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Technology’s role in shaping customer preferences

June 20, 2022

Becoming profitable is the primary objective of any business, and in the process, they try to operate by getting ahead of their competition. Getting ahead of the competition depends highly on your brand’s perception and acceptance among consumers.

Being accepted by consumers ensures that a company grows and flourishes to strengthen its market position and increase its customer base. However, with the increase in the use of technology, there has also been a change in the behaviour of consumers. As per stats by InternetLiveStats, Google processes over 40,000 search queries per second. According to Oberlo, 27.6% of the global population shops online. This reflects the impact that brands can have with a strong digital presence.

While technology has helped many businesses scale up their operations, it has also caused the customer’s mindset and behaviour to evolve, which must be taken into consideration by brands. As a brand, you should always evolve along with the consumer in order to remain competitive and relevant in these changing times.

Let us take a look at a few ways in which customer preferences are changing, and how you can leverage them.

Decreased attention spans

The amount of content online is increasing massively with every passing day, and consumers are flooded with more content than they can realistically interact with on any given day. This abundance of content decreases the attention span of your consumers and visitors to such an extent that you must grab their attention within a few seconds, or they are gone. According to Facebook, consumers spend a maximum of 2 seconds when viewing a piece of content on their smartphones.

You need to get your message across in the quickest and most effective manner possible for it to be heard completely, and hope at getting a conversion. The key is to highlight the benefits presented by the product or service that your company is providing. Ensure that it stands out and speaks to the consumer in a manner that is easily understood.

In the financial world, it is necessary to put the message across in the simplest way possible so that the content can be easily consumed and understood.

Making the world a smaller place

The increase in the use of technology and the internet has truly made the world a smaller place. Consumers are more connected to businesses than ever before. They have the capability to research, review and question your products or services, irrespective of their physical location. According to GlobalWebIndex, social media is used to research products by 54% of the users.

With the increase in the use of social media, consumers are enabled to interact with your brand directly. This lets them ask questions and also influences their purchasing decisions to an extent.

With the hyper-connectivity that consumers are being subjected to, there is an increasing sphere of opportunities of engagement towards new, as well as existing customers. Nevertheless, you must ensure that your communication breaks the clutter and fulfils the demands of your consumers.

This change in consumer behaviour can be taken advantage of by ensuring that your brand has a strong presence on both social media and digital platforms. Creating a dynamic digital ecosystem, coupled with an omnichannel marketing strategy ensures that you check all boxes and are reachable by consumers all the time. Providing consumers with an experience that is cohesive, irrespective of the channel ensures that you retain them.

The urge for personalization

Consumers crave attention, and desire products that are created after taking their individual preferences and interests into consideration. This gives them a feeling of personalization, which enhances their trust and affinity towards your brand.

With the increase in technology, globalisation has also increased. This has caused many brands, offering similar services and products, to pop up. With so many similar options to choose from, consumers are spoilt for choice. In this scenario, personalization is a massive influencing factor. According to Khoros, 86% of brands convert one-time clients into long-term customers by giving them a satisfactory experience.

In order to cater to consumers on a personal level, the first thing that you need to do is get a comprehensive understanding of your target market, and direct tonality in a manner that they speak to your audience on an individual level.

Nearly all financial products or services should be prepared in a manner that is tailored to fulfil the consumer’s needs.

Increasing consumer expectations

With an increasing number of brands entering the market, the expectations of consumers are sky high. Consumers nowadays look for a one-stop solution that caters to all their needs. They expect a targeted approach from companies in terms of communication, products and services, with responsive customer service that caters to their needs on demand.

If a consumer faces even the slightest inconvenience in getting the desired product or customer service, they will switch to a competitor with the same offerings without the slightest hesitation. According to a report by Zendesk, nearly 80% of users switch to a competitor because of one bad experience. The bar for customer satisfaction is set extremely highly, with more and more companies entering the market, and looking for the same target audience.

For your business to work, and succeed, in this highly competitive environment, you need to analyse your consumer’s behaviours minutely, and devise strategies that extensively caters to all their needs.

