Cryptocurrency, Blockchain, and Artificial Intelligence (AI) are changing the world. Should the Cryptos be in your portfolio?

In the current era of digitalization, cryptocurrencies, blockchains and artificial intelligence have been a hot topic. Blockchain technology has taken over the FinTech business. This new innovative technology is best recognized for powering cryptocurrencies, which have recently received a lot of media attention. They are changing the world rapidly and Cryptocurrency slowly seems to be becoming a more mainstream investment.

Cryptocurrencies, almost known as Bitcoin, the biggest one of them all, have delivered fantabulous returns at times and many are willing to invest in it because investing in crypto seems to be an easy road to success.

But sample this:
Bitcoin price was Rs 45.24 Lakhs in April 2021, Rs 23.53 Lakhs in Jul 2021, Rs 36.45 Lakhs on Aug 2021, then Rs 45.66 Lakhs in Nov 2021, Rs 32.01 Lakhs in Jan 2022 and is somewhere around Rs 29 Lakhs today (16 Mar 2022). Also see the chart below of past 15 months (given in USD):-

Now the question: should you invest? If yes, how much?
If you’re thinking of investing, consider this:

  • Be very sure that you’re comfortable with the above volatility – nobody has any idea what more is in store!
  • As of now, cryptos have no underlying security. They are not pegged to any Central Bank’s currency, any commodity like Gold or anything else. So, it is the buyers’ and sellers’ collective perceptions and global events that make it move.
  • Nobody issues them but a distributed faceless computer network.
  • There is no regulation on them and you have nobody to go to if you lose any of these online coins – no legal or regulatory safeguards.
  • There’s a possibility you could make outsized gains the likes of which you’ve never imagined, and an equal possibility that you could lose 100% of your money.

If you’re ok with the above, please go ahead with a tiny amount of your surplus money and watch the adrenaline flow as the crypto yo-yos.

Which one to buy, we would root only for the big one – Bitcoin (BTC), and maybe Ethereum (ETH) for now.

(Contributed by Manish, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

What is the surprise gift you’ve planned this Holi for your loved ones?

Will your gift this time be a designer bag, Amazon Alexa device, a vacation voucher, staider saree or bedsheet, or something on similar lines. What will happen to the gift after some time? A vacation will be forgotten, bag or saree will become old, Alexa device will get overtaken by technology, and more.

Want to give something which will stay with them for much longer time – maybe years – and actually help them in times of need?

Consider a financial gift then.

If they do not have a mutual fund portfolio, start one with just Rs 5000 in a fund or put in the first SIP of a few thousands which she/he can carry on later. This could be for your sister, brother, son, daughter or anybody else you care for. The power of compounding will create a big corpus in the long term for them which will help them fulfil their dreams, goals or maybe even finance their education or their children’s.

How about gifting one year premium of a health insurance or even a Term life insurance?
Medical insurance can help them meet the expenses in case of any kind of medical uncertainty like an ailment, an accident or any other health-related issue. Life insurance might sound a bit odd because of the underlying theme but then, it could be taken as a very pragmatic gift if the loved one doesn’t have a life insurance and actually needs it.

What are these unconventional gifts conveying?

Apart from being unconventional, they also convey your deep understanding and care for them. Also, once you gift one instalment to them, there are very fair chances they will continue further with it and it may contribute to their lifetime financial security. Such an action will get them on to a path of financial awareness and freedom in a much better way than just reminding them to do it on their own.

So, if you are planning to gift something, then surprise them with a lifelong gift that can give support and security to their life.

It is probably the best way to show how much you care. तोहफा ऐसा दो जो उनके ज़िन्दगी भर काम आये

(Contributed by Devanshu Anand, Associate Financial Planner, Team Prithvi, Hum Fauji Initiatives)

Important aspects of Health Insurance cover for you

The current pandemic has made everyone realize the importance of health insurance. People have started to understand why it is an important and cost-effective way of protecting your finances from eroding since a medical emergency has the potential to wipe out a major, or sometimes even all, of one’s life-long earnings. Health insurance coverage for yourself and your family helps beat medical treatment inflation. Of course, all this may not apply to you if you have employer-provided health insurance for life like ECHS but it’ll surely apply to all others who are part of your family and not dependent on you.

Mainly, health insurance is divided into two categories:
– Indemnity Plans
– Defined-Benefit Plan

Indemnity Plans are the traditional plans, which we actually know as Medical or Health Insurance, that cover your hospitalization and treatment expenses up to the sum insured including Individual Coverage, Family Floater Coverage, Senior Citizen Coverage, and Unit Linked Health Plans.

On the other hand, Defined-Benefit plans not only cover your hospitalization bills up to the sum insured but also cover pre-and post-hospitalization expenses insured and listed day care procedures. It extends coverage against medical expenses incurred owing to accidents, illness, or injury. These plans include the Critical Illness Plan, Personal Accident Plan, etc. These are the products even others like the ECHS and CGHS beneficiaries need.

Buying health insurance at an early stage comes with many benefits:

  • Health insurance needs to be taken when one is healthy and not when one has medical problems. The premium will be lower and medical security starts since a medical emergency can strike anytime irrespective of the age.
  • Most of the health policies have a ‘waiting period’ for specified and laid down diseases and such waiting period could range from a few months to even four years. When one takes a health policy early, this period gets over within the healthy youth period itself, covering you better in your later life.

(Contributed by Prateek Rediwal, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

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