With numerous investment options available in the market, making the best choice may become a cumbersome task. If you seek a pure life cover at the most affordable rate, you may consider investing in a term insurance cover.
A term insurance plan, as the name suggests, offers coverage for a certain term. In case of an unfortunate event of death during the policy period, the beneficiary is entitled to receive the sum assured amount. This amount may be used to fulfill financial obligations such as meeting lifestyle needs, covering funeral costs, meeting educational costs, and repaying any existing debt, among others.
It is important to make a well-informed purchase decision. For this purpose, you must have complete knowledge about certain features and benefits of term plans.
Following are five things that you may keep in mind while buying a term cover.
1. No returns
It is important to note that term plans are a pure life cover, and hence do not provide returns. Such a plan is not designed to offer returns post-maturity, and hence may not be used as an investment option.
2. The need for a term policy
A term plan provides a safety net for your loved ones even in your absence. The insurance provider is entitled to pay the sum assured amount, which may be used to meet numerous financial needs of your near and dear ones. Such a plan is an excellent option if you are the breadwinner of the family as it acts as an income replacement and sustains your family.
3. The sum assured amount
An important aspect to take into consideration while buying a term insurance policy is the sum assured amount. You may keep in mind your family’s expenses based on their lifestyle habits and decide the sum assured amount accordingly. Besides, you may also consider inflation and rising costs. You may reassess your needs every few years and enhance your coverage accordingly.
4. The policy period
The golden rule for deciding the policy period is to deduct your current age from your retirement age and opt for a term policy for that long. Hence, if you are in your twenties, you may consider a term of 40 years. It is advisable to purchase a term policy early in life as insurance providers offer higher life cover at a low price, due to the low-risk factor.
5. The right insurance provider
It is imperative to choose the insurance provider that best suits you. You may zero in on a particular insurer after considering various aspects such as market reputation and financial background. You may also have a look at the claim settlement ratio of the insurer. Higher the claim settlement ratio, higher is the chance of your claim being settled. You may also consider the solvency ratio of the insurer to determine, as it is an indicator of financial strength.
Term plans offer numerous advantages, such as low price, flexibility, and tax benefit, among others. You may, therefore, keep the aforementioned points in mind before going ahead and purchasing one. By doing so, you may financially protect your loved ones even in your absence.
Yoga and investments: how are they even connected? One revolves around deep breathing and stretch-pants while the other involves stocks, bonds and people in suits. Well, it turns out that there are more similarities than you can imagine.
1) Disciplined efforts yield results
It is not possible to expect positive results after practicing yoga once or twice. Only through disciplined efforts can you appreciate the benefits of yoga. You need to commit to it with your body, mind, and soul.
Similarly, only through a disciplined approach, it is possible to achieve financial success through investments. For example, you can cultivate investment discipline by investing regularly in mutual funds through Systematic Investment Plans (SIPs). This can help you cultivate a large amount of money for your future goals like buying a house or creating a retirement fund.
2) The importance of patience
One of the main reasons why people perform yoga is that it makes people healthier. In addition to burning calories, it also helps you to relax and gain mental peace. However, it is not possible to see all these results after a single session of yoga. You need to have patience in order to witness these changes in your body and mind.
In the same way, don’t expect your financial results immediately after investing. You need to give it time and effort before you see your investments blossom and offer returns.
3) Practice makes you perfect
There are many different ‘asanas’ or postures that may be impossible to perform on your first try. Case in point: try doing the ‘sirshasana’ or the headstand by yourself. But with patience, you can slowly perform even the difficult asanas comfortably.
In the world of investments too, you cannot become a master just in a month or two. It takes committed efforts on your part to learn about the different approaches to investing. And once you learn, you need to put your knowledge into practice. Only through experience and constant learning, it is possible to become a good investor.
4) Long-term commitments
Yoga is not a fad. Rather, many people consider it as a lifestyle choice. There are a lot of people in the country who have been practicing it their entire lives. To truly benefit from the gifts, you need to have a lifelong relationship with yoga. In the same way, regular investments for the long-term are an important aspect of financial planning. By investing steadily in long-term equity funds, you can achieve goals such as retirement planning in a simple and easy manner.
5) Focus helps you reach your goal faster
While performing yoga, the important thing is to focus your concentration on your breath. There may be a lot of things going on around you. But you should not lose your focus on your goal.
