Nurture Your Child’s Dream with a Click!

by Vinaya HS on June 27, 2015

in Finance

The following post is a sponsored post.

Being a parent is the toughest job in the world. Caring for children, nurturing their talent and helping them fulfill their true potential is the biggest responsibility that every parent must shoulder. Parenthood is not about taking one or two big decisions correctly. Rather, helping your child reach the pinnacle of success is all about making smart decision in a consistent manner.

Being a good parent is not about leading a perfect life. That is impossible. Rather, a responsible parent is one who plans for potential problems, and ensures his or her child is secure even in the worst case scenario. Let me tell you how one small decision that I took many years ago helped my child’s future.

I decided to open a Recurring Deposit – It was a small decision that I took on an impulse. It was my daughter’s 5th birthday and I wanted to gift her something that would help her in the long run. However, even I did not know how my decision would transform her life.

I decided to invest Rs. 3,000 per month in a recurring deposit, and planned to let it run for as long as possible. Now, a RD offers the same interest as a Term deposit. So, you don’t really lose out on interest despite opting to invest your money in a recurring manner instead of making a lump sum deposit.

You can choose your RD’s tenure depending on your requirements. Most banks offer RDs for 12, 24, 36, 60, and 120 months. I opted for the 120-month deposit and ended up investing a sum of Rs. 3.6 lakhs over a span of ten years. The biggest benefit of this option was that the monthly deduction did not pinch my pocket, and allowed me to spend on my family without any restrictions.

After ten years, I received a maturity amount of Rs. 5.74 lakhs. As my 15-year old daughter showed signs of academic brilliance from a very young age, I decided to use a part of the maturity amount to invest in savings & investment plans to secure my child’s education.

The returns that the RD had provided proved very beneficial when my daughter was about to seek admission in an engineering college. I lost my job and struggled for four long years before I become financially stable again. The combination of the RD’s maturity amount and the investment plan funded my daughter’s education despite the fact that I was not earning anything throughout her engineering degree.

My farsighted decision helped my daughter hone her skills and study abroad with a full scholarship. A small amount of Rs. 3,000 per month made all the difference between success and a devastating failure.

Therefore, you should start planning to nurture your child’s future at a very young age. Remember, compounding offers benefits only if you let the investment grow for a very long time. Combining a 10-year RD with a 5-year RD can help you save money for your child’s future without compromising on your immediate requirements.

Author Bio:

Rachita Kotian is an independent blogger and writing has been her passion for a long time. A literature major, she loves exploring the world of health, lifestyle, travel and finance. When she’s not writing, she’s most likely listening to music, cooking, surfing the web, or catching up on the latest flick.

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NCDEX Jeera Chart 21-May-2015

Jeera prices are trading in higher top higher bottom formation, indicating uptrend. But recently prices have taken resistance at 18600 levels after breaching previous top 17000 levels, forming lower high on RSI, creating divergence. We expect Jeera prices to trade lower in short term and hence recommend to go short in NCDEX Jeera on rise towards Rs. 17950 for the target of Rs. 17300.

About Kotak Commodities

Kotak Commodities is promoted by the Kotak family that has decades of experience in commodity trading, they have a full-fledged research division involved in macro & commodity complex research and commodity specific research. This is combined with a strong and well networked sales force, which helps deliver current and up-to-date market information and news. For more information visit their website. http://www.kotakcommodities.com/

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NCDEX Chana Chart 21-May-2015

We maintain our bullish view in NCDEX Chana as prices have been in an up trend forming higher tops and higher bottoms. Recently, as shown above on weekly chart, prices have breached 38.20% Fibonacci levels. Prices continue to trade above 9,13,21 EMA signaling bullish trend. Hence we recommend to go long in NCDEX Chana on decline towards Rs. 4290 for the target of Rs. 4415.

About Kotak Commodities

Kotak Commodities is promoted by the Kotak family that has decades of experience in commodity trading, they have a full-fledged research division involved in macro & commodity complex research and commodity specific research. This is combined with a strong and well networked sales force, which helps deliver current and up-to-date market information and news. For more information visit their website. http://www.kotakcommodities.com/

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Indian Stock Market Basics for Novices

by Vinaya HS on May 14, 2015

in Finance

The following post is a sponsored post.

Informal trading of shares of banks and cotton presses was being done in India since the 18th century. However, it was in 1875 when the first formal institution for share trading, the Bombay Stock Exchange, was established. It was recognized as the first stock exchange of the country under the Securities Contracts (Regulation) Act in 1956.

