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Direct v/s Regular Mutual Funds: Know the Difference

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Mutual Funds are available in two plans – Regular and Direct. While regular mutual fund plans are commonly-known to investors, direct mutual fund plans have started becoming popular recently.

What Is a Direct Mutual Fund Plan?

The Securities and Exchange Board of India (SEBI) introduced direct mutual fund plans in January 2013, making it mandatory for all Asset Management Companies (AMCs) to provide an option to invest in mutual fund schemes directly, without the involvement of an agent, broker or distributor, which is the case with regular mutual fund plans.

What Is the Difference Between Direct And Regular Plans?

Particulars Regular Plan Direct Plan
Expense Ratio High Low
Returns Low High
Investment Advice Available Not Available
Market Research Done by distributor/agent Done by self
Convenience More Less

Regular and Direct plans are just the two options to buy the same mutual fund scheme, run by the same fund managers who invest in the same stocks and bonds. The only difference between the two is that in the case of a regular plan your AMC (Asset Management Company) or mutual fund house does pay a commission to your broker as distribution expenses or transaction fee out of your investment, whereas in case of a direct plan, no such commission is paid.

Instead, in the case of direct plans the commission is added to your investment balance, thereby reducing the expense ratio of your mutual fund scheme and increasing your return over the long term.

To understand it better, let’s take an example. For instance, Mr. X and Mr. Y invested in three mutual fund schemes, namely HDFC Equity Fund, Aditya Birla Sun Life Liquid Fund and HDFC Balanced Advantage Fund via a monthly SIP of Rs. 5,000 for each scheme on 01 April 2014. While Mr. X chose the regular plans of these schemes, Mr. Y chose to invest in the direct plans.

Value of Mr. X’s and Mr. Y’s investments after 5 years.

Particulars/Schemes HDFC Equity Fund Aditya Birla Sun Life Liquid Fund HDFC Balanced Advantage Fund
Mr. X (Regular plan) Rs. 4,00,335 Rs. 3,63,967 Rs. 4,05,544
Mr. Y (Direct plan) Rs. 4,10,115 Rs. 3,64,837 Rs. 4,14,396
Difference Rs. 9,780 Rs. 870 Rs. 8,852

Here’s a comparative analysis of the average expense ratio and average returns of the direct and regular plans of mutual funds across different fund categories.

Average Expense Ratio of Regular and Direct Mutual Fund plans

Fund Category Regular Plan Direct Plan Difference
Equity 2.02% 1.22% 0.80%
Debt 0.90% 0.42% 0.48%
Hybrid 1.96% 0.98% 0.98%

Source: Value Research, Data as on March 31, 2019.

As the table above shows, on an average, you will earn 0.50%-1% more per annum by investing in a mutual fund scheme through its direct plan rather than its regular variant.

Why Is the Direct Plan of a Mutual Fund Better Than Its Regular Plan?

  • Lower expense ratio.
  • Higher return due to reinvestment and compounding of amount which gets paid as commission in regular mutual fund plans.

How To Know If You Are Invested In Regular Plans Or Direct Ones?

The account statement/fund holding statement will clearly state whether your mutual fund plan is regular or direct. Typically, if you have invested in a mutual fund scheme through your bank, then it would be a regular plan. If you have invested via the website of the mutual fund, the plan would be direct.

Also, if you are receiving a ‘free of cost’ service from your investment agent or if he/she tells you he/she is paid by the mutual fund company then in all likelihood you have invested in a regular mutual fund plan and are paying a hidden fee.

Also Read: How To Switch From Regular To Direct Mutual Funds?

The post Direct v/s Regular Mutual Funds: Know the Difference appeared first on Compare & Apply Loans & Credit Cards in India- Paisabazaar.com.



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The Cheapest Renters Insurance Companies in Florida 2019

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Hurricane Irma held the world transfixed as Florida’s beautiful beaches were battered by relentless rain, whipping winds and tons of flooding. The category-4 hurricane created over $50 billion worth of destruction that is still in repair today, and it is an event that remains fresh in the minds of renters and homeowners alike.

Hail, hurricanes, flooding and high winds are all widespread in Florida. That creates a need for a different kind of renters insurance with specialized features that cover things like sinkholes, lightning and hurricanes. Florida has a weather system all its own, so renters must be diligent in ensuring maximum coverage for all types of events.

The Florida Housing Finance Corporate reports in a new study that the number of renter households in 2017 exceeded 2.5 million. With so many renters and so many potential natural disasters, renters insurance is a necessity to protect your home and all of your belongings inside.
Best renters insurance companies in Florida

As tourism continues to rise, visitors are more common. It is essential to ensure your belongings are covered, as well as theirs. Renters insurance will protect your home, your belongings and any guests on the property.

