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Why don’t Insurance Companies accept proposals from those who have adverse health history (or) very old people? Insurance is nothing but pooling of risks: Let us understand this with an example. ·        100 healthy (Normal) people take up insurance policies for each 1 lakh cover. Assuming the total claim amount in the year is 10 lakhs (with 10 people claiming 1 lakh each), Premium payable will be around 10,000/- per person in this case. Now if high risk people enter this group (say 10 of them), the probability of claims will go up . Assuming 5 out of these 10, claim 1 lakh each, then total claims amount now will 15 lakhs in the group of 110 people. The premium payable in this case will become 13,656/-. per person . Due to such premium increase, healthy individuals will tend to opt out of insurance leaving the group with more & more riskier people and the premium will only increase, which the high-risk group would continue to pay. This would ...

Health Insurance plan comes up with list of waiting periods & exclusions – it is important we understand what is NOT COVERED in the health insurance, than what is covered.  These exclusions & waiting periods are almost common across all the companies in India . Following are the generic 2 types of exclusions that any health insurance policy: 1)   2-year Exclusions / Waiting Periods: Certain diseases / Treatments are not covered for the first 2 years of taking up the policy. These are typically not life-threatening ones. Ex. Cataract, Piles, Hernia, Varicose veins, Sinusitis, ENT related, etc. The reason for not covering up these in the initial 2 years is because one should not opt for health insurance just only to take up treatment of these diseases, that is having this existing condition & hence taking up a policy for the treatment – “Insurance is always for the unforeseen & not for what is already present”.  2)   Permanent Exclusions : These a...

 Steps to apply for Equity IPO via NJ ewealth mobile APP:   Download "NJ E-Wealth Account" Mobile APP & "NJ E-Wealth CM" Mobile APP Login to "NJ E-Wealth Account" mobile APP (you can create personalized login name from Menu > Settings > Create Personalized Login). Use reset password, if you don't remember the password.  Once logged in, Transact > Public Offer > Equity IPOs Scroll Down to the desired IPO to purchase & click on Apply You can specify the Quantity of shares to purchase <Retail Investors can apply for a maximum amount of 2 lakhs> If need be, you can specify the price for which you want to place the bid - if not checked, the upper price band of the offer will be considered.  Click on Submit - the application is submitted.  Once the shares are allotted, the debit request will come up from your bank, which has to be approved.  From the date of listing, it will take 2 working days for the shares to get reflected in you...

Recently, when we were analyzing our business data, we saw that around 10% of our Clients have reached / about to touch 1 crore+ in mutual funds portfolio alone .  Achieving the first 1 crore is the most difficult thing - but once 1 crore is reached, the next 1 crore is going to come up in less than half the time & time for further crores gets further reduced.   Hearty congratulations to all of them 👏 Agreed, all of their disposable income was high , which has helped them achieve 1 crore+, but there were some common traits among these people (if not all, majority shared these below traits) - Conclusion was if we could control what is in our hands, we are sure to reach the goals than focusing at things which are out of our control .  Their Savings rate was higher They didn't bother about market up & downs much - they invested & stayed for long-term They didn't keep withdrawing in between (had separate bucket for short term needs) They didn't chase perfor...

You may have group health insurance cover with your employer already - That is good as it provides the below benefits already:  There is no 2-year waiting period for certain treatments & for pre-existing diseases.  Your parents may be covered in the same plan where the above is covered too.  But having a separate insurance apart from group insurance is absolutely necessary for the below reasons - We have experienced the below situations, where in the client was hospitalized but without any cover .   Employer chooses to stop the benefit suddenly, especially for parents.  Employer increases the premium substantially high due to higher claims incurred - hence it becomes kind of unaffordable, again especially for parents.  Customer switches job & during the change-over time (even for 15 days) & during probation period of 6 months, the insurance cover was not available.  Customer / family members become uninsurable - meaning they would have unde...

What are Index Funds?   Index funds invest the money in the chosen index say SENSEX / NIFTY 50, etc. They just mimic the index stocks & their proportions - there is no active fund management done by the mutual fund company.  Are Index Funds safe & guaranteed?   Index funds also invest in shares & hence the returns are subject to market risks as with any other fund. The returns are NOT GUARANTEED - Ex. during Covid, it is Sensex / Nifty that fell over 50% & hence index funds also would fall to the same extent.  But they are top companies of India & are blue chip stocks?   The stocks in the index gets changed semi-annually based on their market value. Barring 7 to 9 companies, the other 40-odd companies have kept changing periodically in the Nifty to index. A blue chip stock does not always remains a blue chip stock . Remember: Yes Bank, Suzlon, Reliance Communications, etc.  Ok - I hear that Index funds will get more returns than other f...

