Jeevan Saral by LIC makes your life "ultra saral"....

Jeevan Saral from LIC (Table no 165) is one of the best plans by the LIC which takes care of all the requirements that an investor needs in life. It takes care of the safety of capital, life cover, capital appreciation and liquidity. It has been correctly termed as LIC ki RD cum PPF.

The 2 biggest advantages of this plan by LIC are:-
 1) It gives you the same death cover irrespective of the age and the term.
 2) Policy period is extended after 10 years and you can withdraw your money anytime without any extra charges or extend the policy like a PPF

The following are some of the features of Jeevan Saral:-

• High life risk cover at very low premium
• Guaranteed Surrender Value after policy being in force at least for 3 years
• Liquidity & a lot of flexibility
• Death cover is same irrespective of age at entry and term
• 100% of Maturity Sum Assured in case of surrender after 5 years
• Death Benefits is 250 times of monthly premium + Total premium paid, less 1st year's premium & Extra premium paid + Loyalty Addition if any payable in lump sum.
• Withdrawal of money after 10 years with full maturity benefits plus loyalty additions, if any or you can get guaranteed surrender value before maturity if policy has been in force at least for 3 years.

Amid all the gloom and pessimism where people are taking potshots at the Governement for policy paralysis, it is high time that we focus on the available plentiful resources which are within our circle of competence to make a better tomorrow.  LIC Jeevan Saral perfectly fits the bill for a safer and a more secure tomorrow.

Please go through the attached images for a vivid understanding of the policy.

Looking forward to your comments.

Your friend,
Vivek

What are the different Insurance products?

Hi Friends,

Due to the numerous insurance companies today, there is a lot of confusion about the main  insurance products that are available in the markets today. Different companies have different names for the same product. Hence the customer sometimes gets confused.

The simplest definition of Insurance is:-  It is a contract between the insurance company (insurer) and the policyholder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the insured on the happening of a specific event.

The insurance market is divided into two categories- life insurance and non-life insurance. Life insurance covers risks related to human lives. All other risks are covered under non life insurance or general insurance.

I searched on google as to the different insurance products that are available in the markets today. For a lay man, it is all the more confusing. Hence I am listing down the main insurance products that are covered under Life Insurance as well as the different sub-categories under which non life insurance can be divided into.

Non life insurance market can be subdivided into the following:-

1) Fire Insurance    2) Marine Insurance   3) Miscellaneous

Miscellaneous includes Motor Insurance, Property Insurance, Liability Insurance, Health Insurance and Travel Insurance.

The main life insurance products are:-

1) Term Insurance Plans

2) Endowment Insurance Plans

3) Whole Life Insurance Plans

4) Pension and Savings Plan

5) Unit Linked Insurance plans(ULIPs)

Hence it is very important to understand what kind of insurance is needed by an individual. Risk appetite, wealth, age, health, marital status, number of dependants, nature of work, etc are some of the different parameters that need to be considered before purchasing a policy.



Your Friend,
Vivek

Learn to like a falling market!!!

Hi Friends,

Today I shall discuss how one should take advantage of a falling market. The concept is pretty simple. It is known as rupee cost averaging.

We often hear people saying something like "Today I bought 1000 shares of Reliance@ 800. It has already come down from 1200 to 800 and it can't go down any further." Now timing the market is foolish, time consuming and almost impossible. Timing the market is an area where most investors are prone to go wrong.

Under rupee cost averaging one does not have to worry when and how much to invest. Periodic investing is done irrespective of the market conditions. Let us assume that a person had Rs 10000 today and he wanted to invest in a company A which is trading at Rs 20. He would have been able to buy 500 shares. (Scenario 1)

Instead of one time purchase if the same person were to invest Rs 1000 per month for the next 10 months, the scenario would be something like:-(Scenario 2)

Time(mths)        Fixed amt invested             Price per share               Shares Purchased

      1                                 1000                                   20                                      50
      2                                 1000                                   21                                      48
      3                                 1000                                   24                                      42
      4                                 1000                                   19                                      53
      5                                 1000                                   16                                      63
      6                                 1000                                   17                                      59
      7                                 1000                                   14                                      71
      8                                 1000                                   23                                      43
      9                                 1000                                   18                                      56
     10                                1000                                   22                                      45

    Total                            10,000                                18.86                                530

    Thus we see that in case of Scenario 2, he has purchased 30 more shares than Scenario 1 and that too at a lower cost i.e. 18.86 vis-a-vis 20. Plus the worrying bit was not there.

P.S: This should be done with a great company. If rupee cost averaging is done in case of a stock like SKS Microfinance or Koutons, you will keep on averaging and you will start posting negative feedback on my blog.

Hope this helps,

Vivek

Does a 3-in-1 savings account make sense?

Hi Friends,

Due to the positive feedback that I have received, I have decided to write my 2nd article. It is your support  that  has given me the confidence to go ahead with my 2nd article "Does a 3-in-one account make sense?"

A 3 in 1 savings account combines features of a savings account, online trading and a demat facility. As per SEBI guidelines, the shares are needed to be kept in electronic form in a demat account for buying and selling.This is one of the facilities which is extended by banks so that the transfer and trading of shares is almost seamless with minimal waste of time during the movement of your funds and shares. Even the orders are placed electronically so that the proceeds are instantly available since it is connected to your savings account.

Sounds amazing isn't it?