In the same manner, the markets can be very volatile. Stocks can rise and plunge at the drop of a hat. Viewing these changes, many investors tend to panic. They sell off their investments in order to protect their capital. That does not mean you too should react to market shifts each and every time. These day to day changes should not affect your long-term focus. Fix your eye on the target and follow your investment plan. Don’t allow the short-term volatility to derail your long-term focus.
So the next time you are worried about investment results, remember how yoga is so similar. Take a deep breath or two and refocus on your goals. And as your body becomes healthier, your investments become stronger.
Congratulations! Your company has finally given you the bonus you deserve. Now, it is time to gather your friends and pop that champagne bottle. Before you finish that thought, hang on.
Sure, it is a good idea to party once you get a bonus. But keep in mind not to splurge the entire amount. Here’s how you can make good use of that bonus.
We recommend the following points:
1) Clear off your debts
Try to clear off any outstanding loans that you are currently servicing. It may be a college loan or a home loan or credit card debt. Make a list of all your loans and rank them in order of highest to lowest interest rate. By using your bonus to pay off high interest debt like credit card balances, you can free up your finances pretty quickly. In fact, using your bonus to this end is more useful than putting the money in a savings account. The faster you can get rid of your debt, the better you can manage your finances.
2) Investing any extra money you may have to reap benefits later
If you don’t have any outstanding loans, good for you. You can jump to this step directly. Investing money is like planting a seed. The results may not be visible immediately but in a few years, you can see big ripe fruits. Make a list of different financial goals you would like to achieve in the future. And using your bonus, you can kick-start your investing ambitions.
For example, you may want to build a corpus if you want to buy a home in the next five years or so. You can use your bonus to invest in equity funds in order to earn higher returns for the future.
If you have a daughter below the age of ten years, you can invest in the Sukanya Samriddhi Yojana. It is a savings scheme that encourages parents to create a fund for meeting future financial expenses of their girl child. The current interest rate offered of 8.1% on this scheme is still much higher than most other saving options like fixed deposits or Public Provident Funds.
3) Lump sum investment is ideal for those you have surplus cash at the moment
There are different ways to invest when you have a surplus amount of money. Most people tend to prefer regular monthly investments because it matches with their salary schedule. For example, once you receive your salary for the month, you can directly transfer a portion of the money into your Systematic Investment Plans (SIPs) or other investment options. But when you get a bonus, a lump sum investment is the best option. But in order to carry out your investments safely, you can use a Systematic Transfer Plan (STP).
An STP is a nothing but an SIP with a twist. Here, you transfer a fixed amount of money from one investment (liquid fund) to another (equity fund). With a lump sum amount, it can be a risky to invest the entire amount in an equity fund directly. As a result, you can start by putting the amount first in a liquid fund and then systematically transfer the money into equity fund. This way, you can minimize the risk in case the market falls down suddenly.
4) These investments helps you achieve your financial goals faster
Imagine that you have to buy a car or a house right now. It may not be possible. You may not have the required funds. But how about five years later? It can be possible, right. With steady investments, you can make your dreams come true. And when you get a bonus from your employer, it can be a great opportunity to make your dreams come much faster. Have a list of financial goals and work towards them steadily.
All said and done, you may want to use your bonus in order to buy stuff (a new sofa set or a gift for your parents) at the present. That’s normal behaviour. However, don’t forget to invest for your future. In a way, the bonus is like a small booster, giving you a push to reach your financial goals as fast as possible.
A life insurance policy is a need of the hour in today’s day and age. It provides financial coverage against unforeseen circumstances. By opting for such a policy, you gain peace of mind by knowing that you are financially secured at all times. A life insurance plan is, therefore, an important part of one’s financial planning.
Understanding term plans
Out of the types of life insurance policies available in the market, a term insurance plan is one of the most popular options. It is a pure protection plan that offers financial coverage in the unfortunate event of death during the term of the policy. The insured’s loved ones are then entitled to receive the death benefit amount, which may be used to meet their financial obligations. This may include meeting daily lifestyle expenses, repaying an existing loan, or paying for funeral expenses, among others.