The cheapest renters insurance companies in Florida

There are many excellent insurance options for Florida residents, and here we have the best renters insurance companies in the state for 2019:

  • Castle Key
  • Citizens
  • Peoples Trust
  • Security First
  • State Farm

To assess each company, we examined their ratings. Both J.D. Power and the Better Business Bureau judge customer satisfaction on price, claims processing and overall customer service. AM Best uses a grading system to judge a company’s financial strength.

J.D. Power and AM Best ratings are not available for all Florida insurance companies, but we include Demotech financial ratings where possible.

These companies are not only the cheapest renters insurance companies but also come highly recommended by their customers.

Rankings for cheapest renters insurance companies: Florida

Company J.D. Power AM Best BBB Demotech
State Farm 3 out of 5 A++ (Superior) A+ A (Exceptional)
Security First N/A N/A A+ A (Exceptional)
Citizens N/A A (Excellent) A+ A (Unsurpassed)
Peoples Trust N/A N/A N/A A (Exceptional)
Castle Key 2 out of 5 B (Fair) C A (Unsurpassed)

Best Florida renters insurance for best claims service: Castle Key

Castle Key is a specialized division of Allstate that provides renters insurance to Floridians. Allstate is already a well-respected renters insurance company, with excellent claims service and extra protections that will come in handy with Florida’s unpredictable weather. Allstate has 5 out of 5 rating from J.D. Power for how it handles claims.

Best Florida renters insurance company for discounts: State Farm

State Farm offers good insurance coverage in a variety of areas, which means you can save on your renters insurance by bundling it with your auto insurance and get more discounts for both kinds of insurance. State Farm helps you save if you have safety features like smoke alarms or a security system.

Best Florida renters insurance company for private coverage: Citizens

Citizens is available exclusively to Florida residents as a not-for-profit government organization. It is a popular solution for those who cannot find private coverage, and Citizens offers exclusive savings like discounts for homes with storm windows and shutters and homes in compliance with Florida Building Codes.

Cheapest Florida renters insurance company: Security First

Security First is also a Florida-based renters insurance company with unique coverage and affordable pricing. While most companies feature discounts for adults 65 and older, Security First offers discounts for those 55 and older. It also offers discounts for wind-resistant homes, similar to Citizens renter insurance. While your rates will be unique to you, Security First often offers the lowest insurance rate.

Florida is on par with the national average cost of renters insurance, costing about $185 per year, while the national average is $181 annually.

These are the average rates for the best Florida renters insurance companies:

  • Security First: $142
  • Citizens: $160
  • Peoples Trust: $170
  • Castle Key: $175
  • State Farm: $181

Given the specific needs of Florida renters, companies have worked to adapt their policies for better coverage. With several services exclusive to Florida only, it helps to ensure better customer service, fast claims processing and, most importantly, greater affordability for better coverage.

Frequently asked questions

How much renters insurance do I need in Florida?

Renters insurance is especially prevalent in Florida, given its propensity for damaging storms. Consider extra protections based upon where you live. Areas closer to shore will need flood insurance more than someone living near Disney. Florida also experiences strong winds from frequent storms, and areas closer to shore could require more coverage than other areas. Some companies provide wind coverage, but not all. Determine how much risk you have and how much coverage you’d need to replace your belongings to find out how much insurance you need.

What is the best renters insurance company in Florida?

Unlike other states, there are many Florida renters insurance companies that specifically cater to the changing Florida landscape. Where you live will significantly determine the kind of coverage that you need, and that, in turn, will help determine which company is right for you.

Why do I need Florida renters insurance?

Florida has more lawsuits than other states, so renters insurance will provide the extra protection you need. Renters insurance can also protect your belongings from the storms Florida tends to get. Also, many landlords require renters insurance, so check your lease. While your landlord’s policy covers the building, your belongings inside are not covered unless you pay for an insurance policy.

Will renters insurance cover roommates?

Renters insurance only covers the individuals listed on the policy. If your roommate is not on your policy, he or she is not included. If they have coverage and you are not listed on their policy, you are not covered. Roommates should provide their own coverage.

The post The Cheapest Renters Insurance Companies in Florida 2019 appeared first on The Simple Dollar.



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Spend One Minute Doing This to Earn 5 Cents/Gallon in Points to Save on Gas

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There are a lot of ways to save money on gas. You can drive across town to find the cheapest gas station. You can obsess over finding the quickest route. Or you can spend one minute downloading an app that automatically earns you points to save money when you fill up your tank.

