How to successfully prepare for your CFP Examination

The Certified Financial Planner examination is undertaken for people aiming to become finance professions and investors. This examination will ensure that a student is professionally competent for these designations while also ensuring an increase in business. So if you wish to pursue a career in stock broking, insurance agency, to become a tax professional, a loan officer, a banker, etc. this examination should be on your priority list.

There are certain things to keep in mind while preparing for these certified financial planner examinations.

They are:

• Preparation techniques

Well if you have passed our school and college by simply taking tests in order to display one's retention skills, and then think again. This examination demands much more than retention of the material studied, it requires you to merge your syllabus and your reasoning skills in planning department of finance. So memorizing the syllabus only is not an option for those who wish to score in this examination.

• Special kind of reasoning

The CPF board has special methods for its reasoning questions and one may find difficulty in deciphering their methods and how they came to a conclusion for a particular question. Hence you need to solve the previous years' question papers in order to broaden your horizons and pass the examination.

• Minimum passing marks

You do not receive a percentage such as a 50% or a 60% for the examination undertaken. You only receive a ‘pass’ or ‘fail’ response for the test/examination.

• Do not leave out any question

You should ensure that you attempt every question since there is no negative marking. Even if it means that you guess a few answers that you aren't sure of, but it is highly advised that you should attempt every question.

• Ensure you provide more weightage to studying tax

According to most, the tax section is the most difficult to learn, memorize and apply. Hence you need to spend more time on that subject.

• Try enrolling into a class for courses related to the examination

These courses are ways and means to ensure you avail help in order to avail and assimilate all possible information about the course work through the help of an instructor.

FDI (Foreign Direct Investment) in the Indian Insurance Sector

FDI or Foreign Direct Investment in the insurance sector has been a political hot topic for almost six years now. So, what does FDI in insurance mean? To answer this, we first need to understand what FDI is and what happens when a country like ours accepts direct investments from another country.

FDI, simply put, is a direct investment, by an individual or a company of another country, into business or production services of a country. This could be done in two ways viz. by either expanding the business in or by possibly buying a company in India.

Let's examine the condition of India's insurance sector. The Indian insurance sector has been in a state of constant unrest. It is facing a lot of problems due to reasons like rising costs, political reforms being stopped, etc. Thus, even though the insurance industry in India grew significantly in past decade, the Indian market still remains largely untapped. The Indian insurance industry needs to revived, and hence, the Indian government proposed to hike the foreign holding in joint insurance ventures from the 26% to 49%.

So, what are the benefits of increasing FDI in the insurance sector? There are plenty, but let’s take a look the four important ones:

1.  More money coming in will help new insurance companies to enter the market
2. Companies will be able to offer better and wide range of insurance products at extremely competitive prices
3. Companies will get product and technological expertise from their foreign counterparts
4. Companies will have to improve their infrastructure and better their operations to tap into the uninsured markets, which will lead to an increase in jobs

The good news is that, after going back and forth for almost six year, the government has finally given a go ahead to increase the FDI limit. With this happening, the insurance sector is looking at a capital inflow of nearly Rs. 60, 000 Crore in 2015.

Top Three Ways to Assess Your Funds Performance

Mutual funds are collective investment vehicles that offer substantial capital gains over investments. They are professionally managed by experts, or group of experts who are well-versed with the working of financial markets. They tap lucrative opportunities to earn profits over the underlying investments, and thus guarantee capital appreciation for the amount invested.

Mutual fund's performance plays a key role in determining the return rate of any scheme. It is a crucial factor that investors assess and verify before shortlisting a scheme. So, emphasis is laid on the funds' performance while selecting a scheme.

There are several factors that are known to affect the performance of a scheme.