As share trading activity grew, the Sensitivity Index or the Sensex was created in 1986. The National Stock Exchange, the first electronic share market in India was established in 1992, and quickly became the largest and most-preferred platform for traders and investors alike. All stock markets in India are regulated by the Securities and Exchange Board of India (SEBI, which was established in 1988. Today, investors can participate in debt, equity and futures market depending on their investment strategy and risk preferences.

Making your First Buy and Sell Trades

The stock exchange acts as the intermediary between buyers and sellers of shares and securities. A country-wide network of registered brokers and sub brokers receive instructions from clients and transmit orders, which are then settled on the exchange. In the past, orders were placed in person or over the telephone.

Today, one just needs a demat account, a trading account and an online trading program to take investment decisions through a computer, laptop or even a smartphone app. While the procedure for buying and selling shares is simple, knowing when to buy, hold or exit investments can be a complicated exercise, especially for novice investors. Read ahead for some useful “how-tos” that will make it easier for you to have a safe and profitable investing experience.

1. How to Choose the Right Stock

Will the banking sector outperform the Index over the next five years? Will IT sustain its past good performance? Should you invest in Infosys, TCS or both? The act of buying shares is a small part of your investment decision. For a serious investor, research is a continuous activity. Keep learning, keep analyzing and keep researching to become a better investor.

2. How to Enter the Market

Amateur investors make the mistake of deploying their funds all at once. If you are working with a ten-year timeframe, then you can afford to buy shares every few months. This will help you assess the efficacy of your strategy, average your purchase price and exit investments where stop losses have been hit.

3. How to Minimize Losses

It is a misconception that investors don’t need stop losses. Buying a blue-chip at a premium and waiting for years just to recover your investment does not make sense. Consider micro and macro factors and determine your stop losses accordingly.


4. How to Mitigate Risks

As a long-term investor, you must look beyond short-term factors like depreciation of the rupee or temporary spikes in oil prices. This is why you should safeguard your investments by combining aggressive bets with investment in defensive sectors like FMCG and pharmaceuticals. Analyze your options and create a diversified portfolio to ensure your investment is safe.

5. How to Handle Market Crashes

A 700-point cut on the Sensex in a single day can seem like a disastrous event for a trader. For an investor with a 5-year timeframe, a one-day loss is of very little significance. Your decisions should be based on market fundamentals and not on market sentiments. A smart investor should use volatility to purchase quality companies at a significant discount.

Investing in equity is not a get-rich-quickly scheme. It is a long-term exercise that requires knowledge, discipline and patience. As a novice, adopt the slow-and-steady approach to ensure you earn sustainable and attractive returns on your investments.

For more details, head to Religare Online.

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Keep An Eye on Your Money

by Vinaya HS on May 8, 2015

in Finance

The following post is a sponsored post.

What is the point of using new-age solutions like online banking and mobile banking apps if you are going to rely on old-fashioned methods like manual calculators or complicated spreadsheets to manage your personal finances? Most of the individuals make the mistake of underestimating the potential benefits of proper management of personal finances.

Apart from helping you track your financial condition, effective management of money can help you extract more benefits out of your wealth creation strategies. This is where Kotak MoneyWatch can help you obtain a bird’s eye view of your assets, liabilities, investments, savings, and loans, along with useful information about equity markets and the economy as a whole.

What is Kotak MoneyWatch?

Kotak MoneyWatch is an online personal finance manager that allows you to enter and track details of all aspects of your financial life including:

  • Bank accounts
  • Credit cards
  • Mutual funds
  • Equity investments
  • Small savings
  • FD and bond investments
  • Loans
  • Insurance policies
  • Real estate investments

You don’t need to hold a Kotak bank account to use this PFM tool. Simply register your email id and you can start enjoying the benefits of this safe, functional, and convenient tool online.

Advantages of MoneyWatch

Unlike other tools, this Kotak product goes beyond merely providing an online record of your finances. Providing your online banking credentials and details of your credit cards, loans, equity holdings, and other financial products to this encrypted website will ensure your financial records are automatically updated on a daily basis. This means you will get an updated view of your bank balances, cash holdings, assets, liabilities, and investments on the dashboard every time you log in to this website.

Apart from automatic update of financial information, this website helps you plan and track your monthly and annual budget without any hassles. Linkage with all your financial accounts means you don’t have to waste time entering details of all your transactions. Pay your bills and watch its impact on your budget for effective analysis and informed decisions.