In today’s always online, hyper-connected world, you should form plans that give you an edge over your competitors, and gain for you a stable market share.

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Factors to consider when making investment decisions

June 9, 2022

It is important to make investments that help fulfil your financial goals and ensure that you have a stable and secure future, but be aware that this is not always an easy process. There are several factors you need to consider that can influence your decisions. 

It is crucial that you make the right choice, and the right investments for you. Although there are several financial instruments that can help you build a corpus, not all of them may be suitable for you. It is important for you to know which investment format is good for you, and which ones best fit your financial needs. 

Let us take a look at a few such factors that you must consider while making an investment decision. 

Reason of investment 

The first, and most important thing to consider is the reason for making an investment. While it is true that investments are the key to a financially successful future, it is also important to understand that not all investment vehicles are the same. Each investment objective has it’s own pros and cons and a different objective. You must have a clear objective for your investments and then arrive at the right investment choice for you. 

In simple terms, if you are looking for a short term goal, the investment modes would be different than the financial instruments which cater to long term goals. Knowing your investment reason, and fixing on a goal gives you clarity on which investment vehicle is right for you. 

Researching the market 

Making an investment is an important decision, one which can alter your future significantly. Therefore, it is always advisable to conduct thorough market research before you make an investment decision. Doing this will help you understand the current market and give you an idea of the companies you should invest in. 

Knowing your investment goal and the type of investment you want to make, along with having a good understanding of the market, will enable you to make investment decisions that are best suited for you and help you succeed. 

Risk levels 

Nearly all investment vehicles carry with them some kind of risk. Therefore, it is important to understand the risk associated with the investment before you get involved. Your risk appetite should dictate your investments to help you make the most of your investments. If you want to ensure that your principal investment remains safe, go for lower risk investments, though the returns on those may not be high. If you’re looking for high returns and do not mind taking a few risks, then your investments will look a little different. 

Investment Tenure 

Your financial goals must have a time limit, which implies that the investments you make also have a specific tenure. The longer you make investments into one instrument, the higher corpus you are able to build for yourself. You also have a higher chance of earning a profit if the investment tenure is long term. However, not all investments provide a guarantee of positive returns. 

Depending on your financial goal, and the reason for investment, you should decide upon the duration for your investment. 

Taxations 

Before you make investment decisions, it is important to consider the taxation rules, and potential tax implications that may arise in the future. The reason is that different investments cause different taxation levels, which can affect your investment returns. It is imperative to understand the taxation laws and regulations before arriving at your investment. Understanding tax laws help you make sound investment decisions, which can help protect your financial future. 

Liquidity 

When making an investment decision, you should consider that you may have to liquidate that investment to meet other unforeseen needs. You should also consider the appreciation of value for your investment in the long run. If your chosen investment has long term potential and has high liquidity, as an investor, you can take advantage of the price movements in the market, and easily sell the investment if you wish. 

Volatility 

Volatility can be defined as the measure of how much the price of your asset can fluctuate over time. This can be a key influencer in your financial decisions, and is one of the most important factors to consider. Depending on your risk appetite, you should consider the volatility of your investment. This can highly influence your investment decisions, based on your investment objectives.  

For example, if you are investing for the purpose of a retirement plan, you are likely to invest in an instrument that has consistent returns with low volatility. 

The Company 

Before you invest in a company, it is imperative that you conduct a full research about the company, its operations, finances, and market projections. This gives you an idea of whether it is a good idea to invest in the company, and whether you see your financial goals get fulfilled by making the investment.  

Return on Investment  

The ROI, or Return on Investment is one of the key determinants to consider when making investment decisions. The entire point of making an investment is to generate returns and garner profits. Therefore, you must always consider your ROI when making financial decisions. An ROI can help you measure the profitability of your investment in relation to the principal amount. In case you decide that your investment is not generating enough ROI, you can stop investing in that instrument, and look for better options. 

