We often teach our children the importance of saving money for future. When we think of savings, we think of cutting down on inessential expenses. One expense we don’t pay much attention to is tax. Saving tax is saving money, especially since the government takes as much as 30% of taxable income. The fact is you can build substantial wealth over a period of time by just putting your tax savings; you may as well say goodbye to your retirement dreams.Suppose you manage to save Rs 20,000 yearly (from the age of 30) by reducing your tax liability t that extent. Even if you were to do that extent. Even if you were to do so only for the next 10 year and then stop saving and investing, you would have built a corpus of Rs 26 lakh by the time you attempt the age of 60. If you can save more, say about Rs 40,000, a year through tax saving, you could be sitting on rs 52 lakh at the age of 60! The trick is to keep investing the saved tax regularly; the magic of compounding will take care of rest.There are numerous route available to reduce the tax burden on your income. The first thing you need to do is to restructure your earnings to minimize the tax impact. Fortunately, the tax authorities allow you various options to bring down the tax authorities allow you various options to bring down the tax burden. You can also save tax by claiming reimbursement of medical expenses up to rs 15,000 per year. Also, interest paid on housing loan and on loan for studies can be deducted from taxable income up to a certain extent.
The different types of bank in the economy money market render directly and indirectly to the persons engaged in industry, trade and commerce. The functions performed for rendring service are two types financing and monetary transactions.
Service relating to financing:-The banks provide necessary financing for the business undertakings by means of long term, medium term and short term loans.
Long-term financing:- The bank plays the role of underwriter and thus provide for long term financing. When the industrial establishments intend to sell shares or debentures, the banks underwrite them and take up its unsold portion. As such, they are playing an important role by providing them with long term capital. But their contribution is not worth mentioning in this respect.
Medium term financing:- In most of cases they make arrangement for medium term financing i.e. for a period of one year to five years, for industries. The banks provide necessary loans required for replacement of plant, equipment and other assets.
Short term finance:- The role of bank towards short term financing for industrial and commercial establishment is unparallel. The business undertaking often feels the necessity of capital for operating daily activities. When the working capital is not sufficient, deficiency will arise. For overcoming this deficiency, provision is to be made for short term financing. The methods of short term financing are:
Loans and advances:- The commercial banks generally provide loans and advances to the commercial establishments against the security of valuable articles or personal security.
Overdraft:- An invidual or institution operates the transactions through through cheques by opening current account with the bank. The bank accords permission to withdraw more than deposit in the account as per prior agreement. This is called provision for overdraft.
Cash Credit: - Cash credit means the loan advanced by bank against the security of agriculture or industrial commodities subject to the maximum amount as per pre fixed arrangement. Here interest is charged on advance issued. Big traders adopt this means of financing for running their businesses. This system of financing is most advantage to businessmen.
Discounting of bill: - Before the expire of maturity; the holder of bill may discounted same with the bank for the unexpired period. After deducting a certain portion as an interest, the net amount is given to the holder as loan. Thus short term financing is provided. By discounting the bill the banks widen the avenues of foreign trade.
Other method of loan: - Trading transaction is effected through various documents such bill of exchange, bill of lading, insurance policy, invoice, letter of credit, etc. The commercial bank provide short- term financing against the mortgage of these documents.
The wealth under the possession and ownership of an individual is called personal wealth. For example house, chair, T.V. etc. Personal wealth is defined as the stock of all transferable goods owned by an individual or house hold. An individual can us his personal wealth according to his own decision. He also looks after his wealth. It is the wealth from micro view point. Personal wealth increases economic well being of the individual. Whereas the sum total of personal and social wealth of the nation is called national wealth. In this way personal wealth is a part of national wealth. National wealth is looked after by the nation. It is the responsibility of the nation to take steps for the better utilization of national wealth. It is wealth from macro view point. National wealth increases economic welfare of the nation provided when there is equal distribution of wealth. Wealth refers to stock of economic goods. Welfare means the feeling of well being or satisfaction which may be included in the mind of a man by external conditions. When wealth increases stock of economic goods increase and as a result wants satisfying power also increase. An individual is therefore, in a position to satisfy his more wants. He may feel better off by satisfying his more wants. In this way increase of wealth means increase of welfare. When wealth falls welfare also falls.
At any time you can need money, at that time you will think to use your credit card or want to take amount from your savings account. But if you don’t have credit card or saving account you don’t have to worry at that point of time, you may apply for personal loan. There are many sources by which you will be able to take personal loan as for example credit union, your bank in which you have account, on-line bank, or any other financial institution.
Different rate of interest is chargeable by different financial institution so there is a huge difference in the rate of interest which you borrow for personal loan. It depend on you that how fast you can make payment so that rate of interest may be different for a period of time. You can research on-line and investigate different financial institution and can apply for personal loan which suits you the best. Weather you are going to apply on-line or personal information, you have to provide same information for them which include you employment history and income profile. If you want to go to bank and want to apply for a personal loan you have to think a lot. You have to wait in a line during office hours. To get assistance from personal banker also you have to wait. Where as on line application process can also be done by any time.
