DebFinanceFun’s Post

DebFinanceFun: Need Money Urgently? Here's What to Consider Sometimes you need money urgently, but you don't have spare cash lying around. Should you take a high-interest personal loan, liquidate your mutual funds, or consider a loan against your mutual funds? Let's explore the best option for you. #PersonalFinance #MutualFunds #Loans #FinancialPlanning #DebFinanceFun

Are loans against mutual funds an intelligent choice? Mutual funds are not just for investment growth; they can also be strategic financial tools. Here’s why opting for a Loan Against Mutual Funds (LAMF) is becoming increasingly popular: Preserve Your Investments Taking a loan against your mutual funds means you don’t need to sell your shares. This keeps your long-term investment plans intact and avoids premature redemptions that might disrupt your financial goals. Cost-Effective Financing Interest rates for LAMFs typically range between 9-11%, making them more affordable than personal or credit card loans. This lower cost can lead to significant savings, especially compared to the higher rates often associated with unsecured loans. Swift and Simple Process The involvement of NBFCs and fintech companies has streamlined the borrowing process. Getting a loan against your mutual funds can now be quick and hassle-free, providing access to funds when you need them, often without the long waiting periods traditionally seen with other types of loans. Flexible and Convenient Loans against mutual funds come with the flexibility of an overdraft facility. They often have no foreclosure charges, and the flexible repayment options allow you to manage your finances more effectively according to your personal cash flow. Tax Efficiency By borrowing against your mutual funds instead of selling them, you avoid triggering capital gains taxes. This can be a significant advantage, helping to maintain a lower tax liability while still leveraging your investments for immediate financial needs. While the benefits are compelling, it’s crucial to align this decision with your overall financial strategy. Loans against mutual funds offer a blend of flexibility, cost-efficiency, and quick access to funds, making them a valuable option for many investors. Considering leveraging your investments this way? It might be time to discuss how this could fit into your broader financial plan. Follow Chakravarthy V for insightful posts on #personalfinance, #wealthmanagement and #investing.

How to take loans against mutual funds for short-term financial needs.   1. Utility of Loans Against Mutual Funds: These loans allow investors to meet short-term financial needs while still earning returns on their investments. However, they typically have higher interest rates and additional costs compared to other borrowing options.   2. Consider Long-term Goals: While these loans offer quick solutions to financial crises, investors should remember that mutual fund investments are primarily for long-term goals and not short-term borrowing.   3. Variability in Interest Rates:   Interest rates for these loans vary depending on the type of fund and lender. It's crucial to compare different lenders and assess associated fees to ensure cost-effectiveness.   4. Market Risk:   Pledging mutual fund units as collateral exposes investors to market fluctuations. If the value of pledged units decreases significantly, lenders may revalue them, leading to penalties or redemption.   5. Not for Speculation: These loans aren't suitable for speculative purposes or short-term trading. They should be reserved for genuine short-term financial needs, avoiding unnecessary expenses or investments that don't align with financial goals.   6. Consideration Before Opting:  Before taking out such loans, investors should carefully evaluate interest rates, fees, repayment terms, and potential penalties. Seeking professional advice and comparing lenders are advisable for informed decision-making.   7. Emergency Source of Funds:   While providing emergency funds without liquidating investments or incurring high credit card interest rates, investors must understand the loan agreement's terms and its impact on their investment portfolio. #mutualfunds #mutualfundssahihai #stockmarket #sensex Priyanshu Pandey

When working on credit applications, I often encounter decline reasons like "Fins don't support. Unable to meet debt service coverage." But what do lenders really mean by that? This statement indicates that the applicant's financials do not satisfy the Debt Service Coverage Ratio (DSCR) requirements. DSCR assesses a company's ability to use its income to pay off its debts. According to Investopedia, a DSCR of 2 is considered strong, showing that a company can cover twice its debt. A DSCR of 1 means a company has just enough income to cover its debt, while less than 1 suggests negative cash flow, meaning the company might struggle to pay its debts without external funding. A DSCR of 0.95, for instance, indicates only 95% coverage of annual debt payments. If a company's DSCR is close to 1, it's seen as vulnerable, as a slight drop in cash flow could lead to difficulties in debt servicing. Lenders often require a minimum DSCR for the duration of a loan. Many lenders set the minimum DSCR between 1.2 and 1.25. The method of calculating DSCR can vary, often based on adjusted cash flow, net operating income, EBIT, or EBITDA, depending on the lender's requirements. [Learn more about the DSCR from Investopedia] (https://lnkd.in/gPVxzs-B). #FinancialRatios #DSCR