Rate of Inflation 

Inflation is real, and it is something that is beyond your control. Therefore, it is a crucial factor that you must consider when making investment decisions. Over time, inflation can kill your savings, and erode your investment value. You should consider the effects of inflation on your investments before you make them. 

We hope a better understanding of the factors you should consider before you make an investment decision will help you make sound choices and have a successful financial future. However, nearly all investments are subject to market risks, and you should always consult your financial advisor before you make a decision on investments. 

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What are the Eligibility Criteria for the National Pension System?

June 8, 2022

In 2004, the National Pension Scheme (NPS) was introduced for salaried individuals as an alternative to the Employee Provident Fund (EPF). The scheme was later extended to all individuals meeting the NPS eligibility criteria. The scheme aims to provide all Indian citizens with a regular income during their old-age and enhance social security in the country.

What is the NPS?

The National Pension Scheme (NPS), earlier called the New Pension Scheme, is a pension cum investment scheme. It is offered by the Government of India to guarantee old age security to Indian citizens. NPS invests the subscribers’ contributions into several market-linked instruments like debt and equity. The pension amount received after retirement depends on the performance of these investments.

NPS Eligibility Norms

  • The scheme is offered to private sector employees, government employees, and self-employed professionals.
  • The NPS age eligibility is between 18 years and 60 years, at the time of application submission.
  • The subscriber must submit valid KYC documents, such as Aadhaar Card, PAN Card, Voter ID, bank statement, etc.
  • Both resident and non-resident Indians meeting the age criteria can open an NPS account. The NPS account of a non-resident Indian (NRI) is regulated by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act, 1999 (FEMA).

Documents Required to Open an NPS Account

Once you fulfil the National Pension Scheme eligibility, you need to submit the following documents to open and maintain an NPS account:

  1. Subscriber registration form
  2. A passport-sized photograph
  3. Proof of address (Driving license, Passport, Aadhaar Card)
  4. Proof of identity
  5. Proof of age or date of birth
  6. A cancelled cheque, if required

Types of NPS Accounts

There are two types of NPS accounts available to a subscriber. A Tier-1 account is mandatory, while Tier-2 accounts are voluntary.

  • Tier-1 account: Subscribers use this account to contribute towards their pension from their savings. Withdrawals are restricted until retirement. The subscriber can claim tax benefits against the contributions made as per existing income tax policies.
  • Tier-2 account: This account is optional and for investment purposes only. The applicant can withdraw from this account when required. Investments in NPS tier-2 accounts are not eligible for tax benefits.

Check your eligibility for NPS

  • Can I open multiple NPS accounts?

An individual cannot open more than one NPS account. However, the applicant can open one account in NPS and another in the Atal Pension Yojna.

  • Can I open a joint NPS account?

As per the National Pension Scheme eligibility criteria, the subscriber must apply in an individual capacity. One cannot open or operate the account jointly with a spouse, child, relative, or on behalf of HUF.

  • Can I open an NPS account if I have a PPF or any other pension plan?

Yes, even if you contribute towards the EPF or you have an investment in the PPF, you fulfil the eligibility for opening an NPS account.

Summing up

The National Pension Scheme brings an attractive long-term saving avenue, helping individuals plan their retirement effectively.Additionally, like other pension plans, the National Pension Scheme too makes use of compounding interest for calculating the returns.

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How to Successfully Plan for Retirement?

June 7, 2022

Retirement planning can be confusing and intimidating, with multiple financial products in the market, from both private and public sector entities, all advertising various benefits. Finding the one that suits your requirements, counters inflation, and offers you financial security can seem like a gamble. Some government-backed savings options can provide you with a safety net after your retirement, providing a regular income and comfort in your older years. The National Pension Scheme(NPS) is one such option that can be a great retirement companion. Let’s find out more about how to join NPS and use it to successfully plan for your retirement.

What is NPS Investment?

NPS is a voluntary social security scheme offered by the Central Government to employees from the public, private and unorganised sectors, with the only exception being people from the armed forces. It allows you to make regular contributions towards your retirement during your working years. After the age of 60, you can withdraw a part of the corpus in a lump sum, while the remaining portion is used to purchase an annuity plan for your future financial needs.

