Zebu blog

Tag: financial planning

  • What is a Contingency Fund and How Important Is It?

    A savings account designated expressly for unforeseen costs or crises is known as a contingency fund. It is a crucial component of personal finance that may offer stability and comfort in the face of unforeseen catastrophes.

    Typically, it’s advised to save 3-6 months’ worth of income in a contingency fund. This is because it takes time to change jobs or for a company to recover from a loss. In the case of a job loss, unanticipated medical costs, or other emergency, having 3-6 months of income set up will help you stay afloat financially.

    Having a contingency fund can assist avoid the need to incur debt to pay for unforeseen expenditures, which is one of its main advantages. For instance, if you lose your job and don’t have a backup plan, you could have to charge unforeseen costs to your credit card, which might result in high-interest debt. The money in your contingency reserve, on the other hand, may be used to pay for unforeseen costs without putting you in debt.

    The peace of mind it may bring is another advantage of having a contingency fund. The anxiety that comes with unforeseen catastrophes might be lessened by knowing that you have a financial safety net.

    There are several approaches to creating a contingency fund. One strategy is to save a specific sum of money each pay period by depositing it into a savings account. Setting up automatic transfers from your checking account to your savings account is an additional option. Making ensuring the money is simple to get to in case of an emergency is crucial.

    Keeping a contingency fund distinct from other savings or investment accounts is also crucial to remember. This will make it more likely that the funds will be accessible when needed and won’t be spent for non-emergency costs.

    In conclusion, having a contingency fund is crucial for maintaining financial security and peace of mind in the event of unforeseen circumstances. A contingency reserve of three to six months’ worth of income is often advised to cover unforeseen costs or crises. Creating a contingency fund might provide you peace of mind and help you avoid going into debt. It’s crucial to set aside some cash from each paycheck and put it into a savings account, or set

    Make sure the money is available in case of an emergency and set up automatic transfers from your checking account to your savings account. To ensure that the money is not spent for non-emergency costs and is available when required, it is also crucial to maintain the contingency fund distinct from other savings or investment accounts. Making a contingency fund a priority in your overall financial plan is essential because it can be the difference between a slight inconvenience and a serious financial problem.

  • Differences Between Saving and Investing, and When to Choose Each

    Although they are not the same, saving and investing are both significant components of personal finance. Savings accounts and other low-risk accounts are considered to be savings, but investing is the process of placing money into stocks, bonds, mutual funds, real estate, or other assets with the intention of making a profit.

    Here are some significant distinctions between saving and investing, as well as situations in which picking one over the other would be wise:

    Saving often entails less risk than investing does. Savings accounts and other low-risk accounts are covered by FDIC insurance, which guarantees that depositors will receive their money back even if the bank goes out of business. Contrarily, investing may involve greater risk. For instance, it is possible to lose money in the stock market, and real estate can also be a risky investment.

    Return vs. Preservation: In general, investing has a better potential return than saving. For instance, investing in the stock market might yield returns that are far more than the interest you would receive on a savings account. The objective of saving, however, is often to maintain the value of your money rather than to generate a high rate of return.

    Savings are often better suited for short-term objectives like emergency funds or down payments for homes, while investing is better suited for long-term objectives like retirement. It’s vital to be ready for the volatility that comes with investing since it may be a terrific way to expand your money over time.

    Savings accounts have greater liquidity than investments do. A savings account allows you to access your money far more quickly and conveniently than an investment does. This implies that investing the remaining funds while keeping a portion in a savings account for unforeseen costs is a smart option.

    Taxation: While certain investment forms, such as equities and mutual funds, may provide tax advantages, interest collected on a savings account is taxed as income. Short-term profits are taxed more heavily than long-term gains, for instance.

    In conclusion, both investing and saving are crucial facets of personal finance, but they accomplish distinct goals. While investing is a wonderful method to grow your money over time and get ready for long-term objectives, saving is a smart way to maintain the value of your money and be ready for short-term goals. It’s critical to comprehend how the two vary and to employ the tactic that is best for your particular circumstance. When deciding whether to save or invest, it’s crucial to constantly take your personal risk tolerance and financial goals into account.

