Important lessons in Investing

Investing is all about financial management, valuations, and managing oneself. Identifying the DNA of an asset class is the key to successful investing. Following lessons in investing are very important and needs to be learned as early as possible in our investment journey:

– Growth is good, but not at any cost: No business can create long-term value if there is no growth. The same happens with asset classes. Also note that not every growth is healthy growth. If a fund is showing high returns for short periods, it could be toxic and destroy the actual value of the fund.

– Cutting the noise and being patient: If any quality fund is going through a temporary setback, it could be a good time to invest, especially if the setback has no bearing on the real value of the fund. So, to generate long-term outperformance, filter the noise and remain focused all through.

– Digesting success: We should accept the hard reality that outcomes are not in our control. What is under our control is our process, inputs, fund selection, and our own behavior, which go a long way towards achieving the desired outcome.

– Invest in quality assets: Invest is assets that can generate superior returns on capital invested over sustainable periods of time. This leads to compounding of value of the earnings themselves. A high quality portfolio would separate you from the rest of the crowd during any drawdown and crisis.

– Managing own-self is extremely important: One should strive for awareness and serenity in markets as well as in life. Spiritual anchoring is essential for successful investing. The market intoxicates us with success but also drains us with failures. Meditating for 15–30 minutes a day can help maintain a balance in both areas.

Always Remember: “Growth is the horse and valuation is the cart, and not the other way around.”

(Contributed by Priya Goel, Financial Planner, Team Sukhoi Hum Fauji Initiatives)

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Why is a financial plan important for you?

A lot of people believe that saving regularly in banks or investing in the financial markets does the job of financial planning, but in reality, an investment without goals is directionless. It’s like going on a road without a destination in mind.

A financial plan constructs a road map to achieve all the financial goals after aligning the investments with your goals. It helps to build a contingency fund for any unforeseen needs that may arise. It gives you a better picture of your current and future financial needs.

A proper financial plan makes your life easier in the following ways:

– Where to invest and how much to invest: A financial plan lets you know how much to invest and in which instrument, to reach your financial goals by taking minimum risks as per your risk-taking capacity and aptitude.

– Budget Management: It assists you in managing your inflows and outflows in the best way in order to achieve your goals. It helps you cut-out unnecessary expenses and gives you a firm grip on your financial situation.

– A Blueprint for Your Long-Term Goals: It prepares a roadmap for your goals and guides you in choosing the right investment avenue. Additionally, it protects you from making impulsive investments and ineffective tax planning decisions.

– Better Preparation for Retirement: We can’t prepare for everything, but we can always prepare for most of them. Setting the right asset allocation based on your goals prepares you for a stress-free life – before and after retirement.

Many of you might not have the time and expertise to plan and execute your own financial plan. Hence, it would be prudent to seek the advice of an experienced financial planner who can help you in building a proper financial plan so that your finances can be managed in a better way.

Remember, financial plan and financial nirvana are synonyms.

(Contributed by Yogesh Gola, Associate Financial Planner, Team Vikrant, Hum Fauji Initiatives)

Why do Health Insurance Claims get rejected?

The main reasons that most people purchase a health insurance policy are for financial security and peace of mind during medical emergencies.

But, after going through a stressful medical procedure or recovering from an illness, it would be a nightmare to have the health insurance claim rejected. In order to keep yourself secure from the above fiasco, keep the below aspects in mind:

– Wrong information: Any discrepancy, even a sincere mistake, while filling out the form, like a spelling mistake or a deliberate attempt to hide information like annual income, lifestyle and family health details may lead to not just rejection of the claim but even termination of the policy.

– Pre-existing Illness: Policyholders sometimes buy insurance keeping future treatment in mind but forget that pre-existing ailments may not be covered. An attempt to hide the past medical details can be the reason for future claims rejection. Most insurance companies do not cover pre-existing diseases such as high blood pressure, and hence, any medical expenses incurred due to that will not be covered.

– Not knowing the exclusions: Policyholders often miss out on reading the terms and conditions that state that an injury caused while being drunk or doing adventure sports will not be covered. Similarly, no claim can be made until at least 30 days have passed since the policy’s inception date. So, know the exclusions clearly before going ahead with a policy.

– Policy lapse: There have also been cases of people taking a week or even a month’s time before renewing their insurance, falling ill during that phase and then denied a claim. That’s why it’s important to renew the policy well before the deadline.

– ‘Bonus Tip’ – Don’t forget the PRR: At the time of making claims, always remember the PRR principle – Prescription, Receipts, and Reports. Always ask the doctor to give you a prescription for each test, surgery, and medication followed by receipts of payment and reports of the ailment.

(Contributed by Sweta Kumari, Associate Financial Planner, Team Arjun, Hum Fauji Initiatives)

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