Process of claiming a death benefit
Many individuals believe that the term insurance claim settlement process is lengthy and cumbersome. However, this is not true. Most insurance providers have simplified the process, thus making it easy for nominees to make a claim. This not only minimizes trouble for your loved ones but also ensures in settling the amount in the least possible time.
You may follow the below-mentioned systematic process for filing a claim.
1. Notify the insurance provider
The first and the most important step in making a term policy claim is by intimating the insurance provider about the death of the policyholder. Different insurance companies will have their own pre-set procedure for making a claim. Most insurers, however, require a claim intimation to be sent through e-mail as it acts as a proof in case of any issues during the claim.
2. Fill the claim form
The next step is filling the claim form. You may download the form from the insurer’s web portal or may visit your local branch and request for a physical copy. There are numerous types of forms, based on the nature of death. These include natural or accidental death claim forms, accidental disability claim forms, and critical illness claim forms, among others.
3. Submit the necessary documents
Based on the terms and conditions of the term plan, deaths may be classified into early and non-early deaths. The documents to be submitted vary according to the type of death. You may, therefore, check the comprehensive list of documents, which need to be submitted in either type of death.
In case of an early death, general documents to be submitted include hospital statement about the type of medical condition, certificate of cremation, and certificate from the employer. In an event of non-early death, documents to be submitted include death certificate from the Municipal Corporation, age proof, original policy documents, discharge papers attested by the claimant, identity proof of the claimant, and medical statements ascertaining the cause of death. In case of unnatural deaths, the claimant needs to submit the post-mortem report and the First Information Report (FIR) from the police.
Upon submission of all the required documents, the insurance company will verify the same. In case of any further requirements or clarifications, the insurance provider may contact the claimant. Once the documents are successfully verified, the insurance provider then settles the sum assured amount subject to other terms and conditions of the policy being fulfilled.
In the unfortunate event of death, the policyholder’s loved ones may, therefore, receive the sum assured amount without any constraints. They must, however, be made aware of the claim settlement process well in advance.
Banks have reintroduced the concept of ’Minimum Account Balance’ (MAB). Ensuring this amount is maintained is important to avoid paying penalties.
Earlier several banks often required you to maintain higher minimum balance in your account. However, financial institutions now have reduced this amount and often have different requirements for metro and rural areas.
It is crucial you maintain this balance in your account to ensure you do not pay any penalty. Some banks may need a lower MAB while others may require a higher MAB. You need to be aware of the amount to ensure you are not penalized for non-maintenance of the minimum balance.
Because non-maintenance entails a penalty, it is important you need to know how it is calculated. Here is how the minimum account balance is calculated.
Calculation of MAB
Assume that you live in a metro city and your bank requires you to maintain INR 5,000 as the minimum balance in the savings account. Here is the calculation of the monthly MAB for the month of January 2018.
The balance for the first 11 days (January 1 to January 12) is 8,000*11= INR 88,000
The balance between January 12 and January 18 is 2,000*6 = INR 12,000
The balance for the period from (January 19 – January 31) is 20,000*12 = INR 2.4 lakh
The total is INR 3.4 lakh (88,000+12,000+240,000)
The average for the 31 days during the month of January is INR 10,968 (340,000/31)
Because the average monthly balance is more than the required amount of INR 5,000, you will not be penalized for non-maintenance. You need to remember that the number of days is based on the day’s closing balance.
No minimum balance accounts
You may not be able to maintain the minimum balance requirement. In such instances, it is advisable that you open an account that does not have any MAB requirement. According to the Reserve Bank of India (RBI) norms, every bank must offer such accounts for individuals who want to avail of one.
You may choose a Basic Savings Bank Deposit Account (BSBDA).These accounts do not have any MAB requirement. Moreover, a BSBDA has no minimum amount requirement aspect at the time of opening the account. You may use it as the secondary account to maintain your regular saving account in an efficient way.
The rate of interest on the BSBDA is the same as the regular account. Additionally, there are no limitations on withdrawals and deposits to the BSBDA. RBI also does not levy any transaction limits on such accounts. However, there is some limitation on the number of transactions. Therefore, you need to know the terms and conditions before you opt for a BSBDA.
You may hold more than one account and meeting the MAB requirement on all may be difficult. Therefore, you must consider one primary account and an additional BSBDA for limited transactions.
