Reverse EMI anyone

All of us are tempted to buy things we dont need with money we dont have. Companies and banks came together to sell us stuff even if we dont have the money to buy it. This is called installment plan. If a phone costs 20000 you get the same on emi for paying 2000 for 11 months in otherwords you pay 10% more. This is just an example as the real rate of interest would come to 17% compunded.

I have a suggestion to all who would like to buy things, open a recurring deposit and save the monthly instalment required. At the end of say 15 months, you would have saved some amount for purchase of your gadget but also you would have earned interest instead of paying it. Moreoever you have now cash in hand and can bargain lower prices for your favorite gadget.

Of course, you need to postpone your purchase for sometime. This would work well with all frivolous purchases. It also disciplines people into knowing the cost of credit. Buying gadgets with money you dont have is not a good idea, unless your dad owns a bank.

Investing through Mutual Funds

Mutual Funds offer the easiest and best way to plan your finances. Whether you are investing for just a month or for a decade. Most people associate MFs with just equity funds which are meant for the long term, but there is more to MFs then just equities. The common types of funds are.

1. Debt
2.Liquid
3. Equity
4. Balanced ( Has both equity and debt components, usually 50;50)
5. Hybrids (though similiar to the above has equity component ranging from 10% to 80% with the rest being debt)
6. Commodity (Invests in commodities, at present there are Gold Funds)
7. Real Estate Funds (likely to be launched in future)
8. Global Funds ( they invest in stocks and bonds in foreign markets)