Make Money with Credit Card

Making Money from use of Credit Card!

This may sound very farfetched to anybody but it is true, you can actually make money by utilizing the credit card properly.

First the Rules if you follow these rules then only you will be able to make the money.

·          Never Pay late,

·          Never Utilize the EMI options

·          Never Withdraw Cash through Credit Card

·          Never make a purchase because you have credit card.

Things you need to know.

Your billing Date: this is the date on which your billing stops for the month & new Billing cycle starts (mine is 23^rd of the month)

Your Credit period: This is the time difference between your billing date & your Due Date (Mine is 12^th of next to next month) so around 50 Days

So to put an Example, My Billing Cycle date is 23 March 2012 & My due date for this billing cycle is 10^th May 2012 this gives me 50 Days of Credit.

Now if you make a purchase through credit card on 25^th Of March 2012 for let us say Rs.15, 000/- then you have to pay this amount on 10^th May 2012 so you have 15,000 Rs. As free cash for 48 Days if you invest this amount in a decent Ultra Liquid Mutual Fund you will earn Rs.156/- on this amount without spending a single Paisa.

Though it is very difficult to time the purchase exactly as given above, in my experience you can time at an average of around 40 Days, below is the table which shows you the possible earnings through credit card for various scenarios, this can go up seriously if you do regular company travels etc from your credit card. 



Additionally you get points on these purchases which you can redeem for various items, though miniscule this is earnings without too much of an effort.

Table of Money Earned.

	Days
Amount	45	40	35	30	25	Points Earned
5,000	51	45	40	34	28	50
7,500	76	68	59	51	42	75
10,000	102	90	79	68	57	100
12,500	127	113	99	85	71	125
15,000	153	136	119	102	85	150
25,000	254	226	198	170	141	250

GOLD BUYING OPTIONS & TAXATION

BEST WAY TO BUY GOLD & TAXATION ON GOLD.

Everybody today is talking about buying Gold, this article will discuss various ways of buying gold & a comparison of various options.

Possible ways of Buying Gold are listed below:

1.       GOLD buying through Jewelry etc.

2.       GOLD Coins, Biscuits & Bars From Jewelers

3.       GOLD Coins, Biscuits & Bars From Banks or Post Office.

4.       GOLD ETF (Exchange Traded Funds)

5.       GOLD MF (Gold Mutual Funds)

6.       E-GOLD from NSEL (National Spot Exchange Ltd.)

EVALUATION CHART OF GOLD PURCHASES

	Sources
Factors	Jewelry	Coin-Jeweler	Coin-Bank	Gold ETF	GOLD MF	E-GOLD
Purity-Guarantee	Low-Medium	HIGH	HIGH	HIGH	HIGH	HIGH
Making Charges	10-15%	Nil	Nil	Nil	Nil	Nil
Premium over Spot Price	2-5%	0%	6-10%	0%	0%	0%
Other Costs of Buying	Nil	Nil	Nil	1.5% of Purchase	2.5% of Purchase	1.5% of Purchase
Maintenance Cost	Locker Cost	Locker Cost	Locker Cost	1% of Total value	2% of Total value	1% of Total value
Physical Delivery	Yes	Yes	Yes	No	No	Yes
Ease in Selling	Low-Medium	Medium	NO	HIGH	HIGH	HIGH
Long Term Cap Gain Applicable in	3 Yrs	3 Yrs	3 Yrs	1Yr	1Yr	3 Yrs
Wealth tax Applicable	Yes	Yes	Yes	No	No	Yes
Sales Tax Applicable	Yes	Yes	Yes	No	No	Yes-if you take physical Delivery
Recommendation	AVOID		AVOID		AVOID

 Looking at the above chart, if you are buying less than 100 GM (10 Tola) worth of gold in a year, it is better to go for COINS OR BISCUITS From Good Jeweler, But if you are purchasing more Quantity than this then go For the ETF fund with low expense ratio.

Risks In Personal Finance

Risk Management for Personal Finance.

Many of us know about risk management in our working domains thanks to company training & policies, but have you looked at genuine Risks in Personal Finance.

·         Theft/Loss of Credit-Debit Card : This is a very very common risk which is prevalent today, The risk mitigation can be 2 ways. keep a Xerox of the Cards in your office Drawer & a scanned copy in your e-mail so you know the numbers etc in case of loss for blocking the card Another way of risk mitigation is to Reduce the Limits on the cards if you do not use it e.g.  A limit of Rs 50,000/- withdrawal is unnecessary if you do not withdraw more than Rs.10,000/- similarly a big credit card limit does not help you in any way if you utilise the credit card  in very small amounts.