Sound easier? We think so, too. With the Exxon Mobil Rewards+ app, you automatically earn points to save money every time you fill up at Exxon or Mobil stations. Until February 2020, you can earn 5 cents per gallon, compared to the app’s usual offer of 3 cents.

It also lets you pay easily and securely through the app — without swiping a card. 

Watch Your Savings Pile Up With the Exxon Mobil Rewards+ App

If you’re consistent about it, that nickel discount really adds up. 

Consider this: The average American driver goes through roughly 650 gallons of gas per year.

At a current average price of about $2.30 per gallon, that means your typical American spends about $1,500 a year on gas.

At that rate, this app could save you $32.50 per year — free money that you could pocket or that you could spend on whatever you want.

Oh, you’re a two-car family? That’s $65 in the bank.

If you drive a lot, you’ll save even more.

You’re a VIP at 11,500 Stations

It’s easy to be consistent about using the app whenever you get gas, too.

That’s because Exxon and Mobil have about 11,500 gas stations scattered across the North American landscape. Seriously, they’re everywhere. You can earn points to automatically get discounts at all of those stations.

Even if you’re not the kind of driver who actively hunts for a particular kind of gas station, the odds are good that, wherever you are, you’ll find an Exxon or Mobil station nearby. Just Google it. There’s probably a station, like, one minute from you.

The Easiest Way to Save on Gas

It takes just a minute to download the app on Apple or Android and connect your payment information (credit, debit or Apple Pay). Once you’re parked next to a gas pump, you just press a button in the app, and the app turns the pump on. Plus, doing everything through the app means you won’t risk subjecting your credit card to illegal skimmers attempting to steal your credit card information. 

Here are some nitty-gritty details about the app:

  • When you buy gas with the app, you earn rewards points.
  • Once you have 100 rewards points, you can start redeeming your points on gas purchases.
  • Until February 2020, you can earn points to save 5 cents per gallon on gas this way. That’s a temporary increase from the typical 3 cents per gallon with this app. So if you’re thinking about signing up, the sooner the better.
  • If you’re filling your tank with premium gas, you can earn points to save 10 cents per gallon through February 2020.  

We can’t think of an easier way to save on gas. If you’re ready to start earning and saving at the pump, download the app and get started. 

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He drives a lot and would love to save on gas.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.



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What is a Credit Score and How Can You Improve Yours In 2020?

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Whether you’ve seen it on discussed on TV or heard your friends discuss it over dinner, you may have just realized that you have something called a credit score, and the bigger your credit score is, the better. 

Still, with advancements in digital technology soon, it became more widely available quickly, becoming another critical metric for people to work. Now, credit scores can be accessed in just a few minutes online. With this transparency, individuals themselves can see how small changes to their lifestyles can have a positive or negative effect on their scores.

Credit score websites, such as Credit Karma, and credit checker Apps have gamified credit checking in an attempt to drive traffic to their sites, and what used to be a straightforward measure of a lender’s trust is now displayed with bright, eye-catching colors and dynamic wheels to capture and retain a persons attention.

Regardless of the change in the way in which your credit score is now displayed, the end goal is still the same – to increase your credit score. So here’s how you can improve yours in 2020. 

What is a Credit Score?

Before we get into the nitty-gritty, let’s take a quick step back to ensure that we all understand what a credit score is, because amongst all the bright colors and dynamic graphs hides some critical information. A credit score sometimes referred to as a credit rating, is a measure of the likelihood of you paying a loan or credit back>

Lenders use credit scores to assess whether they feel they can trust you to make the necessary repayments. Aside from the obvious, getting a credit card, your credit score can affect you getting a mortgage, being able to finance a car, your insurance policies, and even your mobile phone contract.

To make things even more complicated, your credit rating is calculated differently by different credit bureaus.

How You Can You Find Your Credit Score?

It’s now easier than ever to find out an estimation of your credit score through credit checker websites in which you fill out a short form detailing information about you. Remember, although these websites are a good indication of your credit rating, they often aren’t exact, and their results can vary quite significantly over time and from site to site.

Most websites use a scoring model that starts at 300 and ends at 850 though some others such as Experion score out of 999, so it’s best to check how you rank on each scoring system separately. Typically a credit score of 700 or higher is considered good however they are generally classified as follows:

  • 750 – 850 is deemed to be excellent 
  • 700 – 749 is considered to be good
  • 650 – 699 is considered to be fair* 
  • 600 – 649 is considered to be poor 
  • 300 – 599 is considered to be bad 

*If your score is in the 650-699 range, read what you can do to boost your credit here

What Can Affect Your Credit Rating? 