Further, this personal finance management tool helps you generate detailed reports of all aspects of your financial life with the click of a mouse. From the principal and interest component payable on your personal loans to a graphic breakup of your assets and liabilities, the website will help you analyze and understand your financial position even if you are not an expert in money management.

Finally, the website provides a snapshot of the performance of the financial markets in India along with useful information about the latest developments in the Indian economy. From details of the Union budget to the procedure for shifting your personal loan from one bank to another, the tool will help you acquire the necessary knowledge to improve your money management skills and strategies.

This resource helps you maximize the benefits of technology without compromising on safety of your private and confidential details of your finances. Instead of maintaining bulky files or complicated spreadsheets, use your computer, tablet, or smartphone to track your personal finances in a convenient and efficient manner.

Author Bio:

Rachita Kotian is an independent blogger and writing has been her passion for a long time. A literature major, she loves exploring the world of health, lifestyle, travel and finance. When she’s not writing, she’s most likely listening to music, cooking, surfing the web, or catching up on the latest flick.

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The purpose of Rajiv Gandhi Udyami Mitra Yojana (RGUMY) is to provide hand holding support and assistance to the potential first generation entrepreneurs, through the selected lead agencies i.e. ‘Udyami Mitras’, in the establishment and management of the new enterprise, in dealing with various procedural and legal hurdles and in completion of various formalities required for setting up and running of the enterprise.

The Rajiv Gandhi Udyami Mitra Yojana (RGUMY) was established to enable first-generation entrepreneurs to establish and manage their new enterprises through support and assistance provided by lead agencies that function as Udyami Mitras.

The Yojana was aimed at helping entrepreneurs deal with procedural formalities and legal issues involved in setting up a new enterprise from scratch and running the same in an efficient manner.

Revamping RGUMY into BASP

In a bid to enhance its effectiveness as a tool for promotion of MSMEs in India, the RGUMY has been revamped and restructured into the Business Accelerator and Start-up Programme (BASP). The revamped plan is designed to boost the MSME sector and enhance the employment generation capacity of this sector in India.

The BASP is being implemented on a pilot basis in the 12th 5-Year Plan, with the government retaining the option of expanding this program further on the basis of its potential impact on the MSME sector in India.

Overview of BASP

The Business Accelerator and Start-up Programme seeks to build upon the work done by the Udyami Mitras by helping first-generation entrepreneurs proceed ahead with the task of establishing competitive micro or small enterprises. Further, existing MSEs will get mentoring and advisory support to improve efficiency and to boost employment generation.

Advisory support provided by BASP shall cover areas like:

  • Registration of establishments
  • Efficient production
  • Functional marketing and sales strategy
  • Access to SME finance, and
  • Compliance with statutory provisions

The Udyami Mitras shall be replaced by entrepreneurs or industrialists who will function as business mentors for the micro and small enterprises. Mentoring support will be provided for a period of five years, and the SMEs shall enjoy access to more lenient small business funding sources and technology support throughout this period. The National Small Industries Corporation shall function as the Nodal Agency for BASP.

Impact on MSME Sector

The RGUMY was introduced in 2008-09. The new scheme seeks to build upon the numerous changes and improvements in the world of technology, as well as the increase in financing options for the MSME sector in India. Encouraging entrepreneurs to setup micro and small units, which make significant contribution to the growth of the Indian economy, will help the individual as well as the economy enjoy significant increase in competitiveness, growth, and profitability.

Conclusion

The revamping of the RGUMY ensures its fundamental goal is achieved even as the transition of an individual from an entrepreneur to the owner of a micro or small enterprise takes place in a smooth manner.

This post has been contributed by SMEcorner – India’s first Online Loan Application Platform.

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R. Vaithianathan of Tata Capital Housing Finance talks about smart cities and online buying.

R. Vaithianathan of Tata Capital Housing

The housing space is abuzz with talks of growth. With the government focusing on affordable housing and housing-for-all, and recent announcements in the Union budget regarding real estate investment trusts, the outlook has turned positive for the sector. The impetus on smart cities adds to the sentiment. R. Vaithianathan, managing director, Tata Capital Housing Finance Ltd, a housing finance company which has a significant focus on project financing and affordable housing, talks about the shape that this space is likely to take, and why it is investors who are buying properties online, the new method of buying properties.

What is your idea of a smart city? How do you see it taking shape?