Why to Invest in NPS?

NPS is a dependable scheme that can offer you peace of mind and an adequate means of income after your retirement. If you are in two minds about how it can benefit you, here are some things to know:

  1. Help your money grow:

NPS invests your money in a combination of securities, including equity, corporate debt, government bonds, as well as alternative investment funds. Overall, these help you create wealth without exposing you to too much risk. The NPS schemedraws a good balance between high-risk equity and low-risk bonds. The equity investment is gradually reduced by 2.5% each year, after you turn 50. This allows your money to grow in value and beat inflation without putting you in a high-risk situation.You can use an NPS calculator for more clarity on returns.

  • Financial security in retirement:

You can withdraw your money from the NPS account after the age of 60 years. 60% of the total corpus can be withdrawn and used for your immediate needs. This could be to buy or renovate a house, travel, cover medical bills, or cater to any other needs that you might have. The remaining 40% is invested in an annuity of your choice, from a Pension Fund Regulatory and Development Authority (PFRDA)-registered insurance company. This ensures that you receive a regular income for life. The primary goal of the NPS is to replicate your income in retirement. Even though you won’t be working, you will still have a steady income to depend on.

  • Control your investments:

The NPS schemeoffers two options to manage your investments – auto and active choice. The auto choice automatically decides your asset allocation as per your age. This option follows the life-cycle based approach (moderate, conservative, and aggressive), which invests in equity when you are young and gradually moves to lower risk options as you age. The active choice lets you pick the asset class allocation on your own. You can decide which way to go based on your preference and goals. You also have the option to change your fund manager if you do not like performance of your current one and find that your investment has not shown sufficient growth.

  • Save tax:

NPS is an excellent tax-saving tool. You can avail of a tax deduction of up to ₹1.5 lakh per annum under Section 80C of the Income Tax Act, 1961. You can claim an additional deduction of ₹50,000 under Section 80CCD (1B). Further, if your employer is contributing to your NPS, you can claim another tax deduction of up to 10% of your salary, including the basic pay and dearness allowance or equal to the contributions made by the employer towards the NPS under Section 80CCD (2).

To sum it up

With it government backing, balance between risk and returns and the tax savings it offers, NPS can be the perfect financial tool for retirement planning.Moreover, the minimum investment is only ₹500 for Tier I and ₹250 for Tier II accounts at registration, making it ideal for all income groups. You can use an NPS return calculatorandstart planning a successful retirement today.

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Functions of PFRDA (Pension Fund Regulatory & Development Authority)

June 5, 2022

The Government of India has initiated many programs for senior citizen over the years. These programs aim at fixing monthly pension schemes after retirement. In 2003, Parliament passed the Interim Pension Fund Regulatory and Development Authority Bill. The goal was to promote, regulate, and develop a pension system in the country.

After the preparation of the final system in 2013, the PFRDA came into being. It was an improved version of IPRDA and is a permanent act. It is the regulatory body for supervising the National Pension Scheme.

Earlier, the National Pension Scheme by PFRDA was for government employees only. But it was later extended to all Indian citizens. This includes non-resident Indians (NRI) and self-employed citizens.

Pension Fund Regulatory and Development Authority and its Functions

The PFRDA is the pension regulator for the National Pension Scheme. It functions towards the promotion and development of pension schemes. The Central Autonomous Body (CAB) has legislative, executive, and judicial powers. It is like other financial sector regulators in the country. These bodies include SEBI, RBI, IRDA, etc. It is a quasi-government organisation. The Indian government provides support, but the management is private.