  • PAN and Aadhaar Linking by March 31st, 2023 – How To Do it

    As investors in the Indian stock market, it is important to be aware of the latest regulations and guidelines set by the National Stock Exchange of India (NSE). In a recent advisory, the NSE has advised all investors to link their Permanent Address Number (PAN) with their Aadhaar number by March 31, 2023. This is to ensure that transactions in the stock market are seamless and uninterrupted.

    In 2017, the Indian government announced that it would be mandatory to link PAN with Aadhaar for all transactions in the stock market. The deadline for linking PAN with Aadhaar has been extended several times in the past, but the expectation of an extension this time around is low.

    PAN is the primary identification number for transactions in the stock market, making it crucial for investors to ensure that their PAN card is linked with their Aadhaar number. Failure to link the two before the deadline of March 31, 2023, may result in the suspension of your trading account. The NSE has warned that if an investor has not linked their PAN card with Aadhaar by the end of March, they will not be able to make new deals or even close open positions.

    To link your Aadhaar card with PAN, follow these simple steps:

    • Visit incometax.gov.in
    • Login or register yourself
    • Click on ‘Link Aadhaar’
    • Fill in the necessary details and submit

    The Income Tax Department will start the process of linking your PAN and Aadhaar.

    In case you want to manually link your PAN with Aadhaar, you can visit a PAN service center and fill out the Annexure-I form. You will also need to provide a copy of your PAN card and Aadhaar card and pay a fee of Rs 110 for any corrections to PAN data, or Rs 50 for updating Aadhaar details. Biometric authentication may be required if there is a significant discrepancy between PAN and Aadhaar data.

    To check if your PAN and Aadhaar are already linked, you can visit the income tax e-filing website www.incometaxindiaefiling.gov.in and log in to your account. If the two are linked, your Aadhaar number will be partially displayed in your profile. You can also send an SMS to NSDL e-Governance Infrastructure Limited or UTI Infrastructure Technology and Services Limited, which are PAN service providers, to link your PAN and Aadhaar. Simply text a keyword to 567678 or 56161 in the format UIDPAN>12 digit Aadhaar>10 digit PAN> to link the two.

    It is important for investors to take this advisory seriously and link their PAN with Aadhaar by March 31, 2023, to avoid any disruptions to their trading activities.

    <b>Click Here:</b> <a href=”https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar”>Link PAN with Aadhar</a>

  • The Benefits Of Investing In Corporate Bonds

    Bonds are debt market products that, as their name suggests, pay a fixed interest rate annually or at regular intervals and can be redeemed at the end of a certain time period. Bonds are fixed-income securities that act as a private company’s assurance to raise money for operating costs. Most of these bonds are traded on the secondary market and are also available to investors as “dematerialized” bonds. Before you buy private sector bonds, here are some things to think about.

    1. Is it backed by a reputable business group?

    These corporate bonds from the private sector are at risk of default, but government bonds are not. As an investor, default risk may have two effects on you. First, the company can have bad financial results and be forced to stop making principal repayments and periodic interest payments. Second, even if the bond is traded on the stock market, it could be downgraded by the rating agencies. This would cause the price of the bond to drop.

    2. Don’t try to find more ways to make money

    Going down the grading curve to find higher yields on private bonds is very common, even among fund managers. For instance, a corporate bond with a AAA rating will have the lowest interest rate. But if you choose bonds with an AA or A rating, the yield will be higher because these companies are more likely to pay higher rates than AAA companies. Even though not every AA or A-rated company will go bankrupt, it is a risk, so you should be careful. If you can’t sell the bond on the secondary market or don’t have time to keep an eye on how the company is doing, the risk is higher.

    3. Keep in mind that private-sector bonds make you pay more in taxes

    Your actual returns depend on how the tax treatment works out in the end. When you buy private bonds, the interest you earn is taxed at your highest rate, say 30%. So, if the bond pays you an interest rate of 11%, your real yield after taxes is only 8.7%. (11-3.3). Even though the lock-in term may be longer, it may be better to invest in an infrastructure bond that saves taxes. For example, if the interest rate on a tax-free bond for infrastructure is 6.5%, the effective after-tax yield will be 9.3% (6.5/0.7). In reality, an infrastructure bond has a higher effective yield and a much lower risk of default.