Individuals often believe that they do not need a mediclaim cover when they are in the pink of health. However, a medical condition or a disease may be contracted at any given time, resulting in huge out-of-pocket expenses. Therefore, it is necessary to seek coverage to remain financially protected at all times. By doing so, you may focus on receiving quality treatment without any financial burden.
There are numerous aspects to keep in mind while choosing from among various health insurance plans such as premium cost, offered features, co-pay amount, and co-insurance, among others. One of the most important aspects to take into consideration is whether your insurance provider will offer you coverage for pre-existing diseases.
Understanding pre-existing diseases
As the name suggests, a pre-existing disease is one that exists before purchasing a mediclaim cover. This may include any health issue such as asthma, diabetes, high cholesterol, and high blood pressure, among others.
You may note that some health insurance providers are reluctant to offer coverage to those with pre-existing diseases. Such individuals are in greater need of medical assistance. They, therefore, are considered as high-risk individuals, who tend to increase the liability of the insurance provider.
The good news, however, is that some insurers do offer health insurance plans to those with pre-existing diseases. Some even provide services of wellness coaches to help you combat the disease. They guide you on a path to better health by offering suggestions that fit your lifestyle. Besides, such plans also provide cover for numerous medical expenses such as diagnostic tests, pharmacy costs, and medical consultation expenses, among others.
You may keep the following four points in mind while buying health insurance plans against pre-existing conditions.
1. Difference in insurance plans
Various insurers have their own eligibility criteria while deciding whether or not to provide coverage to individuals suffering from pre-existing conditions. While some health insurers take into consideration an individual’s entire medical history, some only take the past few years into account. You may, therefore, do your research and request medical insurance quotes from those insurers offering health coverage for pre-existing illnesses.
2. Nature of the disease
Insurance providers often look out for diseases that are chronic in nature, i.e. those which have a long-term effect. Hence, minor conditions like cold, fever, and cough are not considered as pre-existing illnesses as they do not have major side effects.
3. Failure to disclose a pre-existing condition
Many individuals fail to disclose the nature of their ailment to the insurance provider at the time of purchase of the policy. It is important to note that insurance providers may reject the insurance claim if you require treatment for such a condition.
4. Waiting period
While some insurance providers may offer insurance for those with pre-existing diseases, it comes with a certain waiting period. This is the timeframe that you must wait for before beginning to enjoy the benefits of the insurance policy. While some insurance providers have a waiting period of four years, some have a period of 30/90 days from the start of the policy date. You may, therefore, identify such insurers and opt for those health insurance plans that offer the lowest waiting period.
In case you suffer from any pre-existing medical condition, fret not. With numerous insurance providers offering coverage towards the same, you may choose from a plethora of options. You may either visit your nearest branch or buy health insurance online. By doing so, you may enjoy financial security and remain protected at all times.
With exams around the corner, it is likely that you are worried about your child’s preparation. You disapprove of the last-minute studying and even admonish your child for starting to prepare in the last minute. But before you lecture your child for not having studied throughout the year, ask yourself whether you are responsible for such behavior? Is it possible that your child is learning to procrastinate from you? For instance, can you honestly say that your financial planning or planning for long-term goals such as retirement is on track? You may have dilly-dallied similarly, a habit that may have derailed or delayed your financial planning. So, why just berate your child and instead look to set an example.
The cost of delay in investing
As youngsters, most people think that we do not earn enough to save. According to anecdotal evidence stated by financial planners, most salaried individuals do not consider investing for retirement in the first five years of their career. The numbers don’t improve later either. In fact, a Reserve Bank of India (RBI) household survey found that less than a quarter of our population planned for retirement in 2016.
This can prove to be a big mistake in your later years. A lot of people realize that they should have started their retirement planning when they were young and had few responsibilities.
Let’s understand this with a hypothetical example. Ajay begins an SIP of Rs 5,000 in an equity fund at the age of 25. Assuming that the scheme delivers returns of 12% annually, Ajay would accumulate Rs 1.77 crore over a period of 30 years. However, if he delays his investment till he turns 28, his corpus by the end of 30 years would reduce to Rs 1.21 crore. Even if he enhances his savings by 10% each year, he will not be able to make up for the notional loss he incurs at the beginning of his career. This example is proof of the fact that what you invest in the first ten years of your career will account for nearly 25% of your retirement corpus.
