buying life insurance. 

While most men are aware of the fact that life insurance can be an emergency fund and help meet one's objectives or protect their families, it is time women know their importance in their loved one’s lives. They need to get themselves insured, in fact, adequately insured. 

Why women must buy life insurance?

The biggest reason a working woman must buy life insurance is because she is adding to her household income. Of course, about 100 years ago, the value that women were providing to the home wasn't considered worth insuring, but not anymore. Today the woman’s salary provides equally for the family, sometimes even more. 

Now as a woman, you can actually put a number to the value you provide to the household and help your family to continue living at their current lifestyle.

So the reason you need a life insurance is to ensure that your family has the income to stay afloat even if something happens to you – like permanent disability, accident, or untimely death.

Now, if you are a single, working woman, the reason you must purchase life insurance is when you have ageing parents (or any other dependents like younger brother or sister) that you're caring for. 

What kind of insurance women should buy?

What are the various types of life insurance?

There are two basic types of life insurance policies viz. Traditional Whole Life and Term Life Insurance. A whole life is a policy you pay till death of the policy holder and term life is a policy for a fixed amount of time.

The basic types of  life insurance policies are:

Term insurance

Term plans are the most basic form of life insurance. They provide life cover with no savings / profits component. They are the most affordable form of life insurance as premiums are cheaper compared to other life insurance plans.

Online term insurance plans provide pure risk cover, which explains the lower premiums. A fixed sum of money - the sum assured – is paid to the beneficiaries if the policyholder expires over the policy term. If the policyholder survives, there is no pay out.

Endowment plans

Endowment plans differ from term plans in one critical aspect i.e. maturity benefit. Unlike term plans which pay out the sum assured, along with profits, only in case of an eventuality over the policy term, endowment planspay out the sum assured under both scenarios – death and survival. However, endowment plans charge higher fees / expenses – reflected in premiums – for paying out sum assured, along with profits, in either scenario – death or maturity. The profits are an outcome of premiums being invested in asset markets – equities and debt.

Unit linked insurance plans (ULIP)

ULIPs are a variant of the traditional endowment plan.They pay out the sum assured (or the investment portfolio if its higher) on death/maturity.

ULIPs differ from traditional endowment plans in certain areas. As the name suggests, performance of ULIP is linked to markets. Individuals can choose the allocation for investments in stock/debt markets. The value of the investment portfolio is captured by the NAV (net asset value). To that end, there are many similarities between ULIPs and mutual funds. ULIPs differ in one area, they are a combination of investment and insurance, while mutual funds are a pure investment avenue

Whole life policy

A whole life insurance policy covers a policyholder over his life. The main feature of a whole life policy is that the validity of the policy is not defined so the individual enjoys the life cover throughout his life. The policyholder pays regular premiums until his death, upon which the corpus is paid out to the family. The policy expiresonly in case of an eventuality as there is no pre-defined policy tenure.

Money back policy

A money back policy is a variant of the endowment plan. It gives periodic payments over the policy term. To that end, a portion of the sum assured is paid out at regular intervals. If the policy holder survives the term, he gets the balance sum assured. In case of death over the policy term, the beneficiary gets the full sum assured.

How I invested in Mutual Funds, When my friends asked me too.

I Raj(25) being a software professional. My friends and colleagues always suggested me to invest in mutual funds. I always wondered what is it and why? whenever i saw TV commercial or YouTube ad. It always comes with a disclaimer 'Mutual funds are subjected to risk, read the documents carefully before investing. This always pricked me and I always wondered why is it risky.

I went to Banks, every bank and an agent i met it confused me, more and more. I thought let me check online like always we do and i came across numerous websites, blogs and something new First Free Online Financial Advisers. I had a online chat with chat them, sometimes investing online is a worry so I asked them to call me .

They called me I spoke to them. The gentleman on the other line was very helpful, gave me an options how I can invest in mutual funds and the benefits of it . Types of Mutual funds. How I can redeem when ever I want to and save tax too.

