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 ...
Read More

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 ...
Read More

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 ...
Read More

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, ...
Read More

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 ...
Read More

We take a look at common investing errors and suggest solutions to ensure you make better investment decisions. As emotional human beings, we tend to be our own worst enemy when it comes to making investment decisions. Below are 5 common ways in which investors slip up, and suggestions on how best to avoid these mistakes. 1. Letting anxiety rule your head Back in 2007 you might have been feeling nervous about the stock market, with equities at all-time highs, and pondering whether it might be time to offload some holdings. In 2008, you may have found yourself thinking that markets couldn’t go much lower and it was time to plunge your money back into equities. The chances, however, that you actually managed to accurately pick—and act on—these two turning points are very slim. Furthermore, miscalculating these points could have had a seriously detrimental impact on the value of your ...
Read More

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 ...
Read More

If you are an avid reader of our articles, you may have realized that we often emphasize on maintaining proper asset allocation. You see, building an investment portfolio through optimal asset allocation is imperative while you endeavour to achieve your financial goals.. So in this article we thought of explaining you in detail about asset allocation citing the benefits it offers to you as investors. What is Asset Allocation? As the name implies, asset allocation refers to distributing your investible money across asset classes such as equity, debt, gold, real estate or even holding cash for that matter. So by allocating assets, you are essentially adopting an investment strategy which can balance your portfolio’s risk and reward keeping in mind your risk profile, your financial goals, and your investment time horizon. The below chart shows you an example of optimal asset allocation:- What are the benefits of proper Asset Allocation? ...
Read More

Continuing with our information regarding Debt Mutual Funds, in this edition, we give out the various types of debt funds and how are they suitable for you. ______________________________________________________ So, which mutual fund schemes invest in debt? Well, the following schemes are pure debt schemes (that is, they invest only in debt securities):- Money Market Funds: These funds invest in very short term debt securities and are suitable for parking your money which you have kept aside for your emergency needs. Flexible Income Funds: Also known as floating rate funds, these invest in debt securities that do not have a fixed coupon rate (that is, interest rate payable on the face value of the security). The rate varies periodically with the movement of a specified benchmark interest rate. If you prefer lesser interest rate risk and are satisfied with the current interest rates prevailing in the market, these funds are suitable ...
Read More

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 ...
Read More