 No. #1 reason not to choose Dividend option in Mutual Funds is that DIVIDENDS ARE TAXABLE at your tax-slab rate - they get added to your income.  No. #2 reason which many are not aware is that: Dividend pay-out in Mutual Funds is taking from your money & giving it back to you .  To explain this with an example: Let us assume:  Investment Amount: 1 lakh Purchase unit price (NAV): 10/-  No. of units purchased: 10,000 units (1 lakh / 10) Now assuming the unit price is 20/-, the fund value will be 2 lakhs (10000 units * 20).  The fund declares a 10% dividend & so you will receive 20,000/- as dividend. (10% of 20 = 2 * 10000 units = 20,000/- dividend).  Soon after the dividend is declared & paid out, the unit price of the fund will fall to 18 from 20 (10% less as it has been declared as dividend).  Your fund value now will be: 18 * 10000 = 1.80 lakhs.  This 20,000/- is also completely taxable for you. 

Please note - This article is not to suggest that real estate investment is good / bad. This is just to understand the numbers behind the investment. Many-a-times, we get carried away by absolute numbers of price rises & make emotional decisions.   Let's calculate the TOTAL OUTFLOW for this home purchase:   Interest Paid to the bank in 20 years: 52 lakhs (More than even the loan amount taken).  Interiors done for the home: 6 lakhs (You don't get this money back) Opportunity Cost of investing the Down-Payment of 12 lakhs & Interiors of 6 lakhs in Bank FD @ 6% interest rate: 1.08 lakhs every year .  TOTAL OUTFLOW in 20 years: Around 80 lakhs extra for 60 lakhs property! But I will pre-pay the home loan soon? So this calculation is wrong?! Great – Can we assume you will REPAY 5 lakhs every year starting from 1 st year onwards till the loan amount is closed? Home loan will get closed in 7 years instead of 20 years – that’s fabulous.  But do you know ...

 Things To Do when your child turn 18! Apply for PAN (change the status of PAN from Minor to Major, if applied) Link mobile number in Aadhar & update biometrics Open Bank Account (change the status from Minor to Major, if already opened) Register Nomination in all financial instruments taken earlier as minor (MFs, Insurance policies, Bank Accounts, etc.) Apply for Voter's ID Passport Renewal / Apply fresh Open Mutual Fund Account & Start SIPs (even if it is just 1,000/- p.m.) Start donating blood regularly Apply for Driving License Learn to drive 4-wheeler

Direct Stocks or Mutual Funds ? Investor - I want to invest in Equities.  Me - How long can you stay invested, how much risk can you take & what's your return expectations? Investor - I can stay invested for 10 years, okay with volatility & return expectation is 12-15%.  Me - Okay, we will invest in ABC Flexicap, XYZ Midcap and PQR Small cap Mutual Funds.  Investor - Can we not do direct stocks? Me - You want to generate returns, how does it matter where these returns are coming from (Direct stocks or MF)? Also you are not going to be able to track sector rotation, corporate actions & news etc. As a retail investor, MF is a much better option & it will make you the returns you are expecting over 10 years. Should you also take the stress of looking at so many stocks & decide everytime to buy, stay invested or sell?  Investor - But direct stocks will generate higher returns?  Me : It's a misconception. - In direct stock investing, the br...

What is Deductible? The total amount that will be deducted from the claim amount in a policy year. Coverage will start once single / multiple claim amounts add up to the deductible amount in that year. For ex. If 50,000/- is the deductible in the policy, then total claim amount up to 50,000/- will not be payable in that year. Advantage of Deductible? Premium will be almost 30-45% lesser.    Illustration:   Let’s say a family of Husband (aged 42), wife & 2 children opts for 10 lakhs policy with 50,000/- as deductible. Annual Premium without deductible: 29,319/-  Annual premium with deductible: 16,126/-  Annual Savings in premium: 13,193/- Illustration for Claim (s) in a year with deductible: 1 st Claim: 50,000/- Not Paid as the amount is within deductible limit. Balance Sum Insured: 10 lakhs. 2 nd claim: 1 lakh Paid as the deductible is already over. Balance Sum Insured: 9 lakhs. 3 rd Claim: 40,000/- Paid as the deductible is alre...