    4. You might find that investing in debt funds is a better idea

    If you want stability, debt funds may be a much better option for you. Debt funds let you benefit from both the interest on bonds and the growth of your capital when interest rates go down. The second benefit of debt funds is that they build a portfolio of different types of debt instruments with different levels of risk. This makes your overall exposure risk much lower. It’s hard to come up with this much variety on your own. Third, unlike bonds, which are usually hard to sell quickly, debt funds are easy to buy back. Price anomalies can also make it so that the prices don’t reflect the bond’s true value. Last but not least, debt funds are much better than private sector bonds when it comes to taxes. If you choose a debt fund’s dividend plan, you can take out the profits without having to pay taxes because dividends from debt funds are tax-free in the hands of the investor.

    The yield on private sector bonds is a little bit higher than that on bank FDs, but the risks are also a little bit higher. Before putting money into private sector debt, you should know this.

  • This Diwali, Invest In Gold With Gold ETF

    Indians have always liked gold a lot, and this has been true for a long time. India didn’t get its first gold exchange-traded fund until 2007, though (Gold BeES). Gold is the asset that these ETFs are based on. Gold ETFs also give you a way to invest in the gold market in India.

    And this Diwali, when it is considered auspicious to invest especially in gold, you can buy its ETF on the share market with your Zebu trading account.

    Exchange-traded funds (ETFs) for gold, also called gold ETFs, are open-ended mutual fund plans based on the price of gold, which changes all the time. There are a lot of costs involved in making real gold. Gold ETFs are a way for investors to get into the gold market. They are a great choice for long-term investors who want to beat inflation.

    Gold is also a safer investment than stocks because it doesn’t change as much. Because of this, it gives you the chance to invest in gold and trade stocks. Some fund companies make money by buying and selling gold bullion. Because of this, they have to keep a close eye on the market. The price of real gold has a straight-line effect on how much gold ETFs are worth. Not only do they not skimp on purity, but they also make sure it is always available everywhere in the country.

    Who should buy gold exchange-traded funds?

    Gold ETFs could be a good choice for investors who want to add exposure to the gold market to their portfolios. It’s a low-risk investment that careful investors should look into. The money is used to buy standard gold bullion that is 99.5% pure. Gold ETFs are a low-risk investment, even though they are bought and sold on stock exchanges. People can buy gold ETFs instead of real gold if they don’t want to pay money to store it or pay extra taxes.

    What Gold ETFs are and what they offer Flexibility

    You can buy gold exchange-traded funds (ETFs) online and put them in your Demat account. The asset management company buys and sells them on a stock exchange (AMC). Even in the Demat format, gold ETFs act a lot like real gold.

    Liquidity

    Gold ETFs are very liquid because they can be traded on the stock market at the going rate during a trading session. Also, transaction costs, such as broker fees and government taxes, are lower than with real gold.

    Smaller capital requirement

    When you go into a shop, you will need a lot of money to buy gold. When you buy and sell gold ETFs, on the other hand, you can choose how much you want to buy and sell.

    It’s easy to take part in the gold market

    Gold exchange-traded funds give investors access to the open, successful, and safe gold market (ETFs). Also, they have a lot of cash on hand because gold is easy and quick to exchange.

    Long-term investment

    Gold ETFs are not subject to a wealth tax like real gold is. Safety and storage are also not issues with a Demat account. Because of this, you can keep your ETFs for as long as you want.

    Tax-efficiency

    Gold ETFs are a tax-friendly way to store gold because the profits they make are taxed as long-term capital gains. Still, sales tax, VAT, or a tax on wealth won’t make things harder.

    Trading on a platform (NSE)

    Investors in gold ETFs can trade in a clear way on the National Stock Exchange (NSE), which is a stock exchange platform.

    Easy transactions

    You can use it as security for loans and list it on the stock exchange to buy and sell it. Since there are no costs to enter or leave, transactions go more quickly and smoothly.