As of now, we, too, know only as much as what is in the public domain already. Full details are yet to be received. The government, however, is very much focused on the housing sector and this is evident through the various interactions that we have had with the government and regulators. According to reports, a few cities, such as Vishakhapatnam, Allahabad and Ajmer, have already been identified to be developed as smart cities. We have an affordable housing wing, for which we have an 80-member strong team. We participate in housing loans of below Rs.15 lakh, wherein the cost of house is below Rs.25 lakh. These are mostly on the periphery of metro cities, and not in the metro cities because houses in metros are not available at that level. Low-income housing is available in such locations, where we are participating either by funding projects or giving housing loans to salaried as well as self-employed people. Once more detailed rules and regulations come in regarding smart cities, given that we have the expertise of funding projects and retail loan granting, we can participate by having dialogues with the government or authorities or development agencies concerned.

How do you define ‘affordable`? Even your organization concentrates on tier 2 and 3 cities when it comes to affordable housing.

A lot of migration takes place from villages to cities. After 2-3 years, they start looking for housing that they can own. But they cannot afford to buy houses in the heart of cities. They will go maybe 30-40 km away from the city, where a little bit of infrastructure is available, such as road connectivity and rail transportation. We are focusing on that niche segment of customers, which consists of, say, office boys in corporate organizations, self-employed people such as welders or auto mechanics, or clerical staff in government organizations. They can’t buy in metro cities yet need to be nearby. We are working to provide houses to them. This is affordable housing for us.

What will happen to property prices in and around (the catchment area) smart cities as and when they come up?

We will have to wait and watch. If smart cities themselves have a plan for affordable housing—Rs.50 lakh in metros and Rs.40 lakh in non-metros, as per the Reserve Bank of India—participation by housing finance companies will be fine-tuned accordingly. If a smart city exists, then the peripheral areas will definitely have an ecosystem for low-income people who will work in the smart cities. That again will be an opportunity for affordable housing developers to participate in. Real estate is a price-sensitive sector and there will some kind of impact.

How is the home loan space evolving for non-banking financial companies (NBFCs)?

In the latest Union budget, NBFCs have been given the benefit of the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002). This means that we can act like banks in case of legal disputes over properties. So, slowly a level playing field is getting established. We are operating in a segment that requires specialists to judge the income of an individual. If there is a salaried person, then you have a Form 16 to judge the income from. But we also judge on the basis of ability and capacity to pay. We mix these two to take a call rather than relying only on papers and data. NBFCs have their own strength, and housing finance companies have their own. We have been growing and will keep growing.

Some advertisements show low interest rates on home loans. One by your firm says home loan at 7.99%. Isn’t this misleading?

In such a case, the agreement—which the customer signs with the finance company—very clearly mentions that the loan availed is at, say, 10.15% or 10.25%. The developer, who is part of that particular offer, signs another agreement at the time of selling the property mentioning that for a fixed period of time it will be giving concession to the customer by way of subvention. So, the customer is very clearly aware that the rate of interest paid to the housing company is as per the agreed rate and the developer will pay the difference back to the customer.

Many companies are going online to sell properties. Who are the buyers?

This is a new channel of selling properties. Many people now are tech-savvy and stay far away, maybe overseas. They have the money and are looking for a reliable brand with which they can invest. Online buyers are mostly looking for investments for, say, 5-6 years, with a reliable builder who can assure on-time delivery. So, a brand has huge impact on online sales. Local residents may prefer to check the property physically. The time when land documents and records will be in dematerialized form is not too far away. The process of documents going online has already started.

For flexible EMI options on Home Loans visit http://tatacapital.com/consumer-finance/home-loans.htm

Source: http://www.livemint.com/Money/55LgimWc7oXwAZHFRJJrHP/Online-homebuyers-are-mostly-looking-for-investments.html

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Understanding Loans against Securities

by Vinaya HS on March 11, 2015

in Finance

The following post is a sponsored post.

When you are running a business, one of your major worries is always going to be getting the right finance at the right time. Be it at the start of your entrepreneurial venture or the working capital cash crunch you face when you least expect it. SMEs are usually susceptible to such needs and on the other hand, banks are always looking to fulfill such dire needs.

Of late, both banks and non-banking financial institutions (NBFCs) float a lot of these easy to get loan products in the market to meet the demand arising from theses SMEs. While traditionally they did provide loans against assets, they now even provide loans against financial assets such as mutual funds, insurance, security bonds, ETFs and government securities.

