Benefits of Paying Off your Car Loan Early

It is a good idea to pay-off your debt on car loan beforehand, so that it does not pile on, along with future expenditures. Prepayment of your car loan brings you manifold benefits.

Some of the benefits of availing car loan pre-payment option include:

Escape paying the rate of interest of future EMI's

A large sum of your monthly income, which will be paid as EMIs towards the car loan, can be saved if you prepay the loan. This free money can be invested in more lucrative investment arenas that are available in the market. It also reduces the burden of the total interest to be paid back on the loan otherwise. Once you are rid of the debt of the loan, the additional amount you are required to pay as interest amount on the loan will cease to prevail.

Prepayment adds to your credit score

Paying off your loans helps you to clean your portfolio of debts and increases your credit score. Timely or pre-payment of loans adds to your credibility and reflects your ability to deal with liabilities. Your credit score can help you to secure another loan in the future, if the need arises. A positive credit score boosts your reputation and signals financial stability.

Save the car’s insurance coverage amount

Lenders require you to have a certain level of insurance cover on the car that has a lien on it. You can save a good amount of money on your car insurance cover by prepaying the loan, especially if the car is older or in poor condition. Once you pay off the car loan, you have the flexibility and liberty to change your car insurance coverage according to your needs and financial convenience.

What is FinaMetrica Risk Profiling System?

This is a simple way to understand and gain an astute understanding of your client's financial risk tolerance. It is an important part of the process which involves an increase in the knowledge about your client and is used by financial advisers all over the globe. It begun in the year 1998 and has been prominently used by countries such as Australia, the UK and the US.

Developed in Australia over a term of four years, beginning in the mid-1990s, it came into existence with the assistance of the University of New South Wales offering reliability and accuracy in assessing risk tolerance. Initially, this was adapted by smaller advisory groups and later on grew its base among-st larger organisations such as insurance companies and banks. This test has been translated into various other languages and has become a significant part of the lives of leading academicians and researchers. Also, a number of academic studies have also made use of the FinaMetrica test proving its importance in today's world.

The FinaMetrica Risk Profiling System constitutes of three parts:

• A psychometric test: This is done for the purpose of personal finance risk tolerance. This test is a combination of statistics and the study of psychology that helps determine personality traits and characteristics. It helps in assessing one's risk tolerance and maintains international standards of evaluation. The main focus of attention is upon reliability and validity.
• Results: The result of the test is important for the financial planning process.
• Study material: This is created in order to help and explain investors about the investment risks they are undertaking and the returns. This will also provide them with a fair idea of how their future performance will be.

Therefore, this method is not only useful to measure the risk tolerance, but also helps understand the clients better. A  FinaMetrica Risk Profiling System is the perfect solution to determine returns expectations and arriving at a consensus (for financial issues related to equities, debt and cash).

Parameters to Consider Before Investing in Natural Resources and New Energy Fund

A Natural Resource and New Energy Fund is an investment vehicle owned by the government body where the sole source of revenue is derived from minerals, gas or oil. The main objective of a natural resource fund is saving for future generations, sterilization of capital inflows and covering budget deficits. There is also a provision of investment in foreign assets related to finance.

These funds also assist the government in the management of mineral, oil and gas revenues. So before investing in a Natural Resources and New Energy Fund, you should consider certain parameters that will help and assist you in the long run.

• Performance and ranking

You should always keep in mind that you need to select a mutual fund that not only provides you with the best returns but also suits your risk profile. Investors are generally lured by the recent performance of a mutual fund but one should consider various other parameters before finalizing a fund portfolio.

In order to figure out a Natural Resource fund and New Energy Fund fund's ranking, you are required to check the quarterly ranking of the fund and its peers. Select a scheme that has remained uppermost in terms of the ranking (in quarterly).

• Return ratios

Measuring the risk and return ratio should be your primary focus along with the knowledge of how much a fund manager has been able to generate out of a portfolio.

• Expense ratio

A high expense ratio affects the fund’s returns; therefore, this is one of the most important parameters in order to select the perfect Natural Resource Fund and New Energy Fund Scheme.

• The experience and tenure of the fund manager

A fund manager is the one who takes the ultimate decisions; therefore, his experience plays a very important role in the fund’s performance. His/her past track record determines whether you should avail his/her services or not. Also, keep a check over his quarterly performance.

Tips to Zero-down on Best Fund of Fund Scheme

Investments are crucial for everyone and you may always look out for different avenues for savings. Likewise, the Indian financial market offers numerous avenues to choose from. However, the return rate offered by each matters the most.

In an attempt to mitigate the investment risk and maximize returns, investors prefer to choose mutual funds. These schemes are professionally managed by a group of fund managers who are market experts in tapping lucrative opportunities. The safest of all these schemes are fund of fund schemes.

Fund of Fund schemes offers optimum returns while minimizing the investment risk. Here are the tips to choose some of the best Fund of Fund schemes:

• Know the Investment Objective

Before you plan to invest in any of the schemes, it is recommended to know the investment objective. Without a proper objective, you will not be able to pick the right scheme. Once you have identified the objective, you can move ahead with choosing the right amount.

• Compare the fund houses

Fund houses play a key role in determining the performance of the scheme. Before you move ahead to pick up the scheme on the basis of the current performance, it is recommended to check the credibility of the fund house.

Note: Established fund houses offer consistent returns

• Assess the fund performance

This is the crucial factor considered for choosing the right mutual fund scheme. Without assessing the performance of the schemes, you will never be able to choose the right investment avenue. Wisely compare the schemes for NAV performance over 1 year, 6 months, 3 months, or 5 years in case you are looking for long term investment. For instance, schemes such DSP BlackRock Global Allocation Fund has performed well since the last few years.

• Identify the Loads

Loads are the service charges you pay to the fund house while buying or redeeming units of mutual funds. Generally, they are around 0.5% to 1%. However, certain schemes charge more. Keep an eye on these charges.