    Risk elements

    The NAV, or net asset value, of a gold ETF can go up or down with the market, just like any other stock fund. In a similar way, other costs, such as the fee for managing the fund, can also change the results.

    This Diwali, if you are interested in investing in Gold, open a Zebu trading account and start investing today. It only takes 5 minutes.

  • Why This Diwali Is The Best Time For You To Invest

    Options for investing this Diwali: There are many ways to invest, from corporate bonds and gold to stocks and index funds, which may help you build wealth and be financially stable in the long run.

    During Diwali, lights are used to celebrate, and Goddess Lakshmi stands for wealth. During the Samvat year, it is smart to make plans for money and lay the groundwork for financial stability (the Hindu New Year). People can build wealth and plan for their financial future in many ways, from buying gold to buying stocks.

    The primary market

    Initial Public Offerings (IPOs)

    They are great ways to invest for the long term. After a short period of calm, the market for initial public offerings (IPOs) has recently exploded. As the economy and business growth continue to rise, many businesses will use the primary markets to raise money and list their subsidiaries or verticals.

    Equity

    Long-term returns from stocks have always been better than short-term changes in the economy and market. They may also do better than other asset groups in the long run. Value investing is a good place to start. Value investors are like stock scouts because they look for cheap companies or stocks that other market participants haven’t found yet. Instead of buying stocks, they put their money into businesses. Rakesh Jhunjhunwala and Warren Buffet are two examples of value investors.

    Investing in stocks with high dividends could also be a good idea, especially when the market is very volatile. Some Indian businesses are known for giving out attractive dividends. Since they are still stocks, high-dividend stocks still have the chance to go up in value.

    Index funds

    Now is a good time to start investing with them Around Diwali, and index funds have been known to give better long-term returns.

    Since the market can go up and down and there is a real risk of losing money, and if you don’t know much about the market, you may not want to invest in stocks. Here are index funds. An index fund is a type of mutual fund that looks like the portfolio of an index. For example, a Nifty index fund would track the NSE Nifty index and hold a mix of the 50 stocks that make up the Nifty. The results of an index fund would be similar to those of the index it tracks. So, asset allocation with index funds gives you diversification, lowers risks, and increases long-term returns.

    Corporate bonds

    Corporate bonds are a good choice for investors who don’t want to take too much risk and want a stable way to make money and good returns in a time when fixed deposit rates are going down. These bonds are made by both private and public businesses. Investors should only choose companies with a good reputation, a long history of paying their bills, and a high credit score.

    Gold

    Gold has been one of the best investments this year. It has gained more than 30%. Gold is seen as a safe investment option because it tends to do well when things are uncertain. Gold is likely to keep its shine for a long time, since the Covid19 pandemic shows no signs of stopping and geopolitical problems in India’s region and around the world are getting worse. Gold is also a good way to protect against inflation. During the Dhanteras celebration, it is said to be lucky to buy gold.

    If you would like to open a Zebu trading account and start investing in any of these instruments, please get in touch with us today.

  • What You Should Know About Loans Against Securities

    There are many benefits to investing in the stock market in India. You can get a loan against the securities in your Demat account, which is one of the many benefits. You can basically use the stocks you own as collateral with your stock broker or a financial institution to get a loan to pay for unexpected expenses.

    Before we get into understanding loans against securities, it is important to understand that trading requires a powerful online trading platform and at Zebu, as share market brokers we understand that. Along with the tool we also offer the lowest brokerage for intraday trading.

    Still, there are a few things you should know before you go ahead with this. Here’s a quick look at the top 5 things you’d have to think about if you used this service.

    Financial Institution

    The first thing you should know about getting a loan against the stock is that not all banks or stock brokers offer this service. So, it is very important to find and pick the right institution. When looking for loans, you should try to get them from places that have low-interest rates. This will help you pay the least amount of money you have to.

    2. Check if you’re eligible

    Before deciding on a financial institution where you want to use this service, it is a good idea to look at their requirements to see if you meet them. Different institutions have different requirements, so it’s important to know if you meet them before you apply. This will help make sure that everything goes smoothly and without any problems.