At times when SMEs face a liquidity problem, getting loans gets a bit difficult. Specially, if it’s an urgent cash crunch issue and there is no time to arrange for collaterals and all the paperwork that follows. Loans against securities (LAS) are the ideal way to get the much-needed liquidity. With quick and uncomplicated application processes, this is the perfect go-to for SMEs.

What are loans against securities?

Under LAS, the loan is given to a customer against the pledge of securities. These securities can be any type of securities such as insurance policies, mutual funds, government securities, non-convertible debentures, NABARD bonds, Demat shares, UTI bonds or NSC/KVP. They can also differ from bank to bank. Loans against securities are usually taken for short durations, as securities are merely pledged and not out rightly sold. It works like an overdraft facility advanced to you from a bank or a financial institution. The value is determined on the basis of the securities that are being pledged and is usually 50-70% of the total value of the securities. Although lesser than what you get against loans on properties, this is quicker and less fussy to avail of.

How do they work?

The bank/financial institution opens a bank account for the pledger and deposits the money being loaned against the securities. It is on the pledger’s discretion on how and when to withdraw and use the money. The pledger only pays interest on the money withdrawn from the account based on the period of utilization.

Benefits of Loan against Securities

The best part about pledging your securities is that you don’t lose your benefits of being the shareholder and enjoy your rights of dividends and bonuses. Another perk is that you pay a lesser interest rate through loan against securities as compared to a personal loan. It’s a secured loan and there are usually no prepayment charges, although they may differ from bank to bank. Since it’s easy to get a loan against securities, it’s a great way of raising capital for SMEs when one is in a dire need.

Contributed by SMEcorner – India’s first online loan application platform.

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When to Start with a Pension Plan?

by Vinaya HS on February 16, 2015

in Finance

The following post is a sponsored post.

Planning your future is extremely essential to lead a successful life. The rate of every commodity is rising with the changing times. You do not know what the rates would be after certain years! For now, you have a stable job to survive the ever increasing inflation. But, how will you manage your finances after you retire?

This is a big question that everyone should ponder upon. The answer to this certainly lies in having a good pension plan. But, when should you start thinking about the plan? When is the right age to invest in a pension plan?

The answer is, now. Start your pension plan immediately on getting your first job. The younger generation fails to understand this. They think, they have many years left for retirement and pension plan is something that they should think about at a later stage. But the fact is the early you start, more benefits you get.

Starting early means you will be invested for a long time. Long term investments always fetch better results as your money gets a longer period to grow. Pension plans being a long term plans, will also give you better outcomes if you start early.

When you start early, you can accumulate a lot of corpus to bear all the expenses of your retirement life. Besides, you can manage to collect a large amount with little savings. This also helps to inculcate the habit of saving from a young age. On the contrary, when you start your pension plan late, you need to increase your savings considerably and your returns are also comparatively low.

If you haven’t invested in a pension plan yet, then start with one immediately. People belonging to different age groups should see different aspects when looking for a pension plan. Some of the things you should see, before selecting the plan are:

  • When you are in Mid 30s: At this age, you should take an estimate of how much money you will require, after you retire. You should also check whether the scheme is sufficient or you need to save more to cope with the inflation? Accordingly, choose the best pension plan. You may invest more, if required.
  • When you are in Mid 40s: In your 40s, you become mature enough to understand the realities. At this age, you have a clear picture of where you will settle, when you will retire and how much fund you will require to fulfill your desires in the post-retirement life. These things will help you to know how much to invest in which scheme.
  • When you are in Mid 50s: This stage leads you closer to the retirement age. It is high time when you get serious about your retirement life. Go through various pension plans in India and pick the right one. You should pick that plan which will take care of your health and medical expenses along with funding your dreams.

It is certain that early planning makes your life after retirement, financially comfortable and secure. So start planning now and choose the best pension plan in India for yourself.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

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Reducing the Debt Gap for SMEs

by Vinaya HS on February 2, 2015

in Finance

The following post is a sponsored post.

In a developing country like India, the micro, small and medium enterprises (MSMEs) play a very important role in contributing to the economic development. Being the second most populated country in the world, we have a huge population to serve and these MSMEs that are built on innovation and talent, help in reaching out to the spread out billions.

The Small and Medium enterprises in India (SMEs) contribute 45% of the total industrial output, hence becoming a crucial part of our economy. They also contribute to 40% of the country’s total exports, employ about 60 million people and create 1.3 million jobs every year.

