''All things bright and beautiful,'' a famous hymn that we learnt in school applies to urban India today. The economy is booming, the stock markets, despite global slowdown, are doing exceptionally well and salaries are also not doing too badly either.
The corollary is that the Indian consumer has money to spend. And now that the festival season is here, consumer goods companies and banks would like you to splurge all that money and if falling short, there will always be ready credit available.
Already there are offers galore for everything, from loans on lifestyle products and even homes. Confusing it is, when you have to choose from the multitude of promotional offers to get the best product. A few guidelines before you go on that festival binge.
For starters, since this is the time you may also get that festival bonus, it is advisable to take stock of your investment commitments. Provide for them first. Also, if during the year you have withdrawn money against certain investments, use a part of your bonus to replenish that investment. Now you can rub your hands in glee and go for it.
Make a list of things that you need to buy and prioritise them. Accordingly, allocate a percentage of your spending budget to each of these goods. Of course, the latest television available on personal loan may attract your attention.
But then, interest rates would be upwards of 16 per cent a year. So it is not a great idea to increase the burden on your monthly salary by getting into a loan which you will keep servicing well after the festivities are over.
Great offers from credit card companies will also be on. They will all invite you to spend with reimbursements of up to 50 per cent cash back on airfares and hotel stay. A practical way of saving money is to use these cards through various travel websites to save money. There are also extra reward points on usage which can be redeemed for gifts or frequent flyer miles on your airline. There are even mega prizes like cars through lucky draw for those credit card holders who swipe their cards during this period.
If your card has a cash back facility, make best use of this to get some money back on your purchases. However, remember that there might be a maximum limit of cash back that the credit card provides in one billing cycle. Also, while using all these services it is important to note that there is an interest cost of 36 per cent a year on these expenditures.
This season is also the time when a lot of bullion and jewellery is bought as this is considered an auspicious time. Buying during Dhanteras is supposed to bring good luck and fortune through the year.
However, while the entire lot of jewellers offer good discounts during this season, the prices are invariably at their highest during this period. This means that there is a higher cost of purchase, despite the discounts.
A smart solution for this is to pay for a major portion and book the jewellery a couple of weeks in advance, and pay the small balance amount and take delivery on Dhanteras. This will help you get lower prices for your purchases as well as avail of the festive offers.
Regarding buying gold bars or coins from banks, they too offer festive discounts such as 5 per cent discount on the price for preferred customers or credit card holders. However, keep in mind that they sell gold at around 10 per cent higher than market prices, so despite getting 5 per cent off, you still end up paying a 5 per cent premium.
And then, there are lifestyle offers, especially on electronic goods. There may be offers such as zero per cent interest with convenient equated monthly installments or freebies on purchases.
The best way to address these is to understand that the offers are built into the price of the item. So, if you bargain hard, you can convert many such offers into cash discounts on the items you need to buy, rather than receive certain free gifts like a radio with an expensive television which you may not want to lug around with you later.
Of course, this is also the time when some good offers might come to you from mobile phone or credit card companies like discount coupons, which you can redeem at various merchant outlets. Some of these are very useful, especially the ones which are for branded products or outlets where bargaining is not possible, or for various restaurants you might visit during the festive season.
Buying a home could also be a great idea as large lenders have reduced their loan rates by 50-100 basis points. Besides, builders will also throw in some goodies like free furnishing or repayment of stamp duty during such times. This could easily save you a lakh or two.
In other words, by planning a bit ahead and being a little discerning you can make your festival shopping interesting as well as fruitful. Enjoy!
The writer is director, Touchstone Wealth Planners.
