Investment Advice for Defence Personnel

Life Insurance Corporation of India (LIC) is aggressively marketing its insurance policy, LIC Bima Diamond Plan, as a ‘Diamond for Life’. Let’s see if this ‘Diamond’ is worth your money? LIC Bima Diamond Plan is a typical non-linked, with-profit, limited premium payment money-back life insurance plan. Non-linked means it is not ULIP or your money will not be linked to equity market movements. With-profit means, it is like investment product where you get returns on your investment based on the product feature. Money back means at a different interval of the policy term, you will receive some money from this policy. Highlights of the policy It is a fixed tenure insurance policy. There are three tenure options - 16 years, 20 years and 24 years. The premium paying term is less than the tenure of the policy e. g. for a 16-year policy you have to pay only for 12 years.Money-Back (Survival Benefits)every 4th year. The premium rate ...

Col Sher Khan is a go-getter infantry officer, known for his professional acumen and is a sought-after party animal. He and his family live life to the full. His only Achilles Heel is finance. He routinely has a large amount – anything from Rs 75,000 to even 2-3 Lakhs lying in his savings bank account at any given time, earning 4% savings bank interest. And just because it was lying there, unimportant expenditures would come up and suddenly become urgent and the most important ones to be done then and there. He was fully aware that bank interest is fully taxable and he being in 30% bracket, it practically earned him a mere 4% - (30% of 4%) = 4% - 1.2% = 2.8% interest. He wanted to do something about it but didn’t know what and how. That’s the time he got introduced to Liquid Funds by a friend ...

Stock Markets have been unrelenting for the past one year and, it has only intensified in Jan 2016. Most of the retail investors have not understood the reason why it is so – Acche Din to Aane Wale The! They’re told that China is slowing down, so the world is slowing down. But the US of A, the world’s largest economy, is on an acknowledged growth path now. They’re told that Oil prices drop is affecting the world growth. But cheap oil results in India saving about 60-70 Billion USD a year – how can that be bad for us? Same is the case with other commodity price drops the world over. They’re told that Govt’s policies have not delivered and the economy is not doing well. But everybody can see that the structural reforms being undertaken will cure the ills of past so many decades. It all becomes very ...

Divesh Kumar has recently retired as a contended man. He hasfulfilled his duties as a devoted father, caring son and loving husband all his life. He now wants to gift something long lasting for his two lovely grandchildren which he and his wife fondly dote on. They both decided to contribute for higher studies for them by contributing some money every month. Their first impulse was to save in a bank Recurring Deposit (RD) but wanted their decision to be validated by us. We heard them out and asked them, “Have you thought of mutual funds for this purpose?” They never had thought so. We explained to them that they had a long time frame for their gift. The gift should actually work for the recipients to create value as they have planned and not be lost to inflation and taxes. In case of any emergent requirement some time later, ...

In a country where event managers are paid for organising weddings and nutritionists are paid for making diet plans, financial advisors struggle to make a case for earning a fee. Only a small segment has managed to break through the resistance. Investors continue to save, invest, and borrow without any framework or process in place and assume they can manage their money. Why does one need a financial advisor at all? There was a time when getting a job meant meeting "commitments." There were siblings who needed college education; there were marriage expenses; and, there were elderly parents to take care of. Today, a young earner begins financial life on a firm footing - a regular surplus income. He acquires a bank account and a debit card with the job. By the end of his first year of earning, he has bought some tax saving products and applied for loans ...

Investing is an essential aspect of financial planning and wealth-building. However, many individuals fall prey to common investment mistakes that can hinder their long-term financial success. As a financial advisor, it is crucial to educate clients about these pitfalls and guide them toward making informed investment decisions. Here are some common investment mistakes and strategies to avoid them: 1. Lack of Proper Research: One of the most significant mistakes investors make is jumping into investments without conducting thorough research. It is vital to understand the investment product, assess its potential risks and returns, and evaluate how it aligns with your financial goals. Conducting due diligence, reading prospectuses, and seeking professional advice can help make more informed investment choices. 2. Emotional Decision-Making: Allowing emotions to drive investment decisions can lead to poor outcomes. Fear and greed often push investors to make impulsive decisions, such as panic selling during market downturns or ...

Indians have always considered Gold as a safer option to invest vis-a-vis other investment opportunities like equities, fixed income, real estate etc. Gold’s ability to act as a hedge in times of financial emergencies is one of the main reasons for the yellow metal to find a favour with Indians. Gold is also believed to be auspicious and in addition to this has proved to be a prudent investment option for a long time now. In the last few years, we have been seeing a trend wherein young and savvy investors are looking at gold as more of an investment instrument rather than a commodity to be passed onto posterity. Hence, they prefer to invest their surplus into gold via instruments which are hassle-free and are more viable than investing in physical Gold. The mutual fund industry offers multiple alternatives to physical gold if investors wish to take an exposure ...

Introduction: When it comes to achieving long-term financial success, asset allocation plays a crucial role. The concept of asset allocation entails a deliberate and tactical allocation of investments among diverse asset classes, encompassing stocks, bonds, real estate, and cash equivalents. This approach aims to balance risk and reward, optimize returns, and protect against market volatility. In this article, we will explore the importance of asset allocation and provide data to support its effectiveness. Diversification and Risk Management: Asset allocation allows you to diversify your investments across various asset classes and sectors. Diversifying your investments effectively lessens the influence of an individual investment's performance on the overall performance of your portfolio. This diversification helps mitigate risk and protect against potential losses. Studies have shown that asset allocation, specifically diversification across asset classes, can reduce portfolio volatility and improve risk-adjusted returns over the long term. Data: A study conducted by Brinson, Hood, ...

Debt funds invest exclusively in fixed-income instruments securities like bonds, debentures, Government securities, and money market instruments such as certificates of deposit (CD), commercial paper (CP), and call money. Here are the different types of debt funds in India: Government Securities (G-Sec) Funds: Invest in government-issued securities such as treasury bills and bonds. These funds carry low credit risk but are sensitive to interest rate movements. Corporate Bond Funds: Primarily invest in corporate bonds issued by companies. The risk and returns vary based on the creditworthiness of the issuing companies. Money Market Funds: Invest in short-term debt instruments such as treasury bills, commercial papers, and certificates of deposit. These funds aim for capital preservation and provide high liquidity. Short-term Funds: Invest in fixed-income securities with a short maturity period, typically less than 1-3 years. These funds aim for stable returns with relatively low-interest rate risk. Medium-term Funds: Invest in fixed-income ...

What does debt investing mean? I understand ‘debt’ to be money borrowed. But I want to invest! When you lend your money to a bank (by putting your money into your savings bank account or making a bank deposit) or to a company (by investing in a company deposit) or to the government (by investing in bonds offered by state institutions such as IRDA – Insurance Regulatory And Development Authority & SIDBI - Small Industries Development Bank of India, etc. or making your Public Provident Fund (PPF) deposits or by investing in post office schemes), you are making ‘debt’ investments. While for you it actually means saving or investing money, for the borrowing entity (the bank, the company, the government, etc.), it means borrowing money. Debt investing – through Mutual Funds! But I thought Mutual Funds only invest in equity? Mutual funds are actually money managers. They offer different schemes ...