According to an article in the Economic Times, an Indian Millennial opens a bank account every 30 seconds. This shows that Millennials have a proclivity to handling their personal finances to the best of their capacity. With a plethora of options to save, invest and retrieve money, it is evident that there is a growing surge among millennials, to know and learn more about finances.
So we at myPaisaa have rounded off 7 terms that every Indian millennial must know when it comes to finances:
- Compounding – is the financial equivalent of the word synergy. It is the art of reinvesting the earnings made from an investment, to garner more wealth. Hence, when the earnings from the assets you accrue, be interest or capital gains (the money you earn from selling property/investment) are added back to the investment, it is called compounding. This indeed results in exponential growth as you earn money from the initial investment and from the accumulated earnings as well. Infact, most millionaires resort to this technique to cumulatively make their wealth.
- Insurance – Having an Insurance is necessary as it is your safety net. It is a contract between an individual and an entity where the entity assures financial protection/reimbursement in the case of a probable scenario that can supposedly occur in the future. Although, you will only be paying only a small sum for this protection in comparison for the amount you will be receiving from the company. The company creates a pool from the insurance amount recived to pay the insured when in need. There asre several types of insurance like vehicle insurance and health insurance etc. In fact, the past year there was a surge in health insurance in reaction to the covid pandemic.
- Dividends – When it comes to Stocks, a Dividend is the reward from the residual profits given by the company one has invested in, after the creditors are paid off. It is basically a aprt of the profit you receive from the corporationfor being a shareholder. Although when it comes to chit funds, a dividend is a passive income you receive every month for investing in your chit. Dividends in general are a great source of income they promise fixed returns; all at the cost of your investment remaining safe.
- Credit Score – A credit score is like the thermometer of your financial health. Yes, it is a score that assess the credibility of your account based on a myriad of parameters like time-period of the account, credit history, loan payback period and several others. It is based on thisscore that banks decide whether you can receive a loan. Your score can range anywhere between 300 – 850 based on your credit history. ICRA, CIBIL & Equifax are some of the well-established credit-reporting agencies in India.
- ROI or Return on Investment – This is a ubiquitous term that is used everywhere in the world of finances or even when you run an ad on Facebook. This value determines whether your made expenditure is profitable or not. You can calculate ROI in term sof percentage. One of the simplest manners in which you can calculate ROI is by dividing total return on your investment divided by your initial investment multiplied by 100%.
- Electronic Fund Transfers – Any form of digital/electronic money transfer between two parties liasoning with a divice like a phone, computer or ATM is called Electronic Fund Transfer. It facilitates money transfer between two bank accounts of the same or even different banks. The popular EFTs in India you must have heard of through netbanking are NEFT, RTGS & IMPS.
- Chit Funds – Chit Funds are a quintessentially Indian way of borrowing and saving. It is one of the most user-friendly investment tools as you can simultaneously invest and borrow at the same time when you invest in a chit fund. It is a shared pool of money you can invest in from which each adn every pearson participating in the fund gets a chance to bid and borrow the entire chit fund value. In this manner, if you borrow in the first month itself, you’ll end up paying interest for the same through the chit fund period and if if you sustain till the end of the chit period, you will receive the entire chit value along with the 10% interest you have accrues annually.
So after you gain a thorough understanding of your personal finances and financing in general, get ready to start your savings journey with myPaisaa, one of the well-recognized and assuredly safe chit funds in India, as the chit fund market is fluctuation-free. myPaisaa is also India’s first and foremost 100% Digital Chit Fund that is government recognized and state-registrar regulated.