·         Health Risk : Healthcare cost is increasing significantly now a days hence Floating Health cover for your family & you is essential even though Your company covers you for these, imagine a situation where no insurance company is ready to give you a policy once you retire……… start now with a decent amount. At least 2 times the current cost of Open Heart Surgery is a good amount to start with.

·         Death Risk: This is an extraordinary risk & must be covered at the earliest, Basic Thumb rule for Insurance is 13- 15 times your total yearly expenses. Please go for Pure Term plan from a good company. A pure term plan is surprisingly cheap but most people will go for LIC which is costlier, My suggestion is Take 50% coverage from LIC & rest from any other Company, so when LIC pays the claim, Other company will automatically pay the Sum insured. Additionally You should make your spouse the 2^nd Holder in Bank Accounts/Investments/Mutual Funds etc, this will make the life easier for everybody.

·         Knowledge Risk : You must list down all your investments on a excel sheet & keep a printout in your money drawer another good idea is to Mail the copy to yourself so you can access it even if your PC/Laptop fails……..

·         Liquidity Risk : You must create an Emergency Fund so in case of emergency you do not have to withdraw your long term investments which reduces your returns & adversely affects your Financial planning, I maintain an emergency fund equal to 6 months Expenses, This is split as 2 Month’s expense in Savings bank account & the rest in Liquid Mutual Funds so I will have immediate access to cash when needed.

·         Password Risk : We have the habit of not changing the password to our ATM Card, Online Bank account Etc. this can be very dangerous, I change the password at the end of Each quarter.

·         Other Risks : We many times ignore the risk of Loss of other documents like Passport, Vehicle registration card etc,  I keep a scanned copy of these documents in my Email So I Always have the access to it in case of loss, But Do scan these documents from Both Sides J……………….

Don't Waste Money in Savings Bank Account

Are you keeping excess money in savings bank for one of the following reason.

Ø  I am waiting for a good opportunity to invest.

Ø  I am receiving interest on this money without any risk.

Ø  I can withdraw money anytime for emergencies.

Ø  I am just comfortable with money in my bank instead of other avenues.

Well you are part of the majority of people in India, who keep the money in Savings bank account as other options are not known to everybody. You should know other options also which can be utilized for parking the money while you take the decision about the final investment.

I am showing below some of the options & their comparison chart

o    Savings Bank Account: Keep the money lying in bank account

o    Fixed Deposit : Simple Fixed Deposit for a fixed tenures

o    Liquid Mutual Funds : These are Debt Mutual Funds which give us benefit of anytime withdrawals

o    Ultra Liquid Mutual Funds : These Debt Mutual Funds are one step above Liquid Funds which provide better returns with same conditions as Liquid Mutual Funds

o    FMP Plans : Fixed maturity plans. These are special schemes by Mutual Funds which are for predefined duration & Money is invested for Fixed period ranging from 45 days to 3 years.

All the above are options for short term & safe investment where your capital is protected, given below is the chart of possible returns from these instruments with the pros & cons.

Type of Investment	Savings Bank Account	Fixed Deposit	Liquid Mutual Funds-Dividend Option	Ultra Liquid Mutual Funds -Dividend Option	FMPs-Dividend Option
Returns	4.00%	9.25%			8.50%
Post tax returns	2.80%	6.48%	6.75%	8.00%	8.50%
Tax Rate	30.00%	30.00%	0%	0%	0.00%
Type Of Income	Other Income	Other Income	Exempt income-Dividend	Exempt income-Dividend	Exempt Income-Dividend
Compunding frequency	No Compounding	Quarterly	Daily	Daily	No Compounding
Positives	1. Anytime Money Availability	1. Easy to operate 2.Income tax is applicable hence proper reporting necessary	1.can be withdrawn within 1 day without any loss of money 2.No Taxation	1.can be withdrawn within 7 days without any loss of money 2.No Taxation	Best Returns
Negatives	1. Low Interest	1. T.D.S. 2.Heavy Penalty for premature withdrawal.	1.can not be withdrawn on weekends	1.can not be withdrawn on weekends	1.Can not be withdrawn before maturity 2.No visibility on end usage of funds

The unforeseen benefit of not Keeping the money in Savings bank Account is that the Telephonic calls from The bank asking to check with you for Personal Loans & credit Cards stop as they have no data about how much money you have.

Other Articles

Types Of Mutual Funds

Taxation of Mutual Funds