Read this whenever you are confused about Stock Market (Mutual Funds) and u will get answers: 1) 80% of Gains come in 20% of time . So one needs enormous patience & conviction to hold Mutual funds for 10+ years. 2)  Why not all investors get rich? They like to get rich without going through many years of Discipline & Patience. They want quick money / returns – not compounded wealth! 3) A worst fund you can stick with is likely to produce better results than a best fund you cannot stick with & continue. 4)  Understand Compounding ; After 10+ years, money makes more money. So stick with investing without withdrawing for at 10+ years. 5) 99% of the time, doing nothing is the best thing to do in the market. Activity hurts. 6)  You cannot predict or control markets & returns. What you can control is how much you invest, investment process and behavior. Focus only on that. 7)  Don’t chase high returns – Don't look for 5-star rated funds ; th...

  Eligibility - Based on the plan, premium & no. of years elapsed Rate of Interest - 9.50%  p.a. Process - Original policy bond + Loan application form to be submitted. Loan amount credited to the given bank in 7-10 working days. Processing Fees: NIL Effect of Loan: No change / effect will be on policy features due to loan Repayment mode - Interest is to be paid once in 6 months online. (This is not EMI where the repayment amount has Interest + principal component in it) Principal Repayment : Can be done anytime & any no. of times exceeding Rs.500 & accordingly interest will be calculated on the balance principal. Due Date of Interest payment : Once in 6 months coinciding with the policy’s date of commencement. Broken period / Interest : The period from date of loan to next loan due date. Broken period Interest is calculated for this period on pro-rata basis & actual interest is charged from next cycle. Closure before 6 months : Loan can be ...

An elephant and a dog became pregnant at the same time. 3 months down the line the dog gave birth to six puppies.  Six months later the dog was pregnant again, and nine months on it gave birth to another dozen puppies. The pattern continued. On the 18th month, the dog approached the elephant questioning, - "Are you sure that you are pregnant?. We became pregnant on the same date, I have given birth 3 times to a dozen puppies and they are now grown to become big dogs, yet you are still pregnant. What’s going on?” The elephant replied - "There is something I want you to understand. What I am carrying is not a puppy but an elephant. I give birth to only once in 2 years. When my baby hits the ground, the earth feels it. When my baby crosses the road, human beings stop and watch in admiration, what I carry draws attention. So what I’m carrying is mighty and great.” Likewise, if you break your SIP / MF in 1 or 2 years, you will get puppy wealth and if you keep your SIP/MF for 10 to...

  Sovereign Gold Bonds Purchase   Visit: https://ewa.njindiaonline.com/ewa/login   Login ID:  <you can create personalized login ID too> after you login Reset Password using “Forgot Password”, if need be Once you have logged, Transact > Public Offers > Sovereign Gold Bond” (SGB) Click on “Apply” Enter the desired quantity (in gms) under “Quantity” & click “Continue” Preferably Choose “Net Banking” if available (or) choose any other payment method, Accept Terms & Conditions & Click on “Proceed to Pay” Once the payment is completed, the purchase would have happened (Pls confirm the amount debit from your bank account - Check for per day transaction limit in your bank, if it doesn't go through).  The purchase will be reflected in the same login after 15 working days You will receive the soft copy of the bond by mail in 15 working days too. 

  Sovereign Gold bonds are issued by RBI on behalf of Govt. of India. They are issued during a certain time window periodically. Below are the features of these bonds: Advantages of investing in Sovereign Gold bonds? Demat format - no security worries / no locker charges 100% safe & guaranteed Discount of 50/- per gm (Current Issue Price: 6,213/- per gm) 100% Tax-free on maturity (8 years) Extra 2.50% p.a. as interest (payable half-yearly)  What is the tenure of these bonds? 8 years ; But there is an  exit option after 5 years.  What is the minimum & maximum amount that can be invested? Minimum:  1 gm Maximum:  4 kg per person per financial year Taxability aspects Held till Maturity: Tax-Free Exit after 5 years before maturity: Capital Gains tax @ 20% post indexation Interest payable half-yearly: Taxable as per your slab rate Final Words: If you are looking for investment in Gold as a long-term accu...

