Real Estate Investments for Buying a Home with Your Partner

Close to 30 percent of home buyers in urban India are women, say an article published in MakaanIQ.com in January 2016. More and more women today are choosing real estate investments. If you are planning to buy a house, you can consider buying it jointly with your spouse. Buying a house jointly has its own set of advantages. Real estate mutual funds are another way to invest in this sector.

Things to Consider Before Buying Your Dream Home with Your Partner

When you co-own a house, you not only share the title but also other expenses. Women generally get home loans at a much lower interest rate, since they are considered to be more punctual in repaying bank loans. Stamp duties also tend to be lower for women. In case of joint ownership, both owners can claim tax deductions. Joint tax benefits can amount to Rs 3 lakhs per year under section 80c of the Income Tax Act and Rs 4 lakhs under Section 24. Here is a list of things that you must consider before buying property jointly:

1. Determine Your Needs and Preferences – You must list down all the criteria on which you will judge a property. Likewise, you may want a home that is near schools and public parks or have easy access to them. Similarly, you must also decide on the size you can afford to buy, whether it has parking facilities, whether there are hospitals nearby and so on.
   
   
2. Ownership – You must decide how the ownership will be divided among the two of you. There are three types of ownership: tenants in common, joint tenancy, tenancy by entirety. In case of tenants in common, there is no specifications about the division of share. Each owner has the right to use the entire property and is deemed to have an equal share. In case of joint tenancy, the property is divided among the owners in equal share. Marriage is one of the clauses for tenancy by entirety. Here, both partners own half of the property each and cannot sell it without the consent of the other.
   
   
3. Total Cost of Buying – Buying a home not only entails its purchase price but all other expenses involved, such as stamp duties, registration fees, down payment and so on. Get a clear idea of all such expenses early on to avoid a rude shock later.
   
   
4. Finances – Before you apply for a home loan, you must go through your credit report. You can apply for a joint loan too. This will increase both the loan amount and your repayment capacity. Generally, banks offer financing for up to a maximum of 80 percent of the purchase value of the property. You must also make arrangements for down payment before you finalise the deal.

If you are not in a position to invest a huge chunk of money at once, you can invest in this sector with minimal funds through real estate mutual funds or real estate investment trusts.

SIP Plans – Your Path to a Safe and Financially Secure Future

Did you know that you can calculate your expected rate of return on systematic investment plans (SIPs) through the SIP calculator online? Other calculators also let you calculate the amount you have actually gained till date through an SIP. This helps you plan your future goals better. Mutual fund investment lets you invest in the stock market without directly exposing your assets to market volatility. It is considered to be an appropriate tool to hedge risks and diversify your portfolio. Objective oriented investments can help you build a significant corpus, which can be used as a retirement fund or to fulfil other financial responsibilities, such as a child’s education and marriage. What if I say that you can meet your goals in a much shorter time and by investing a much lesser amount in one go? This is possible through an SIP. 

mutual funds in India

What is SIP?

A Systematic Investment Plan is a disciplined approach towards investing in mutual funds in India. It lets you contribute a certain sum at a pre-set date every month towards a mutual fund. It helps you bring regularity and discipline to your investments. Also, it helps lower the burden by allowing you to invest as little as possible at one time. It is one of the best tools for money management and wealth creation. 

How Does it Work? 

You have to instruct your bank and activate auto debit. A predetermined sum of money is then auto-debited from your bank account every month. This money is then used to buy mutual fund units that you have invested in. The units are then transferred into your demat account. The purchase takes place according to the NAV for that particular day.

How Does it Help Accumulate Wealth?

An SIP can help you maximise the power of compounding. In other words, money gets compounded more number of times over a long horizon of time. You can also benefit from rupee-cost averaging. In such a case, you buy fewer units when the prices are higher and more when the prices are low at the same cost. This lowers the average cost of investment in the long-run while eliminating the need to time the market. SIPs are especially beneficial for long-term investments.

You can exit an SIP as and when you wish to. It invests in open ended schemes, therefore you can withdraw your money as well. You can also increase or decrease the amount you contribute every month. You can also contribute monthly, quarterly, half-yearly and so on. You can extend a plan if you have not been able to achieve the set target. Mutual funds in India may have a minimum limit for investment. Generally, companies set Rs 500 or Rs 1,000 as the minimum limit. 

Are You Looking to Invest in SIPs? Better Check This Out Before You Do!

Equity mutual fund schemes have seen an addition of about 43.44 lakhs new SIPs during 2015, a nearly 66% increase on a year-on-year (y-o-y) basis, says an article published in The Economic Times in January 2016. If you are involved in share trading in India, then you must aware of SIPs. Systematic Investment Plans let you make regular contributions towards a mutual fund (MF) instead of a heavy lump-sum amount in a particular year. The biggest advantage of investing through this channel is that you get to start with as less as Rs 500. This has opened up newer investment avenues even for those with less surplus cash.

Investment Mistakes to Avoid

Systematic investment plans are considered to be an effective tool for wealth creation. It comes with the added advantage of compounding and rupee-cost averaging. Although it has huge plus points, investment errors can limit the power of an SIP and ultimately the expected returns. Here are some mistakes that you must avoid while making share market investments through SIPs.

1.      High Amounts of Investing – Lured by the benefits of the plan, you might end up committing to a higher amount as monthly contributions. However, this might prove to be a problem when you are unable to pay the same in future due to increased financial responsibilities. Therefore, you must analyse not only your present financial condition but also future surplus cash flow, responsibilities and goals in order to decide the optimum amount that you can contribute towards this scheme every month. You can increase the said amount anytime you wish to.

2.      Investing for a Short Time – You can best reap the benefits of SIPs only through long-term investing. Durations of even one year could be too short to tide over any volatility in market movements.

3.      The Scheme is Best for Small Investors – Although the scheme lets you contribute towards a mutual fund with as little as Rs 500, that does not imply that it is only for small investors. You can invest in the scheme with Rs 5,000 or any other amount. The basic essence of the scheme is consistency and not volume.

4.      Discontinuing the Scheme in Bearish Markets – You might discontinue your plan driven by market volatility. However, through an SIP, you can benefit even during falling markets. Rupee-cost averaging lets you buy more units at the same price when the prices are low and vice versa. Because investments are made at regular intervals, this decreases the average cost of investment in the long-run.

5.      Choosing Dividend Over Growth – A lot of people may choose to benefit through dividends. However, the longer you leave your money invested and larger you invest, the more you gain. Thanks to compounding.

6.      Not Monitoring the Scheme – Every mutual fund behaves in a different manner, which makes it essential to monitor and act accordingly when it comes to SIPs. You cannot invest and forget and then expect to reap high returns. 

If you have signed up for portfolio management, you can ask your fund manger about investing through SIPs.