Archive for July, 2009
Live life on your own terms, but plan it right with pure-risk insurance cover
July 28th, 2009
Mukesh Dedhia
THERE exists a small, but smart, lot of insurance buyers that subscribe to pure risk, term insurance products . These products are non-participating in nature, meaning there is no investment component in them; the buyer gets nothing on maturity and they provide only a death benefit. The crux here is purchasing a bigger sum insured at a relatively small amount of premium. For those who need to buy a term life insurance for themselves, there is good news. Thanks to competition in the life insurance vertical and rising life expectancy , the premium payable on term insurance plans has gone down. Buy term and invest the rest is a mantra in many developed insurance markets. However, there are a few things you have to keep in mind while purchasing a pure risk plan. Here are they:
Term Of The Day- Golden Coffin
July 27th, 2009
Mukesh Dedhia
What Does it Mean?
A lucrative death-benefit policy given to top executives. A golden coffin is a death-benefit package awarded to the heirs of high ranking executives who die while still employed with a company. Benefits awarded can include unearned salary, accelerated stock options and insurance proceeds.
Source: Investopedia
Entry load for mutual funds (MFs) – How SEBIs move positively impacts you
July 23rd, 2009
Mukesh Dedhia
In a welcome move, SEBI has totally abolished the entry load charged by mutual funds (MFs) effective August 1, 2009. Read on to know how this impacts you. This applies to all MF units purchased after 1st August, and in any form: Purchase of units in an existing MF scheme where you don’t hold any units already Purchase of units in an existing MF scheme where you already hold some units. Switch over from one MF scheme to another New MF schemes Systematic Investment Plans (SIP).
So, why is this so great for you? Read on.
Term Of The Day- Stop Loss Order
July 21st, 2009
Mukesh Dedhia
What does it mean?
An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a security position.
Also known as a “stop order” or “stop-market order”.
Source: Investopedia
Importance of discipline in investing!!!!
July 16th, 2009
Mukesh Dedhia
How often do you churn your investment portfolio? On what basis do you do that? On the basis of market sentiment, right? As & when you feel the bull is running you just close your eyes & run after it & then when the bear phase comes you just hide yourself completely getting out of the markets. I am sure most of you would have increased your exposure indiscriminately to equities at around 18, 000 to 21, 000 levels & then would have feared & not invested anything at 8, 000 levels. (Only if you would have done the reverse I would have not had to post an article on it.)
So, how & when should one invest? The answer is by following a disciplined format which should be laid out in an INVESTMENT POLICY STATEMENT (IPS). This is an important written document that clearly defines your objectives and constraints over a relevant, explicitly stated time horizon. The IPS is the linkage between you, the financial planner, and your portfolio.
Term Of The Day- Forex Hedge
July 9th, 2009
Mukesh DedhiaWhat Does it Mean?
A transaction implemented by a forex trader to protect an existing or anticipated position from an unwanted move in exchange rates. By using a forex hedge properly, a trader who is long a foreign currency pair can be protected from downside risk, while the trader who is short a foreign currency pair can protect against upside risk.
The Perils of Timing
July 8th, 2009
Mukesh Dedhia
Equity mutual funds are not equity and fixed income funds are not fixed-income. Many mutual fund investors don’t understand this and end up using funds in a way that is harmful to their investments. There’s a lot of difference between the ingredients of a dish and the prepared dish itself.
As per Nilesh Shah, who is the chief investment officer of ICICI-Prudential Mutual Fund one of the problems with the way many investors approach funds is that they keep moving in and out of equity funds but they stay invested in the same type of fixed-income fund for a long period of time. This is the opposite of what should be done.
Budget Highlights
July 7th, 2009
Mukesh Dedhia
Infrastructure Development
• IIFCL to refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next fifteen to eighteen months. IIFCL and Banks are now in a position to support projects involving total investment of Rs 100,000 crore (US$ 20.61 billion).
Highway and Railways
• Allocation to National Highways Authority of India (NHAI) for the National Highway Development Programme (NHDP) increased by 23 per cent over B.E. 2008-09 in B.E. 2009-10 and allocation for Railways increased from Rs 10,800 crore (US$ 2.23 billion) in Interim B.E. 2009-10 to Rs 15,800 crore (US$ 3.27 billion) in B.E. 2009-10.
How Will Your Investment Make Money?
July 6th, 2009
Mukesh Dedhia
This article defines the basic types of investment income and which asset classes pay them.
Interest
Interest income is paid on any kind of debt instrument as compensation for loaning the investor’s principal to the borrower, or issuer. This type of income is paid by several different types of investments, listed as follows:
• Fixed-income securities, such as CDs, bonds and mortgage-backed securities (MBS). The rate of interest is usually preset and lasts until the security matures, or is called or put.
• Demand deposit accounts, such as checking, savings and money market accounts. Depositors receive interest as compensation for parking their cash in the account from the depository institution.
• Fixed annuities, which pay a set rate of interest on a tax-deferred basis until maturity.
• Seller-financed mortgages, where the seller charges an agreed-upon rate of interest on the principal that is loaned to the buyer.
• Mutual funds that invest in the above vehicles.
Words are important
July 3rd, 2009
Mukesh Dedhia
The government’s budget exercise may seem similar to that of a household, but for its intimidating jargon. Here’s making sense of all those words in the budget speech which may defy your intelligence.The lines and figures that reveal the receipts and expenditure of the year
Lets understand the terms in the budget:
ANNUAL FINANCIAL STATEMENT
This is the last word on the state’s receipts and expenditure for the financial year, presented to Parliament by the government. Divided into three parts — Consolidated Fund, Contingency Fund and Public Account — it has a statement of receipts and expenditure of each. Expenditure from the Consolidated Fund and Contingency Fund requires the mandatory nod of Parliament.