    Loan Amount

    The next thing you should know about a loan against security is how much you can borrow. Since the value of securities like stocks and bonds tends to change every day, most lenders will only loan a portion of the securities that have been pledged. Most of the time, the amount of a loan from a financial institution is between 60% and 80% of the value of the securities pledged.

    A list of stocks

    Not every place that lends money will take every kind of security as collateral. For example, some lenders may be willing to take mutual fund units as collateral while others may not. So, the list of accepted securities may be different based on where you apply. So, if you want to get a loan against stocks, you should first check with your preferred financial institution to see if the stocks you own can be used as collateral.

    Fees and charges that must be paid

    Lastly, most lending institutions charge fees and interest rates for loans against securities. Fees can be for anything, from processing to making a pledge. Some financial institutions even charge fees if the loan is paid off early. So, before you move forward with the process, you should be aware of the different fees and charges that come with such a service. So, you can make a good choice.

    Conclusion

    With this information, we hope you now know what you should think about when using this service. On the other hand, if you want to invest in the stock market today, you must have a Demat account in your name. Contact Zebu right away to set up a free Demat account in just a few minutes.

    At Zebu, as share market brokers we understand that trading requires a powerful online trading platform, and we offer just that. Along with the tool, we also offer the lowest brokerage for intraday tradingWhat are you waiting for? Download the Zebu app now.

  • How to Invest in the Stock Market During Inflation

    The economy is always changing, and it can be hard to make investments when things are always changing. Investors are having a hard time right now because the economy is showing all the signs of inflation. So, how do investors invest now, especially if they want to put their money in the stock market?

    Are you planning to invest in the stock market? If yes, then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share market brokerage firm we also understand that online brokerage is a major problem, hence offer lowest brokerage options to our customers

    With higher rates of inflation, the IPOs of startups going public are becoming an ever more appealing way to get people to invest. But it’s worth going back in time to get a better idea of how the economy worked in the past. The last 10 years, from 2011 to 2020, had low inflation and moderate growth. During the first decade, especially from 2002 to 2007, growth was higher, but inflation went up.

    We are at a time when growth is slow and prices are going up fast. There is a lot of uncertainty in the world today, and rising geopolitical tension is making it worse. But even though the markets have recently gone down, starting prices are still high. If you want to trade stocks when inflation is high, you can, but you should be careful.

    How the Indian economy is doing

    The Indian economy is in a macro situation right now, which can hurt most emerging markets. Many countries with “emerging markets” (some of which are closer to India than others) are in economic trouble. Because of this, FIIs are pulling their money out of these markets. Since October 2021, this has been the case with India. Still, India is better off than other countries in the same situation when it comes to inflation. This is one of the most optimistic signs for investors.

    Using Investor Awareness to Trade on the Stock Market

    Why is India a good market for investments, even if they are in the stock market? For one thing, India’s economy is back on track after all the problems of the past few years. The services sector, which has been slowing down for the past few years, is also showing signs of getting back on its feet. Also, the amount of debt owed to countries outside of Canada is low, and the country has enough foreign exchange reserves to cover CAD projections and debt payments to countries outside of Canada. In this situation, investors who buy stocks need to be careful, because investing in the markets is risky. Investors who want to open a Demat account and invest in stocks that will do well during times of inflation should keep in mind the following:

    Investors should be ready for more volatility for the next 6 to 9 months.

    Investors shouldn’t expect big returns and shouldn’t think that the returns of the last two years will happen again.
    If an investor wants to invest a large sum all at once, they can choose funds that have a balanced mix of debt and stocks.
    Hybrid funds are a good choice for investors who like to play it safe.
    Using an STP or SIP, you should spread out your investments in small and mid-cap stocks over the next 6 to 9 months.

    A Time to Invest Carefully

    You might be interested in investing in the stock market because there are a lot of IPOs coming up. It’s easy to open a Demat account and start investing with Zebu, but if you do so now, you must do your research on stocks and invest carefully.

    If you planning to invest in the stock market then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share broker firm we also understand that online brokerage is a major problem, hence offer the lowest brokerage options to our customers

  • The Best Way To Save Gold – SGB Vs Gold ETF

    Gold is a popular investment choice because it protects against inflation. But when there is more than one way to invest, an investor may not know which one to choose because they all track the price of gold. Tax and investment experts say that the Sovereign Gold Bond and the Gold ETF (Exchange Traded Fund) are best for two different types of investors.