The regulatory body has its headquarters in New Delhi. There are many regional offices across the country. A list of PFRDA functions is as follows:

  • Promoting pension schemes to secure the old age financial requirements of retired individuals
  • Regulating the pension schemes that fall under the PFRDA act (NPS and Atal Pension Yojana)
  • Protecting the interests of pension fund subscribers
  • Governing and supervising Tier-1 and Tier-2 accounts of the NPS
  • Registering and regulating intermediaries like Central Record-Keeping Agency (CRA), Pension Fund Managers, etc.
  • Training intermediaries to familiarise and educate people on the importance of pension funds
  • Educating stakeholders and the general public about the benefits of PFRDA NPS
  • Approving schemes and formulating the guidelines for managing pension fund corpus
  • Establishing a grievance redressal mechanism
  • Addressing grievances on the various pension schemes in the country
  • Regulating the regulated assets

Online Services of PFRDA

It is easy to apply for NPS both offline and online. The Pension Fund Regulatory and Development Authority (PFRDA) takes care of the same. The regulatory organization offers many internet services. These services encourage professionals to apply for different NPS by PFRDA. They include:

  • Pension Fund account opening through NPS
  • Processing contributions to the Permanent Retirement Account Number (PRAN).
  • Activating Tier-2 account
  • Updating subscribers’ personal information
  • Changing investment strategy
  • Changing the PFRDA pension arrangements
  • Downloading and accessing transaction statements through PFRDA NPS login
  • Processing withdrawal or departure requests
  • Filing complaints and queries
  • Printing e-PRAN and other documents

Conclusion

The National Pension Scheme is an initiative by the Government of India. It aims at facilitating a regular income for all subscribers after retirement. The Pension Fund Regulatory and Development Authority (PFRDA) governs the NPS. The PFRDA offers National Pension Scheme through four types of accounts. They are All Citizen Model, Corporate Model, Government Sector, and Subscribers accounts.

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How Does NPS Work for Government Employees?

June 2, 2022

The National Pension Scheme (NPS) is one of India’s most popular retirement benefit plans. The Pension Fund Regulatory and Development Authority of India (PFRDA) is responsible for regulating the NPS scheme. Investing in this plan secures your retirement while offering tax benefits under Sections 80C and 80CCD. There is also a lock-in period with the NPS, but withdrawal is permittedunder certain circumstances. The NPS rules and regulations for government and non-government employees differ significantly. Here is everything you need to know about NPS if you work for the government.

NPS Account Opening Online Rule

If you are a Central Government employee, NPS is mandatory for you if you joined the service on or after 1st April 2004. However, this condition does not apply to you if you work under the armed forces. NPS is also mandatory for State Government employees (except those employed under the West Bengal government).

As soon as you join the service, your employer wants you to submit an NPS application form to the Pay and Accounts Officer (PAO) and Drawing and Disbursing Officer (DDO). The enrolmentis then processed through the nodal officer.

NPS Contribution for State Government Employees and Central Government

Government employees can contribute to online NPS at the rate of 10% of the salary plus dearness allowance. The employer will make a matching contribution in this case. However, the employer contributions rates have been revised and increased to 14%. The rate revision was made effective from 1st April 2019.

Benefits of NPS for Central Government Employees:

  • Higher returns:

The salary you contribute towards NPS is invested in equity, alternative investment funds, corporate bonds, and government securities. It provides safer and better returns than any other scheme available due to the diversification of money in different asset types. The NPS interest rate can range between 9% and 12%.

  • Tax benefits: 

NPS allows you to claim tax advantage under section 80C of the Income Tax Act. You can claim tax exemptions of up to ₹1.5 lakhin a financial year. 

NPS Withdrawal Rules:

Premature exit before the age of 60 years:

  • If your accumulated corpus is equal to or less than ₹2.5 lakh, you will be provided with a lump sum payment.
  • If you have an accumulated corpus of more than ₹2.5 lakh, you must invest at least 80% of it in an annuity plan. The remaining 20% will be paid in one single sum to you.

Normal exit after the age of 60 years:

  • You are allowed to withdraw the lump sum amount if the accumulated corpus is less than or equal to ₹5 lakhs.
  • In case the corpus is over ₹5 lakhs, you must invest at least 40% of it in an annuity plan. The remaining 60% will be paid as a lump sum.

To Sum It Up

NPS is mandatory for all government employees. In case you work in the private sector, you can also start contributing to NPS and enjoy the benefits of relatively safer returns.