Some quick takeaways from recent private credit updates: 1. Private debt fundraising was below average in Q1 2024, but funds in market are now targeting over 50% more at almost USD500b than at the start of 2023. 2. Direct lending was the largest component of private debt fundraising and deals in Q1 2024. There is strong demand from borrowers and investors.  3. Private credit faces competition from banks and the broadly syndicated loan market, which have recovered in 2024 and are offering cheaper and larger refinancing options to some borrowers. 4. Jury still out on the extent to which private credit (also) faces risks from higher interest rates. Debt service coverage ratios are getting strained... 5. Regulators still keen to scrutinise the industry, though to date they have not done much. A space to watch. Links in comments👇

Investments in private credit have become more popular with the wealth channel. However, private credit loans are predominantly issued as variable-rate debt, contributing to outsized returns relative to other private assets. Could lower interest rates and yield compression for the asset class dampen enthusiasm? #wealthmanagement #privateasset #finance

𝐀𝐫𝐞 𝐲𝐨𝐮 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐢𝐧 𝐅𝐃𝐬 𝐜𝐨𝐫𝐫𝐞𝐜𝐭𝐥𝐲? I know of so many individuals, who have not invested correctly in Fixed Deposits. Wondering how? In this post I will explain 3 aspects of it. What went wrong for them, What you should be doing, Why even do Fixed deposit & What is a better alternative. 𝐖𝐡𝐚𝐭 𝐰𝐞𝐧𝐭 𝐰𝐫𝐨𝐧𝐠 ? 💡 Investors choose fixed deposits as a part of their portfolio for the long term, but still end up taking 1 year fixed deposits. 💡 Every year they renew these Fixed Deposits. 💡 It got renewed at the rate available as on that day. 💡 Investors get exposed to decreasing & increasing interest rates each year. 💡 Ended up with 6.7% p.a CAGR in last the 10 years from 2015 to 2024   𝐖𝐡𝐚𝐭 𝐬𝐡𝐨𝐮𝐥𝐝 𝐡𝐚𝐯𝐞 𝐛𝐞𝐞𝐧 𝐝𝐨𝐧𝐞 ? 💡 Instead of choosing to renew your fixed deposits every year, go for a 10 year fixed deposit. 💡 You basically lock your interest rate for the next 10 years without worrying about the changes happening in the interest rate every year. 💡 This concept is the same as fixed or floating interest rates when you take a loan. 💡 Investors would have made 8.5% p.a CAGR in the last 10 years from 2015 to 2024.   𝐁𝐮𝐭 𝐰𝐡𝐲 𝐞𝐯𝐞𝐧 𝐝𝐨 𝐅𝐢𝐱𝐞𝐝 𝐃𝐞𝐩𝐨𝐬𝐢𝐭𝐬 ? 🔴 Pre-mature withdrawal penalties - By any chance you need the money in between, a penalty of 0.5-2% p.a will reduce the returns drastically. 🔴 Tax on accrued income - You pay tax on interest earned (as per income slab) from your pocket each year, even if you have not withdrawn the money from fixed deposit. 🔴 Interest rates may be very low (like in 2020 / 2021) due to certain market factors and you might lock 10yr FDs at lower rates too. 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐚 𝐛𝐞𝐭𝐭𝐞𝐫 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 ? 🔵 Debt Mutual Funds in your Fixed Income portfolio. 🔵 You can easily participate in the changing interest rate scenario to make even higher returns (which is impossible in Fixed deposits). 🔵 And if you want to lock your returns, better than Fixed Deposits rates, for the long term then invest in a long duration debt mutual fund. 🔵 Liquidity & Safety is very high as it is backed by the RBI. 🔵 No income tax on accrued income. Pay tax only in the year when you redeem. Hence no cash flow issue 𝐏𝐒: 𝐓𝐡𝐢𝐬 𝐡𝐢𝐠𝐡 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐫𝐚𝐭𝐞 𝐰𝐡𝐢𝐜𝐡 𝐲𝐨𝐮 𝐬𝐞𝐞 𝐭𝐨𝐝𝐚𝐲 𝐢𝐬 𝐠𝐨𝐢𝐧𝐠 𝐭𝐨 𝐛𝐞 𝐡𝐢𝐬𝐭𝐨𝐫𝐲. 𝐒𝐨 𝐥𝐨𝐜𝐤 𝐲𝐨𝐮𝐫 𝐫𝐞𝐭𝐮𝐫𝐧𝐬 𝐚𝐬 10𝐲𝐫𝐬 𝐟𝐫𝐨𝐦 𝐧𝐨𝐰 𝐲𝐨𝐮𝐫 𝐅𝐃𝐬 𝐦𝐢𝐠𝐡𝐭 𝐩𝐫𝐨𝐯𝐢𝐝𝐞 𝐚 𝐫𝐞𝐭𝐮𝐫𝐧 𝐚𝐭 𝐚𝐫𝐨𝐮𝐧𝐝 4-5% 𝐩.𝐚 𝐨𝐧𝐥𝐲. Post your questions in the comment section, if you have any queries. Will be happy to address it. #FixedDeposit #Investment #Debt #MutualFund