While there are a lot of perks and benefits for the SME sector in India, they still continue to face a lot of difficulties and challenges. An important one in the list is getting the right and secure source of SME financing. This lack of available funding for SMEs has only been highlighted post the credit crunch in our country.

Funding gap in SMEs

According to a report by the International Finance Corporation (IFC), the total financing demand gap in the SME sector is of Rs 2.93 trillion. Research shows that most formal lenders prefer traditional-collateral based lending and look for at least three years of profitable track records. Such expectations out of newly opened innovative companies makes loans for SMEs out of reach.

Reasons for the increase in the debt gap

A lot of these SMEs are run by entrepreneurs who have little or no experience in raising SME finance. Others are family-owned and have less information about tapping the right kind of financing. There is also information asymmetry, which exists in these SMEs, causing the debt gap to increase.

Also, traditionally SMEs prefer taking private funds from family and friends, which is the largest source of finance for this sector in India. Some also rely on private moneylenders and some players from the unorganized financial sector for their SME finance needs. The terms of these deals are typically unclear and interest rates are very high.

While banks are making efforts to bridge this gap, the rules and regulations in the banking industry makes it very difficult to do so. In any application for loans for SMEs, the bank has to evaluate the risks involved and see the collateral support. It becomes difficult for entrepreneurs with small businesses to satisfy all the conditions and requirements that the bank will ask for.

Thinking from the bank’s point of view, they have to be restrictive to create value by controlling and managing the risks and are right in their scrutiny.

Government support for SME funding

The Indian government has always been aware of the funding gap that exists in the SME finance sector and they keep announcing some sort of relief mechanisms to support them. Their initiatives have helped in coming till here and ensuring that we continue to get our set of good entrepreneurs but more needs to be done to take it to the next level.

This article has been contributed by SMEcorner – India’s first online loan application platform.

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Buying insurance is often perceived as time-consuming and difficult. Although most of us agree with the importance of having a life insurance, the formalities can be a big turn-off. Such a cumbersome task can sometimes cause policy buyers to postpone their decision.

Let us be appreciative that we are in an age where almost no task is time-consuming or cumbersome. All thanks to the Internet. You can now look for insurance companies on the internet and buy online term insurance plans. Buying life insurance online is growing popular with every passing day where people now prefer this medium for buying and selling term insurance products.

Why buy Term Insurance?

Who needs a Term Insurance? Well, almost everyone who is earning and has dependent(s) needs a term plan. Term insurance is the most basic kind of life insurance. Here, in case the policyholder faces demise during the policy period then the family members get the sum assured as death benefit. However, if the policy holder luckily doesn’t come across such unfortunate events, and is still alive, then the insurance company wouldn’t remit any money back. Which effectively means that the nominees would earn no benefit on maturity of the policy. However, the most exciting feature of opting for a term insurance plan is it guarantees a very high sum assured for a really low premium.

Online Term Plan

For a customer who is comfortable using the internet and has some experience of having made online purchases, buying life insurance online is definitely the most convenient and most logical option. It’s fast, easy and secure – just fill in the details and make the payment through Internet Banking. Apart from the convenience, online policy is comparatively cheaper compared to the offline version and offers a very high sum assured compared to the premiums.

Every month around lakhs of people in India search for online term plans. The market of online term insurance has witnessed a constant rise since 2010. Approximately 25,000 policies are sold online every month in India. One such popular online term plan is the HDFC Life Click 2 Protect Plus offered by HDFC Life. According to a report by Boston Consulting Group and Google India, it is projected that, by 2020, three out of four insurance policies sold would be via digital channels. Sensing a growing demand for online term policies, almost all private life insurance companies have started focusing on this segment.

Benefits of Opting for Online Term Plans

Some of the advantages of buying term plans online using the website of insurance companies are:

  1. Lower premium rates
  2. Faster policy issuance process
  3. Less paperwork
  4. Crystal clear process
  5. No health / medical checkup for certain age groups

Due to high awareness levels amongst the youth, the outcome is better. In case of offline plans, there is always a possibility that the policy buyer has just signed the form, while the agent enters all the data. Online term insurance ensure that the insured himself fills in all the details accurately leaving no scope for the information could be sketchy or mistaken resulting in better quality of information.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

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The life insurance industry in India is the largest in the world. The collective amount of people from about 200 countries across the world is less than the total amount of people insured in India. Don’t be surprised after reading these statistics, India still is under-insured.