Life Insurance Policies:  1) Traditional policies : Where total premiums of policies taken from 1st of April 2023 is less than 5 lakhs per year.  2) ULIPs : Where total premiums paid is less than 2.50 lakhs per year.  3) Death Benefit : is always tax-free in the hands of the nominee, irrespective of the amount.  Mutual Funds:  1) Equity-Oriented Schemes : Total Gains up to 1.25 lakhs in a financial year.  Small Savings Schemes:  1) Public Provident Fund 2) Sukanya Samridhi Scheme  Pension Schemes :  1) NPS - Up to 60% of the amount commuted at the time of pension. 2) Annuity Plans - Up to 1/3rd of the amount commuted at the time of pension.  3) Provident Fund - withdrawal after 5 years.  Sovereign Gold Bonds : if held until maturity. 

10-5-3 Rule: (for reasonable return expectations) Equity Products: 10% (Equity Mutual Funds, Shares) Debt Instruments: 5% (Bank / Post Office Deposits, Debt MFs, etc.) 50:25:25 Rule (for balanced life now & for future) 50% of your income towards NEEDS (Food, Home loan EMIs, education, etc.) 25% of your income towards WANTS (Entertainment, Vacations, etc.) 25% of your income towards SAVINGS (for retirement, children's future, etc.) 3x-6x Emergency Rule: (for peace of mind) Set aside 3 to 6 times of your monthly income as Emergency fund & maintain this as a fixed deposit or in Liquid funds. Don't touch it unless it is an emergency (Loss of employment, Medical expenses, etc.) 30% EMI Rule: (for not becoming a slave to money) Do not exceed 30% of your monthly income for payment of EMIs. Banks may offer more - but if you have to escape the rat race, then it is important not to have too much of your income going towards EMIs.  100-Age Rule: (How much risk can be taken on the ...

43 years of SENSEX - What should I expect while investing in Mutual Funds? *** Don't forget to look at the probability of negative returns within 5 years of investing *** There were 11,000 trading days in the last 43 years ! Observations on positive and negative return occurrences:   🔰 SENSEX delivered 𝟭𝟱.𝟱% 𝗖𝗔𝗚𝗥 returns over the last 43 years. 🔰 𝗗𝗲𝗰𝗮𝗱𝗮𝗹 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 dispersion (CAGR) 𝟭𝟵𝟴𝟬-𝟭𝟵𝟵𝟬 - 21.6% 𝟭𝟵𝟵𝟬-𝟮𝟬𝟬𝟬 - 14.3% 𝟮𝟬𝟬𝟬-𝟮𝟬𝟭𝟬 -17.8% 𝟮𝟬𝟭𝟬-𝟮𝟬𝟮𝟬 - 8.8%.* 2020~ 2022 - 24.8% 🔰 BSE Sensex returns 15.5%, if we add an average dividend yield of 1.4% for the last 43 years. At 16.9% compounding the value of BSE is actually around 𝘁𝗵𝗲 𝟴𝟬,𝟬𝟬𝟬 𝗹𝗲𝘃𝗲𝗹.🚀 🔰 Longest 𝗽𝗲𝗿𝗶𝗼𝗱 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 was from 1994 to 2003. 9 years in total. 🔰 Since 2002, in the last 18 years 𝗡𝗢 𝘀𝗶𝗻𝗴𝗹𝗲 𝟳 𝘆𝗲𝗮𝗿𝘀 𝗿𝗼𝗹𝗹𝗶𝗻𝗴 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝘄𝗲𝗿𝗲 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗿𝗲𝘁𝘂𝗿𝗻𝘀. This means since 2002 if you ever invested and ...

High NAV (or) Low NAV mutual fund -  Which one is better to invest? Lot of people believe that a high NAV fund is not a good one to invest!  Only reason: "It's NAV is high"!    As far as MFs, the NAV doesn't matter at all as it is just a notional number & does not reflect the "PRICE" of the fund. MFs invest in many stocks & it is the performance of the underlying stocks that matter. All mutual funds start with a NAV of 10 when they launch the fund (they can start with NAV of 100 or 40 or any number too - but for standardization it is launched at 10/- NAV - that is all. It does not mean that 10 is cheap or 100 is costly).  Let us consider 2 funds:    Fund A : 10/- NAV (a new fund in the market) Fund B : 100/- NAV (an existing similar fund in the market which has been there for years & hence the NAV is high).  Both obviously will invest in a set of stocks - we will assume that both invests in the same stocks & hence the same stocks w...