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The time period ‘monetary freedom’ can have completely different interpretations for various folks. For some, monetary freedom or independence would imply having sufficient financial sources to cowl their residing bills. For a lot of, it might seek advice from having sufficient cash to fulfill monetary objectives or life-style selections. For others, it might imply eliminating debt reimbursement obligations. Gaurav Aggarwal, Senior Director, Paisabazaar.com, shares some suggestions for attaining monetary freedom in a broader sense:-
Make prepayments, at any time when attainable
“Prepayment or foreclosures of excellent loans can result in substantial financial savings in curiosity price, particularly if made throughout the preliminary years of the mortgage tenure. Therefore, present debtors having monetary surpluses ought to at all times attempt to prepay their loans. These having a number of loans can begin prepaying the mortgage costing them highest rate of interest and/or having longer residual tenure. This can derive greater financial savings in curiosity price,” Gaurav Aggarwal mentioned.
“One also needs to think about foreclosures or prepayment expenses, if any, levied on mortgage prepayment. Lenders providing loans on fastened rate of interest normally levy prepayment expenses. RBI tips have barred the lenders from levying prepayment expenses on floating charge loans. Go for mortgage prepayment or foreclosures provided that the general financial savings within the curiosity price exceed the prepayment expenses, if any, by a large margin,” he added.
“Additionally keep away from utilizing emergency funds or present investments made in your essential monetary objectives for prepaying loans. Doing so could lead you to avail loans at greater curiosity price to deal with monetary exigencies or for attaining unavoidable objectives,” he suggested.
Go for stability switch
“Stability switch possibility permits an present borrower to switch his mortgage to a different lender at a decrease rate of interest, resulting in a discount in his curiosity price and EMI burden. Therefore, debtors having lengthy residual tenures ought to examine the rates of interest charged on their present loans with these provided by different lenders. The easiest way to take action is to go to on-line monetary marketplaces and examine the rate of interest provided by numerous lenders primarily based in your earnings, credit score profile and reimbursement capability,” he mentioned.
“If different lender(s) are providing decrease rates of interest than those levied by your present lender, then request your present lender to cut back your rate of interest. In case your present lender rejects your request, then switch your mortgage to the lender providing a decrease rate of interest. Nonetheless, think about prepayment expenses levied by the present lender, processing charges and different expenses levied by the brand new lenders earlier than exercising stability switch,” he opined.
Embrace your EMIs in your emergency fund
“The first objective of sustaining an emergency fund is to take care of monetary exigencies or earnings loss attributable to job loss, sickness or any unexpected scenario. The scale of this fund needs to be sufficiently big to fulfill your unavoidable bills for at the very least six months. Therefore, embody your EMI obligations for the following 6 months in your emergency fund. This is able to provide help to in persevering with your EMI repayments throughout monetary exigencies and thereby, save your self from incurring greater curiosity price, late cost penalties and any adversarial impression in your credit score rating,” he mentioned.
Put together a monetary plan
“Having a monetary plan helps in offering a path to your cash administration and funding actions as per your earnings and liquidity. It additionally helps in devising an optimum asset allocation technique for reaching your monetary objectives. Begin this course of by estimating the quantity required to fulfill every of your monetary objectives on the premise of your time horizon, presumed charge of return and inflation charge. After getting this info, use on-line SIP calculators to search out out the month-to-month contributions required to attain your monetary objectives,” he suggested.
Start investing early by way of SIPs
“The sooner you begin investing, the extra time your investments must develop and thereby, profit from the ability of compounding. Therefore, attempt to begin investing in your big-ticket monetary objectives like post-retirement corpus and baby’s greater schooling as early as attainable. This is able to provide help to obtain monetary objectives with a lot smaller month-to-month contributions,” he mentioned.
“Go for the SIP mode of funding as common funding at periodical intervals would instil monetary self-discipline and likewise guarantee rupee price averaging by buying extra items at decrease NAVs throughout market downturn or correction. This is able to additionally get rid of the necessity for monitoring markets and timing your investments,” he added.
Evaluation your credit score report at common intervals
“Your credit score stories checklist numerous actions associated to loans and bank cards. They supply particulars associated to your reimbursement historical past, your previous and present mortgage and bank card accounts, purposes made for bank cards and loans, and many others. As this info is reported by the lenders to the credit score bureaus, any clerical error made by the bank card issuer or lender throughout the reporting or any fraudulent exercise made in your identify can cut back your credit score rating. The one option to detect such mistaken info is to fetch your credit score report at periodic intervals and report them to the involved bureau or lender for rectification. Fetching your credit score report at periodic intervals may provide help to in getting pre-approved mortgage, bank card and stability switch presents from numerous lenders,” he concluded.
(Disclaimer: The views/ideas/recommendation expressed right here on this article are solely by funding specialists. Zee Enterprise suggests its readers to seek the advice of with their funding advisers earlier than making any monetary resolution.)
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