Impact of delay in tax planning
Now let’s get to another aspect of financial planning: tax planning. Has your kid seen you breaking out into a sweat at the fag end of a financial year trying to collect investment proofs to deduct your taxable income? Does he or she often witness you making frantic phone calls to make last-minute investments? If so, you are indeed setting a poor example!
Last-minute investments can be risky
Delay in tax planning can cost you dearly as well. For instance, you can make a last-minute investment in an equity-linked savings scheme (ELSS) to get tax deductions up to Rs 1.5 lakh under Section 80C. In such a scenario, you will have to make an investment in a lump sum. But investing a lump sum amount can backfire. That’s because if you make a hurried investment in a month where the markets are volatile or on an uncertain trajectory, there are chances of you losing money.
On the other hand, if you choose to make periodic investments in an ELSS through the systematic investment plan (SIP) route, you stand to benefit on two counts.
Firstly, you average out your costs by buying lesser units when markets are high and a larger number of units when markets are low. This will help you weather the risks of volatility.
Secondly, an ELSS investment can help you meet long-term financial goals such as higher education of your children or building a retirement corpus. This is because ELSS helps in wealth creation and tax saving.
The same holds true if you buy an insurance plan towards the end of the financial year. While it is a good idea to augment one’s insurance cover, a last-minute investment just to save taxes may not work out. It’s always better to take time and research before you fortify your health cover. It’s also ideal to integrate tax planning with your financial plan at the beginning of a financial year to avoid exposure to unnecessary risks.
Lead by example
So, if you want your child to be proactive and not reactive, maybe it’s time to relook your financial behavior and set the right example by not procrastinating. By making timely financial planning decisions, you can not only gain control of your financial future but also impart a lesson or two to your child.
As you begin trading in futures, there are some know-hows you must take care of. Talking about those considerations one by one, let us begin with selecting a broker.
Select a broker or brokerage firm: To trade futures, you need to create an account with a brokerage firm. Your broker must grant you the access to all the futures. You can also select a broker that specializes in the futures trading. To select your broker, the things to know are his commission rates, margin, trades he handles, service provided, customer service, etc. It is your choice to go for a full-service broker or a discount broker. A full-service broker will provide you an expansive service and advice and may charge a higher fee, whereas a discount broker will ask you to do most of the things and will obviously charge lesser.
Type of Futures Market: Almost all the futures contracts are same, but you should be aware of the broad groupings. The main categories of futures contracts are:
• Equity Index
• Interest Rates
• Currency, etc.
You can choose what to trade. You may also continue with what you were doing before. Like if you are habitual in trading in stocks, you can do futures trading in equity indexes.
The type of Trade: A novice can begin trading with the buying and selling a futures contract. If you have a long-term vision, you start expecting to earn profits from the market. The losses ate limited because the price cannot go lower than the $0 even if the trade does not favor you.
Trading short is also active trading as it permits you to get the benefit of both the rising and the falling markets. You can also go for spread trading. With this kind of trading, you can enter a long and short position in the futures contracts simultaneously. This way you can get profit from the price difference between the two. You can also hedge against the risk this way. Another strategy of you is hedging. Here you can sell a futures contract to balance your position in the cash market.
Trading Nifty50 Futures: The advantage of trading futures is that the traders have access to any major stock index or currency in the futures markets. NIFTY50 futures provides a variety of options. Since India stands as a leading and an emerging market, the NIFTY50 futures contracts have become a fabulous trading instrument. Before you start trading the NIFTY50 futures markets, you must know these things:
• The NIFTY50 index is a leading stock market index for the Indian equity markets on NSE. Until 2013, it was known as S&P CNX Nifty Index.
• The NIFTY50 futures contract is priced in dollars, while the NIFTY50 index is priced in rupees.
• Trading on the NIFTY50 futures is similar to the trading hours from Monday to Friday. The timing is from 4pm of the previous day will 5pm on the present day. • It has a low trading volume and low trading hours.