    Gold ETF is better for investors who want to invest for the short term while keeping liquidity in mind because it lets investors sell their money whenever they want. But for medium- and long-term investors, the Sovereign Gold Bond is better because it guarantees a 2.5 percent return and the maturity amount isn’t taxed.

    Both are investments that protect against risk, but investors with little time to invest should choose gold ETF. For investors who want to be able to sell their investments quickly, Gold ETF is a better choice than Sovereign Gold Bonds, which have an 8-year lock-in period if the investor wants the maturity amount to be tax-free.

    If you want to invest in gold over a long period of time, the Sovereign Gold Bond is better because it lets you buy gold in small amounts over time. The Reserve Bank of India (RBI) makes these small amounts of gold available from time to time. But it can’t be traded for 8 years, or 5 years from the date the bond was bought and 3 years after that.

    An investor can withdraw their money after 5 years, but if they do, they will lose the exemption for long-term capital gains (LTCG) that the scheme offers. So, under the Sovereign Gold Bond Scheme, an investor must keep their money invested for 8 years before they can get a tax break. In addition to not having to pay taxes, the Sovereign Gold Bond Scheme gives investors a guaranteed return of 2.5%, which the Gold ETF scheme does not.

    After 8 years, the maturity amount would be sent to the person’s bank account automatically. Iin the Sovereign Gold Bond Scheme, the investor doesn’t get to choose when the bond matures. Instead, the maturity amount is based on the average price of gold at the end of the last three business days before the redemption date.

    Gold ETF also charges fees for fund management and brokerage when an investment is made or sold, which Sovereign Gold Bond Scheme doesn’t do.

  • How much time should you spend researching stocks?

    Researching stocks is not a long process, but it can take a beginner anywhere from 2 to 4 hours to finish the whole thing. A platform like Zebull Smart Trader for stock screening and fundamental analysis can help get the job done faster.

    Why should you look into stocks?

    Researching doesn’t just mean reading about a company’s founders and how it makes money. It takes into account all internal and external factors, such as the company’s financial statements and how well it does in its industry and compared to its peers, among other things. I’m sure you spend a lot of time researching new gadgets (like a cell phone) before you buy them, so why not do some research before you buy a share in a company?

    How long should you spend researching?

    People have different ideas about how much time they need to spend researching stocks. Even so, the job is a lot easier now that there are platforms and tools for advanced screening and fundamental analysis. With just a few clicks and taps on your computer, you can get all the information you need about a company. But this isn’t where the main part starts.

    Before you can start, you have to figure out which sector and industry you want to invest in. Once you know, the next steps will be a lot easier. You can use the “Top-down Method” to find a potential industry. With this method, you start with the economy and narrow your list down to one or two stocks of a potential industry.

    Let’s follow an example. Assume you have a good opinion of the IT Industry. There are a few things you can do to find the best stock in the industry. First, you need to look at the economy as a whole to see if the IT space is in a growth phase or not. Next, you can go straight to the specific sector (in this case, the IT sector) and try to narrow your search to an even smaller niche. To find these pieces of information, you might have to read business articles and analysts’ predictions. If you have done this before, it shouldn’t take more than a couple of hours. For a beginner, the same process could take an extra hour or more.

    In the same way, picking stocks isn’t too hard because you can get all the financial information you need from fundamental analysis platforms like Zebull Smart Trader. The whole process could take anywhere from two to four hours, depending on how good you are at research and how far you want to go. After you’ve done a lot of research, you’ll be left with a few high-quality stocks in your favourite industry that you can safely put your money into.

    What are your other choices?

    Now that you know how the task is done and how long it will take, you can save time if you still want to. Mutual funds are an easy way to invest because you don’t have to do all the research and stock picking. Your job will be done by a person who is in charge of the fund. In the same way, you can invest in index funds or exchange-traded funds (ETFs) that track the whole Nifty50 or Sensex and give returns based on that. You can save the time you would have spent analysing stocks by using these.