As banks step back from #CommercialRealEstate financing, private money investors are well-positioned to meet the demand for capital. 💸 Will this shift from conventional lending reset expectations for return rates? Read our latest article to learn more: https://hubs.la/Q02lD8pP0 #TrustDeed

𝕋𝕙𝕚𝕟𝕜𝕚𝕟𝕘 𝕒𝕓𝕠𝕦𝕥 𝕚𝕟𝕧𝕖𝕤𝕥𝕚𝕟𝕘 𝕚𝕟 𝕡𝕣𝕠𝕡𝕖𝕣𝕥𝕪 𝕓𝕦𝕥 𝕤𝕥𝕣𝕦𝕘𝕘𝕝𝕚𝕟𝕘 𝕨𝕚𝕥𝕙 𝕝𝕚𝕞𝕚𝕥𝕖𝕕 𝕗𝕦𝕟𝕕𝕤?  𝕋𝕙𝕒𝕥'𝕤 𝕨𝕙𝕖𝕣𝕖 𝕒𝕟 𝕊𝕄𝕊𝔽 𝕝𝕠𝕒𝕟 𝕔𝕒𝕟 𝕔𝕠𝕞𝕖 𝕚𝕟! Here's why you should consider an SMSF loan: ✅ Diversify your portfolio: Don't just rely on stocks and shares! Invest in real estate for potentially higher returns and lower volatility. ✅ Capital growth potential: Property can appreciate in value over time, boosting your super balance for a comfortable retirement. ✅ Tax benefits: SMSF loans offer tax-effective ways to grow your wealth, with rental income and capital gains potentially taxed at concessional rates. ✅ Control and autonomy: Invest in properties that you choose and manage, giving you greater control over your financial future. Ready to explore your options?  Call us today for a FREE consultation and discover how an SMSF loan could help you achieve your investment goals! ☎️ 0405 784 829 🌐 https://lnkd.in/gHpKmZFe #SMSFLoan #PropertyInvestment #SuperannuationStrategy #FinancialFreedom #BeyondMortgageSolution

Exciting times ahead for M&A as investors navigate a changing landscape... According to ACG Group’s 2024 outlook survey, there's optimism for increased activity, though concerns linger around high interest rates and economic uncertainties. Private credit funds and BDCs are stealing the spotlight, offering flexible capital and leverage options. With interest rates on the rise, alternative financing sources like these are becoming increasingly attractive. Bank lenders charged an average interest rate of 10.2% on senior loans in 2023, compared to 10.9% for non-bank lenders. The private credit market is booming, projected to reach $2.3 trillion by 2027. Companies like Audax Private Debt and FS Investments are seeing promising returns, with opportunities for investors in both private credit and BDCs. #Refinancing is set to be a major theme in 2024 as loans near maturity. Lenders are gearing up for potential challenges, while new M&A transactions show promise, with lenders like WhiteHorse Capital seeing steady activity. Leverage levels are expected to remain steady or fall, supporting continued dealmaking. To read the full article, visit: https://lnkd.in/eXkFCQHd #MandA #PrivateCredit #FinanceTrends