Initial Public Offering is open to the public when a company sells its shares first time on the exchange. The stocks are bought by the investors and public. Then, they become the shareholders in the company. The investors and people invest in an upcoming IPO because they are able to buy the stock when it is underpriced and they don’t pay for the brokerages also. Forthcoming IPO stocks IPO stocks to keep watch for are:
Barbeque Nation Hospitality IPO: Heard of the most famous live Barbeque hotel chain? It is one of the most successful ventures in India. It is coming for a fresh issue and an offer to sell (OFS). The size of the issue is being approximated as more than 6500 Cr. Though the issue price is yet to be disclosed, this is the IPO worth watching. Their latest prospectus and financial performance are yet to arrive. This IPO can come anytime in December or next year. As per the Securities and Exchange Board of India, it is kept in abeyance pending the regulatory actions for the past violations. IIFL Holdings is the Book running leading manager (BRLM) for this IPO.
Reliance General Insurance IPO: This non-life insurance company is a part of Reliance capital. This company had filed for an IPO ion 10th Oct’17. It is coming for a fresh issue and an offer to sell (OFS). The size of the issue and the exact issue price is yet to be disclosed. This IPO will get listed on the Bombay Stock Exchange or National Stock Exchange. Their latest update on prospectus and financial data is yet to come. This IPO can come anytime in December. Motilal Oswal is the Book running leading manager (BRLM) for this IPO.
Hindustan Aeronautics: This IPO is coming for a fresh issue and an offer to sell (OFS). The size of the issue and the exact issue price is not known. This IPO can come anytime in December. SBI Capital is the Book running leading manager (BRLM) for this IPO.
Amber Enterprises: Amber IPO is coming for a fresh issue and an offer to sell (OFS). The size of the issue and the exact issue price is not updated as yet. Edelweiss Financial is the Book running leading manager (BRLM) for this IPO.
Gandhar Oil Refinery: Its IPO is coming for a fresh issue and an offer to sell (OFS). The size of the issue and the exact issue price is not updated as yet. This IPO will get listed on the Bombay Stock Exchange or the National Stock Exchange. This IPO can come anytime in December. SBI Capital is the Book running leading manager (BRLM) for this IPO.
Lemon Tree Hotels: Its IPO is coming for a fresh issue and an offer to sell (OFS). This IPO will get listed on the Bombay Stock Exchange or the National Stock Exchange. This IPO can come anytime in December. Kotak Capital is the Book running leading manager (BRLM) for this IPO.
How to invest in stock market? How to get started? These questions can be rather scary for you, isn’t it? How much money you should put in stocks, stocks to buy today, which mistakes to avoid, etc. must be kept in mind. Here are a few pointers to help you invest in stock market and decide which stock to buy.
A beginning investor should ideally not start with the individual stocks. Buying a single stock is kind of riskier than buying a mutual fund that has a large group of stocks. But, if you already have a diversified portfolio of mutual funds and equity funds then you can have a few individual stocks because individual stocks may give you better returns. Also, if you build your portfolio by collecting stocks on your own, you will save a lot of money as you don’t have to pay to a fund manager.
How much to invest?
There is no fixed amount, but you can invest more when you are young and if you are close to your retirement, you should reduce your risk to ensure not to play with your capital. Take your age, subtract it from 110, and the percentage that comes should be what is invested in the stocks. Do know your appetite for risk.
How many different stocks to buy?
For investing in stocks, buy at least 15 different stocks in different industries to have a diversified portfolio. If you are a beginner, start with a lesser number of stocks.
How to choose a stock?
Start with a company that you are aware of, because at times a lot of investors buy stocks without understanding how these companies make money, and in such cases, they may have losses
Consider price and valuation. Investors often buy stocks that are cheap or lesser in value. But cheap is not always good, and expensive is not always bad. This is measured by the stock’s price-to-earnings ratio or P/E. P/E below about 15 is cheap and a P/E above 20 is expensive.
Compare a company’s P/E to other companies in the same industry. This will help you notice if it is cheaper or is more expensive than its peers.
Measure the financial health of the company. Study the company’s financial reports. The public companies release their quarterly and annual reports. Do go through the Investor Relations section of their portal.
Find out the revenue growth. In the long run, the stock prices increase when companies are making more money. This translates into growing revenue.
Check the company’s profit margin. A company that has a growing revenue and also has a reduced cost, will also have expanding margins.
Does the company have debt? Do know the company’s balance sheet. The stock price of a company having more debt will be more volatile.
Find a dividend or a cash payout to stock investors. It may not be a regular income for you, but a guarantee of good health of the company.