I was very keen, confident and had a positive vibes so that I can invest my hard earn money into mutual funds. Yes, I was clear with the ex-claimer that suggested me Please read the document carefully before investing into mutual funds. With no time I decided I will invest the in Mutual Funds.

Types of Mutual Funds : 

There are four types of Mutual funds. Probably, you can invest in any of these funds. You can invest mutual fund with low risk. You need to understand how market works. You can check them before you invest. I have mentioned them below.

1. Money market funds : 

These money market funds are invested in money market instruments. These securities have very short time of maturity. As per net asset value you can sell to retail investors. These funds are considered to be a safe investment. But returns will be lower than other mutual funds. These funds are invest in short term for fixed income.

2. Bond funds :

These Bond fund invest in bonds and other debt. These funds invest in fixed income. You can classify according to bonds. In addition, these bonds are fixed by maturity. Mainly, These investments are in government, corporate and convertible. It is like mortgage secured securities.

3. Equity funds :

These equity funds are invested in common stocks. You may focus on companies of stock market. These stocks come from industries or countries. The companies are calculated on market price of stock. But these funds grow faster than money market. It has higher risk that you can lose money.

4. Hybrid funds : 

These funds are characterized by portfolio. And it is mixed with stocks and bonds. It remains fixed. And it is categorized into domestic and international fund. It also knows as Balance funds or asset allocation funds. They invest in other mutual fund.

Benefits of Mutual Funds :

1. You will be provide with many stocks.That will diversify your portfolio. It will diversify instant. It gives low risk. You can see it effect for smaller accounts. Since mutual fund provides exposure also. For hundreds and thousands of stocks. Therefore, you need not go out.

2. You can buy hundreds or thousands of stock by own. So you will get profit from smaller investment. These funds will give you good service. You feel convenience.

3. Apart of this, government regulates all mutual funds. Therefore, all mutual funds must give same information to investor. Because to compare easily. Check advantages and disadvantages of Mutual Funds.

Draw Back of Mutual Funds :

1. You can find few hidden chargers in mutual fund. If you sell mutual fund. Because after sale only you have access to cash. Means, you need to wait for three days after sell.

2. You need to understand both good and bad points. If you buy or sell mutual fund. Therefore, you find transaction will take place at market close. It is simple, easy and stress free investment.

3. The government is not responsible for losses. No guarantee on returns. It depends on market. Some of these expenses are charged on ongoing basis. The portfolio diversify helps in minimize of risk. It’s hard to show higher returns.

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Things To Remember While choosing a Home Loan

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Purchasing a home and applying for a home loan are the two most vital decisions of one’s life. You can plan to buy your dream home with a secured home loan, where you have to keep your house as collateral. So, in this case, you are giving the authority to the lender to auction your home to get the money back, if you become a defaulter.

However in that excitement, a lot of people do not take all the required actions and later suffer because of small things they didn’t complete after closing their home loans. In this article, I want to share few things every home owner should complete, when they are closing their loan.

While I am focusing totally on home loan closure in this article, but whatever I am going to share also applies when one closes a car loan, education loan, personal loan or any other kind of loan

So why are you waiting?

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We only provide FREE financial advice so that you are not mis-guided while buying any kind of financial products.

Get back all the original documents

Once you have made all your payments, the Bank or Housing Finance Company will give you all the original documents. You should make certain that all the documents you presented with the bank when taking the loan are returned. Typically it will be the Title Deeds and Mother Deed (if applicable).

Don’t just test out for document alone. Confirm that all the pages are there in good condition as well. I have seen cases where last page of sale deed went missing. In that instance you require to arrange for the misplaced page which is a tiresome process.

Ensure all the pages are intact in front of the bank official prior to signing on the acknowledgement of the bank.

Once you sign, you can’t undo it and banks typically won’t be receptive in this regard. It is typically a good process to get hold of the documents from bank by visiting them than request documents by courier.