Believe it or not, a good salary and a steady borrowing history don’t always amount to a good credit rating, and there are many factors at play which affect the final number. Here are a few things that can affect your credit rating. 

Your History with Credit
Let’s get the most obvious one out of the way first, good history with confidence, and demonstrating your ability to make timely repayments reflect well on your credit rating, whereas having no history of credit or missing repayments can reflect very poorly.

Whether You Have Registered to Vote (UK)
Although registering to vote is essential for many other reasons, it can also impact your credit rating as lenders use it to verify your name and address as a precaution against fraud. Failing to register or registering at an old address can reduce your score by as much as 50 points, which may not seem like a lot but can be the difference between your application being accepted or rejected.

Missing Your Repayments
A late or missing payment can stay on your credit record for up to 3 years, impacting your score, so remember to make payments on time. Believe it or not, this also includes your mobile phone payments and your utility bill payments, with half of the big six energy providers now sharing data about the customers with credit agencies.

Applying for Too Much Credit 
Submitting credit applications in quick succession can be seen as a sign of financial stress and may appear on your credit report. Lenders may see this and decide not to lend on you in case you are in financial difficulties, notably if any of your other applications were declined. 

Your Partner’s Rating
If you apply for a financial product with your partner, then your financial histories become linked, which means that their score can influence yours. You may even have business ties with ex-partners who you no longer are in a relationship with.

The Amount You Spend on Your Credit Cards
The amount you spend on your credit card can be used by lenders to determine whether you rely on them. 

So, How Can You Improve Your Credit Score for 2020?

Now that you know what impacts your credit rating, you can work on improving it. Improving your credit rating will increase your chance of being accepted for loans, credit cards, and mortgages and will stand you in good stead for future financial decisions. So here’s what to do. 

1. Find Your Score

If you haven’t already, create an account with one of the credit check companies and find out your current score as this will give you a good benchmark to work off. Remember that your score can vary between credit agency and that their scales can vary too.

2. Register to Vote (UK)

This piece of advice may seem odd to readers in the U.S. However, if you live in the UK, registering to vote may improve your credit score.

If you aren’t currently on the electoral register, then register to vote. Be sure to use your exact name and address and to keep this up to date should you move even if you don’t plan on voting, being registered to vote matters and can affect your rating.

3. Make Sure to Meet Your Current Repayments

If you are currently using credit them be sure to set yourself reminders for your repayments and make at least the minimum payment amount each month. Prioritize the repayment of your current loans over everything else and be consistent. Just one missed payment can stay on your record for three years.

4. Don’t Pay Off Your Loans All at Once!

If you have a credit card or loan, then you may think that by racing to make early repayments, you are increasing your credit score, but this isn’t always the best strategy. The speed at which you pay off your loan doesn’t matter to the credit agencies so long as you make the minimum repayments, and in fact, lenders can make more money off you in interest if you don’t pay off your loans early.

So weigh up whether you need to pay it off early or whether you can continue to plug along with the regular repayments as this could reflect better on you as a consistent and reliable user of credit in the long run.

5. Dissolve Ties Between Ex-Partners

Your ex-partners will continue to haunt you if you don’t cut ties with their credit ratings. You can ask to have your credit ties cut by contacting the main credit agencies and merely explaining the change in your circumstances.

6. Don’t Take Out Joint Credit with Someone Who Has a Poor Rating

If you have a higher credit rating than your partner, then purchasing credit with them will bring your credit rating down. Carefully consider whether it would be better to take out credit on your own to protect your rating or work with your partner to improve their before you take out the loan. 

7. Take Out One Credit Product at a Time

Although you may need more than one credit product, try to take them out one at a time over several months to not cause alarm with credit agencies who may think you are in financial distress.

8. Use Under 25% of Your Credit Limit

Maxing out your credit cards can make it look like you rely on them. To build your credit rating, try to keep your credit spending to below 25% of your overall credit maximum and remember to make the repayments on time. The lower the percentage of credit you spend on your cards, the better.

Be Patient

We live in a world of instant gratification, but building your credit score will likely take time. Remember that missed repayments can sit on your score for several months, and proving your reliability with money will require regular payment over the year.

So sit back and play the long game, check your score periodically throughout the year and be patient; it will grow with time.

The post What is a Credit Score and How Can You Improve Yours In 2020? appeared first on Your Money Geek.



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