The top three factors that directly influence the performance include :-

• NAV Rates

NAV stands for Net Asset Value. It is defined as the per unit value of mutual fund scheme. It is calculated by dividing the total asset value of the scheme to the total number of units. Latest Mutual Funds NAV are computed on daily basis. The closing price of the underlying securities is utilized to calculate the NAV of a scheme. Thus, higher the NAV, better is the performance of the fund.

• Yield

This is defined as the income generated by any mutual fund. It is independent of the capital value of the underlying assets. This makes it almost independent off the NAV rates of any scheme. The yield of a scheme is directly dependent on the dividend payments of the underlying securities. Thus, if some of the underlying stocks provide heavy dividend, then the Yield of the scheme will increase significantly.

• Total Gain

This is determined by assessing the performance of a fund for a particular period of time. Generally, investors consider a time frame of 1 month, 3 months, 6 months, 1 year, and 3 years. This gives investors a better picture on the performance of fund.

Home Loan Interest Rates Options Offered by Various Banks

It's obvious that when you decide to take a loan for, say, education, going abroad, or else if you wish to buy a home, you research about the best options available in the market, since repaying the loan is a major ordeal. So you need to weigh in the advantages and disadvantages of the kind of loan you select. There are two kinds of loans, i.e., Fixed Interest Rate loans and Floating Interest Rate loans.

Fixed Home Loan Interest Rates

This one is limited as banks do not allow or encourage fixed interest home loans; it is limited to only the first two to three years. A fixed home loan interest rates entitles you to a fixed rate of interest at monthly installments throughout the tenure of the loan. Thus, the interest rate remains the same irrespective of the market changes.

The major benefit of this loan is the fact that even if the market rate becomes higher, your interest rate remains the same. This in turn brings about a certain predictability to the market scenario and also a certain sense of relief to those who have to repay the loan.

The major drawback to this form of loan system is that the interest rate is a bit higher than the floating form of home loan, and even if the market prices decrease, our interest rate remains the same. So you cannot avail the benefit of the decrease in market rate, i.e., a lower interest rate. Thus you should plan carefully and check for the market rates. If you think the market rates are going to go higher, then it is beneficial to select a fixed loan than a floating loan.

Floating home Loan Interest Rates

In this case, the interest rates are not really fixed but fluctuate at certain intervals, i.e., as and when the market prices go higher or are low.

The biggest benefit of making use of a Floating home Loan is the fact they are less expensive as compared to a fixed loan. The percentage difference is about 1 to 2 percent but it does make a difference. Also the fact that you can enjoy the benefits of paying a lower interest rate whenever the market rates tend to fall.

The major drawback of this sort of a loan is the unevenness of payment every month since there is no fixed rate at which the repayment needs to be done.

Top Four Small and Mid Cap Funds to Choose This December

Savings play an indispensable role in your life and as a result many of you may look forward for different avenues of investments. Among the commonly purchased investment products are bank term deposits. However these products offer conservative returns. So, several investors are always looking forward for lucrative opportunities of investments.

Small and mid-term funds offer the privilege of lucrative investments while hedging investment risk. With the changing economic conditions in India, such schemes are becoming popular among masses. After comparing several schemes we have managed to shortlist the top four small and mid-cap funds.

DSP BlackRock MicroCap Fund

With a consistent double-digit return rate for the last five years, DSP BlackRock has managed to captivate the attention of investors since a long time. Though the Assets under Management for this scheme are less than 2,000 crores, still it offer better redemption as well as growth to investors. Courtesy to the capabilities of Vinit Sambre and Jay Kothari, this scheme has managed to perform so well.

HDFC MidCap Opportunities Fund

This fund has completed a positive track record of seven long years and holds top growth and value stocks in its portfolio.  The fund manager focusses on the stocks that have the ability to multiply their earnings by 15 to 20 percent. With assets under management of almost 2802.96 crore, this fund has become popular among masses not only for better gains, but also for versatile redemption facility.