Obtain No Objection Certificate

NOC or NC is a No Objection certificate which is a consent certificate from the bank or housing finance company. This affirms that the Bank does not have any more interest in the asset and it’s cleared by the bank after removing all hypothecation.

When you get this make certain the NOC unmistakably mentions the Property details (like address etc.,) , name of the borrower, home loan account number, date of loan starting and closure, amount borrowed and repaid (some banks don’t mention) .

Also a section should be plainly mentioned that the borrower has paid all the dues and the property is now debt-free. This will confirm that the home is completely yours now.

If Lien of Your Home Is with the Lender, Don’t Forget to Remove It from the Registrar Office

Lien here means “the right to hold possession of property which belongs to another person until he/she has cleared all the debt.”

When you buy a home with housing finance, the lender has the right to sell the property (home bought by you) if you’re unable to pay back the entire loan.

Nowadays, banks carefully check the background of the borrower in advance, so they don’t put a lien on the property. However, they keep the original documents (of property) in their custody.

But if the lenders find anything suspicious in any customer’s background, they might want to put a lien on his/ her property from registrar office.

So make sure you ask your lender about the lien on your property, and if it’s there, ask them about the process to remove it.

Is Your CIBIL Report Updated With “Closed” Entry?

A borrower’s creditworthiness is measured through his/ her CIBIL report and it records your every loan entry and payment actions. Lenders check your CIBIL report before giving any type of loan or credit card. So, if you have closed your home loan by making full payment, it’s crucial to check if your CIBIL report is updated with the “Closed” entry or not.

Although banks update it themselves, but many times they delay or even completely ignore it for several months and your CIBIL report isn’t updated on time which might decrease your credit score and mar your chances of getting any loan in future.

So, double check with the lender bank when you close your home loan account, that they update the CIBIL report at the earliest.

Whenever you’re closing your home loan (even if you’re opting for pre-closure), make sure you complete all the things mentioned above to be on the safer side.

You getting married: How will protect your Finances?

The First Step would be sitting with your partner and have a candid conversation about money

Preparing to get married is an exciting time, but it is also fraught with expectations, tough financial decisions, and potentially awkward conversations.

Although getting married can be financially beneficial, sharing the wealth — and the debt can make you feel like you’re paying more than your fair share. That’s why in most cases, it’s best to set clear financial expectations from the start and take steps to protect your assets, especially if one partner comes into the marriage with significant wealth or with children from previous relationships.

Here the some tips to protect your finances.

Have a Honest Conversation With Your fiancé: 

The First Step would be sitting with your partner and have a candid conversation about money.

Before you wed, you should explore values surrounding budgets, debt, lifestyle, retirement goals and plans, children and college, and so much more. It is ok if both of you doesn’t agree to everything.

If you marrying someone who doesn’t care about budgets, debt then it is going to be lot of tensions and conflict.

You should start sharing your credit report

Any joint account you open will require a credit report being checked for both you and your spouse. If your spouse’s credit is too poor to use for a home or car loan, you may be tempted to take on those financial responsibilities on your own.

Protecting your assets 

You have to ensure that your separate asset remains separate and that will protect in future.

Sitting your goals for the future is a important step. Whether these goals are joint financial goals or something you’d like to take on alone, it’s important to work toward a goal and set a plan to do so. “You’d be surprised how many people make assumptions about how others think about saving and spending

Think Big Pictures

Having these tough financial discussions may seem unromantic in the months leading up to your wedding, but it’s important to keep the big picture in mind.

“Differences in spending habits and financial goals are precursors to divorces — and one of the biggest reasons why people divorce,” Hutchinson says. “[You want it to be] the strongest possible start…so when challenges arise, you have already had these conversations and don’t have to start from square one. It doesn’t mean you don’t trust or love [your spouse.]”

Kruger echoes that sentiment.

“When you get married, you tie an emotional and financial knot that you need to keep strong throughout your lives together,” she says. “Talking about money and financial issues doesn’t come naturally to all of us, but it’s a critical conversation to have with your partners

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