The penetration of life Insurance in India, the ratio of premium funded in a year to the GDP was hardly 3.17% in 2012. This still doesn’t mean that the life insurance space in this country is stagnating. Life Insurance remains one of the fastest growing industries in India as is expected to grow at a compound annual growth rate of about 12-15 percent by 2020.

Why Invest in Life Insurance Post Budget 2014-15?

Life insurance is one of the most important tax saving instrument that provides various plans like term plan, savings, investment, as well as retirement plans which could be the most feasible tax saving options.

After the 2014 budget, it is expected that with an enhanced flow of foreign capital and international expertise, we could see a growth in the development of the insurance industry. This acceleration could be triggered by increased access to global insurance products, distribution channels and top-notch business practices. The 2014-15 budget is expected to have a positive impact in the overall development of the insurance sector in India as well as the fast growing health insurance sector.

The existing Income tax rules allow for an annual exemption of Rs. One Lakh in investments and expenditures including life insurance and home loan repayments. This rule hasn’t seen much of a change for about a decade now. Such investments, along with public provident funds (PPF), employee provident funds (EPF), term deposits and equity-linked mutual funds are most suitable investment tools for people that help in keeping the economy on a strong footing.

Investing in Life Insurance. Does it Really Help?

Sure it does. But, raising the Rs. One Lakh limit and improving the number of ways to invest it in exchange for a tax credit would be more beneficial as people could save more money. It would also allow people to invest this amount in ways that would indirectly benefit the economy, even if it were to hit government revenue in the beginning.

HDFC Life, one of the leading life insurance companies in India, offers a range of options to suit different requirements, all serving one purpose, securing one’s family’s wellbeing and financial stability. Choosing one of the HDFC Life’s life insurance plans serve to be the best way to save tax. As per section 80C, you could save upto Rs. 46,350/- on investment of Rs. 1,50,000/- on all life insurance plans provided by HDFC Life. For people with very high tax bracket, such tax benefits offered by a life insurance policy would be more valuable.

Life Insurance is no more just a tool to save tax; it is a necessary financial instrument. After all, the whole point of insurance is to ensure your dependents have enough to sustain financially if something were to happen to you. Today, policy holders are more knowledgeable than ever and more aware of their rights as consumers. Each policy is different; it is upto the customers to decide what works for them before they buy it.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

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Announcing the Winner of the April Book Giveaway

by Vinaya HS on April 15, 2013

in Finance

It’s never an easy task to judge and pick “one” winner for the book giveaway contests. Each entry is usually brilliant and insightful in its own right. So, I often — and as in this case too — let the computer pick a winner for me. And, the winner of the April Book Giveaway for a copy of the book Beginners Guide to Investing with Confidence is reader Sharan.

Congratulations Sharan! I will email you with the details.

Thanks everyone for participating.

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The Privilege of Making Unwanted Investments

by Vinaya HS on April 8, 2013

in Finance

ICICI Bank’s Privilege Banking is awesome! If you’re “privileged” enough to have it, you can simply walk into any Branch, push a couple of buttons on the quirky token dispensing machine (an entirely optional step), and walk right up to the Privilege Banking Counter and get your work done while the rest of the “non-privileged” world waits for their token to show up on a TV screen/monitor.

The “privilege” of course comes with its own set of “grab-my-hard-earned-money” sales pitches and schemes.

The other day, I was at the said Privilege Banking Counter depositing a slightly high-value check (the proceeds from the sale of the Swift and which was already destined to pay off a bridge loan). One look at the amount on the check led to a barrage of questions from the guy manning the Privilege Banking Counter.

  • Sir, is this your annual bonus check?

  • Are you looking to make some investments?

  • Instead of closing your [bridge] loan, why don’t you earn a higher interest by making some investments?

  • Sir, are you sure that you do not want to earn a higher interest? [All the while looking at me as if I were quite foolish at declining the investment offer.]

NO.
NO.
NO.
NO.

Simple but firm NOs. Out of there in an instant.

Just experienced the “privilege” of making unwanted investments.

Have you?

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Education. Marriage. Retirement.

by Vinaya HS on April 7, 2013

in Finance

Over the past year, I’ve tried to keep tabs on the financial goals that people generally seem to have (as claimed in case studies, interviews, money makeovers, etc. published in leading personal finance publications). So, here’s the trend that I see. Most people seem to have the following set of financial goals –

  • Daughter’s Education in A years

  • Daughter’s Marriage in B years

  • Son’s Education in C years

  • Son’s Marriage in D years

  • Retirement in Z years

The sums of money to be saved as the “Marriage Corpus” are indeed mind-blowing (I’ve always seen 7 and 8 figure sums here!). That’s a whole bunch of ERE-money if you ask me. And Z is usually far far greater than A/B/C/D.