ICICI Prudential Discovery

This began its functions in the year 2004 and has had a remarkable run in the market. This company has a good cash flow and low leverage while the fund manager tries to strategize and capture the bullish economic cycle of the underlying companies. With more than Rs. 2830 crores of assets under management, this fund has been offering consistent positive results for the last five years.

Franklin India Prima Fund

It has a corpus of Rs 867. 36 crore and has been generating a positive cash flow across all business cycles.  Managed by popular fund manager R Janakiraman since 2008, this fund has been offering positive returns with almost consistent growth rate of 15%. With 61 stocks under the roof, this fund is one of the most popular funds among investors.

Top Five Tips to Avail a Business Loan

You may have the simple desire of starting your own business, or expand the current production line. For all such entrepreneurial ventures, financial bodies in India offered dedicated business loans. Such loans are offered to business owners or aspirants who plan to start one.

Small business loan are classified as SME loans in India. SME stands for Small and Medium-sized Enterprises. As the name suggests, such loan is only offered to emerging businesses. To avail such borrowing, here are the top five tips that you should take a look at.

1.   Who provide SME Loans

The needs and financial requirements of every business are different. After considering such diversified financing needs, banks and NBFCs provide loan. There are several NBFCs in India that offer competitive SME loan interest rates over lending, versatile repayment options, and active customer service to turn your business dream into reality.

     2.  What are types of SME loans


There are different types of SME loans which are provided with various objectives. The three prime objectives include increase in working capital, expansion of business, and margin money funding (to purchase additional machinery). So, before you file an application for the borrowing, make sure you know your borrowing motive.

     3.  Get acquainted with the Loan Process

Availing such loan is quite simple, only when you follow the mentioned procedure. During the time of application submission, ensure to submit the valid documents.  Also, develop a good rapport with the credit manager if you look forward to speed up the process. Once all documents are verified and loan application is assessed, you will get the required funding.

     4.   Avoid over-drawing

Many banks provide the facility of making additional withdrawals apart from the borrowed principal amount. However, the borrower should understand that such service is only provided as a privilege and should not be abused. Furthermore, there are separate charges levied on the additional borrowings. So, avoid over-drawing.

    5.    Check the Tenure Options

Loan duration will vary on the basis of borrowed principal amount. SME loan tenure can range from 12 months to 48 months. Only self-employed individuals such as doctors will get extended tenure of up to 60 months.

Three Reasons to Invest in Fixed Income Schemes

What are Fixed Income Schemes?

Fixed Income Schemes invest in securities such as bonds, debentures, government securities, money market instruments and other similar instruments. The main purpose of such schemes is to invest is to generate a steady income against a balanced investment risk.

Fixed Income securities carry minimum investment risk as the main motive is to offer the promised returns to the investors. On the other hand equity securities have no such obligation to pay back the investors. Though the promised return is comparatively higher, equity funds have high risk of investment loss. So, conservative investors prefer going with fixed income schemes.

Following are a few schemes that offer investment benefits to investors:

More tax efficient

Fixed Income Schemes are more tax efficient than several other investment instruments. After a year, the invested income is always treated as a long term capital and is taxed at 10% or 20%. If you hold the debt fund for a longer duration or period, then the indexation benefit is higher. For instance, DSPBR Banking & PSU Debt Fund offers extensive tax benefits to investors by heavily investing in debt and money market instruments, which have special tax exemption.

Better returns

The longer the period of investment, higher are the returns. Funds that invest in long term bonds are not applicable to changes in rate which occur in short-term debt funds’ investments. For instance, DSPBR Government Securities Fund has a longer lock-in period and directly invests in GOI bonds. As lock-in period is longer, it offers better returns as compared to other short term funds.

More flexible

Fixed Income Schemes are more flexible than others and a person can invest small amounts in them every month. Certain schemes primarily invest in money market instruments that offer combined benefit of liquidity and growth. For instance, DSPBR Money Manager Fund has a portfolio of money market instruments that offer better gains than regular debt instruments.