Financial Cocktail Samosas: Bitesized money morsels for YOU, 08/07/2020

Financial Cocktail Samosas_ Bitesized money morsels for YOU, 08_07_2020

Practice these investment asanas

‘International Day of Yoga’ is celebrated on 21 June every year, since the United Nations General Assembly has declared the day as the special day dedicated to Yoga in 2014. The decision came after considering the proposal made by Prime Minister Narendra Modi for the same.

We all know that Yoga is as ancient as India. The basic tenets of Yoga include concentration, discipline, setting up goals and regular practice to achieve those goals. These tenets, when applied to investing can help you achieve your financial goals and during the journey, can assist you tide over the market fluctuations, and restrain you from making reckless decisions or diverting from the path. If done right, yoga can positively impact your life as well as financial fitness. As Yoga needs to be practiced on a regular basis, even if you can spare just little time for it, similarly you should make a habit of investing regularly, even if you save a little.

Floating rate savings bonds

Usually, bonds offer a fixed rate of interest to the investors. However, as the name of Floating Rate Savings Bonds (FRSB) suggests, interest rate on these bonds may fluctuate. The popular 7.75% savings (taxable) bonds (‘RBI Bonds’) that the government withdrew on 28 May 2020 have been replaced by this new series of bonds. FRSB has been made available for investment from 1st July and is currently offering an interest rate of 7.15% per annum, with a maturity period of 7 years. The interest will be paid on a half-yearly basis on January 1 and July 1 each year. The interest rates on these new bonds will be reset every six months and it will be linked to the then prevailing rate of interest on National Saving Certificate (NSC). Interest rate on FRSB will be 0.35% above the interest rate of NSC.

The sovereign (government) guarantee on these bonds reduces the risk of default. A floating rate is also positive for investors as we could be near the end of the lower interest rate cycle at present. It also helps bond holders to get higher returns than prevailing inflation.

Beware of online fraudsters

The spread of Covid-19 has made large sections of the society more sensitive towards hygiene. Anecdotally, we have all observed the increased use of digital modes of payments. Not just merchants, but even consumers are now preferring digital payments to avoiding handling of cash. However, there is also a flip side to it. Many people are not aware of the possible misuse of these systems.

Unfortunately, fraudsters have decided to encash on this and have come up with innovative methods to con users who are new in this digital payment space. It could be in the garb of sending you money by clicking on a link and putting your OTP received there, deceptive UPI handles, posing as bank officials and ask for OTP or PIN etc. It is important to know that you need to provide an authentication by entering your PIN or OTP only while sending or paying money, and not while receiving money. Also, no one should share their PIN or OTP with any other person. Banks, RBI, insurance companies would never call and ask you for this information. In fact, anytime you receive a call that promises you money in the name of cashbacks or offers, you should become very alert and not share any information with the caller.

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