Oh, and there’s also the occasional –

  • Foreign Trip in 5 to 7 years

What do you think?

PS: I’m not in this stage yet — so, I might come back here years later and claim that these are my financial goals too. :-)

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Reader Priya asks –

I stumbled upon your site today while searching for ideas to choose a good term plan, given that there are an array of products available online and offline. I understand that with your analysis, AEGON Religare iTerm Plan is the better of the plans in the market. I also understand that its premiums are the lowest too.

But I read another article where the claim settlement ratio was given a lot of importance along with the premium amount. So, now I am really confused since AEGON Religare does not seem to be settling claims as much as it should. I would like to know your point of view on this front.

Image of Beginner's Guide to Investing with Confidence book
While I certainly have my own set of thoughts on this topic, I’d like to throw open the floor to you and hear what you have to say (given that the key performance indicator of Claim Settlement Ratio seems to cause a lot of debate and headaches). The most well thought through response wins a copy of the brand new book “Beginner’s Guide to Investing with Confidence” from Value Research.

Deadline for your responses is next Friday (April 12, 2013) morning. I’ll pick a winner then but I will be sharing my thoughts and arguments to your responses through the week.

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Oops!

It’s been close to 3-months now since I last wrote — it’s the usual “life just got busy” excuse and I pick-up all the blame for letting things slip. We’ve also just entered a brand-new financial year and I wish each of you a prosperous year ahead. Lot’s of stuff did happen in between including some new investments and having to let go of the Swift in lieu for what I personally think is its perfect replacement. More on that in the coming weeks — I promise!

But first, guess what nudged me over the edge and back here?

A “Unit Account Statement” for LIC’s Market Plus scheme that turned-up in the post box. Now this happens to be one of D’s legacy mis-investments and upon opening the statement we discovered to our horror that a secret [off-market?] Rs 20 was being happily deducted each month under the guise of “Admin Charges.” I guess this has been happening each month since the investment was first made quite a number of years back. Don’t even ask me about it’s Market Value — it’s deeper than the Titanic’s depth of sink!

There’s a whole bunch of other columns for various other off-market charges — which thankfully were zero in our statement.

Here’s a sample –

  • Allocation Charges

  • Mortality Exp/FY Renw(*) [WTH?]

  • Accident Charges [WTH? I hope I'm not charged for meeting with an accident!]

  • Switching Charges

  • Ser Tax Rsk Prm Chrgs [WTH?]

It’s time to cut the flab including another mis-investment — Money Plus!

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A Super Useful Mutual Fund Taxation Cheat Sheet

by Vinaya HS on January 7, 2013

in Finance

Stumbled upon this really handy mutual fund taxation reference sheet (2012 — 2013).

I also took the liberty of creating this easy-to-print PDF version.

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Capital Multiplier…Really?

by Vinaya HS on January 4, 2013

in Finance

A colleague asked for my opinion about a certain Capital Multiplier Plan that he’d been investing in since a few years. I looked up the plan and the details turned out to be as scary as a horror show. A few samples –

[From the brochure]

This plan is best suited for you…

– If you are looking for an investment plan for your child and want a flexible money-back plan that gives you the power to decide the amount and time of withdrawals.

– If you are planning for your retirement and require a plan that allows you to withdraw any amount as per your need and at the same time invest your money prudently to get you bonuses on the balance in your account.

– If you think that from time to time you will have extra cash, which you would like to invest in an instrument which is safe and which will get you attractive returns.

Quite hilarious — an investment that can solve all financial problems in your life.

And how does the capital get multiplied?

There would be sales and administration expense charges of 3.5% and 1% respectively.

There you go. The capital multiplication isn’t meant for you at all.

Clever!

Perhaps “Capital Divider Plan” would be a more appropriate name? After all, your hard-earned capital is being divided amongst the insurance company and the insurance agent.

High charges. Low insurance cover. Overly complicated features. All toxic ingredients.

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A Quick Primer on ERE

by Vinaya HS on January 3, 2013

in Finance

A reader wrote in asking for a quick refresher on the concept of ERE. Thought it’d be a mighty good idea to write on this topic at the start of the new year — so, you now have the entire year to work on it. I create this quick PowerPoint to illustrate the key points –



Note: Here’s the link to download the slides.

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