Let's analyse some facts:-

1) Brokerage is a fee which the broker charges on buying and selling of securities. Its a broker's income. So when you have a 3 in 1 savings account your brokerage plus  the Securities Transaction tax, Service tax, Stamp Duty and Transaction charges comes to around 0.9%. Hence say you buy one share of State bank of India (Let us assume the CMP to be 2000 for simplicity), the total cost comes to around 2018 (2000+2000*.9/100). Now with a broker who is not a bank, let us assume the total cost apart from the CP is 0.5% . So in this case that share would cost 2010 (2000*.5/100+2000=2010). The difference in cost would be Rs 8 which might not sound quite high. But in case you buy around 100 shares of SBI you would have to pay Rs 800(8*100) extra. We are assuming that you would have a 3-in-1 savings account with a private bank where the Average Quarterly Balance is a minimum of Rs 10000. So just because you have an account with a bank, you are paying Rs 800 extra for 1 trade. Let us assume that on a day when Nifty shoots up you execute 5 such trades, then you pay up Rs 4000 extra.

These days all the brokers (which are not banks) have NEFT facility which allow pay-in and pay out of funds by directly connecting with your bank. So just for the namesake that you have a trading account with XYZ Bank and not XYZ Securities Ltd, are you willing to botch up Rs 4000 extra just because the Nifty has moved up by 100 points? Most of the times the banks don't divulge that they have tied up with a broker only to fleece the customers. The customers feel that if it is bank, it is more secure. Think about it!!!!

2) There are 2 kinds of investments in stocks. One which is for your daily and short term trading and the other which is for your long term investments. Now when you have your long term investments in your demat account where you have your trading account, chances are that you might sell a stock when it moves up 10% since it is very much visible and tempting and also because it is "seamless". You buy long term investments for your future (10 -15 years) but just because it is lying in a bank, your RM will make atleast 20 phone calls to you saying that Greece is about to default, S&P might downgrade India, UPA 2 is not functioning properly or FDI in retail has been put on the backburner. Since you would be doing something important, you might ask him to sell it to avoid getting harassed. His money is in and your long term investment has been converted to a short term profit or loss because of a Black Swan which has or hasn't yet happened.

To put things simply, make sure your long term investments are in a separate demat account away from your broker. Forget about them. They should be treated like your LIC policies or your PPF Account where you invest and forget. You would not mind filling up a delivery instruction slip to sell your shares once in 5 or 10 years if your long term investment remains a long term investment just like you need to surrender your LIC policy.It would more or less be "seamless." As Warren Buffett says  I buy my long term investments on the assumption that they could shut the market for 10 years and I could forget about them.

Moreover these shares should be frozen in your demat account. Shares can only come into your demat account but for going out, you need to make a written application to your depository participant.

I hope you all like this article!!!!  Looking forward to the comments and feedback on it.... Have a great weekend!!!!

Thank You!!!!!!!

Your friend forever,
Vivek

  

Financial Freedom gives you back your childhood days!!!



Financial Freedom is the biggest gift of life!!! If you achieve it you will never miss your childhood days.

              If you are doing business only for yourself, you will be the only customer!!!!

    Honesty comes from keeping things simple. Simplicity leads to success.  Success leads to honesty.

Beware of lock in periods and guarantees!!!!

Hi Friends,

On the insistence of my 2 great friends, Udayan Chattopadhyay and Shraddha Jhunjhunwala Todi, I have finally decided to start a blog actively.I shall comment on financial issues which should be at the back of a person's mind at all times. As Einstein had said, "The world is a dangerous place; not because of the people who are evil, but because of the people who don't do anything about it."  Thus it is of prime importance that one needs to be responsible for himself and take actions in such a manner that one does not have to run from pillar to post just because one has been taken for a ride by some greedy and unethical people.

It is for this reason that I have chosen a very simple but a very important area which proves to be a pain for many. Some days back, I went to a financial institution where they told me, "We have this offer where you can invest a minimum of 25 lakhs with us and expect a guaranteed return of 24% y-o-y." The lock in period is 5 years which means that I cannot withdraw from the money that I have invested with them for 5 years or else there will be a hefty charge of around 10-15% of the initial amount that I had invested.

Please read the above line very carefully once again. Now what does it say?

Lock in period of 5 years basically means that if I withdraw the invested money within 5 years (let us assume it to be Rs 1 crore for simplicity), I would have to pay a heavy penalty. So if I would have invested money with them, it would mean that for 5 years I need to forget about the money. An important thing to be noted here is that the money is managed by commission hungry salespeople who have been changing jobs as frequently as their clothes and who have stringent targets to meet. So by the time 5 years comes to an end, no one is actually answerable for your money. It is like handing over money to someone whom you supposedly trust on the assumption that he would generate a 24% return for you. Most of the times what happens is that the 1 crore has been converted into peanuts and the guarantee has gone for a toss because " Investments are subject to market fluctuations and one has not read the  offer document carefully".

Friends, the objective is not to scare the living daylights out of you. It is just one of the important insights that I wished to share with you. As the saying goes "Prevention is better than cure." In my further posts I shall cover the various aspects of finance that a professional from every field should know at the back of his hand so that he can lead a life to prosperity without having to bother about things which are beyond his circle of competence. The objective is to help people achieve financial freedom so that the dreams that were nurtured during childhood come back to life which might have been kept in the backburner for long due to the stress, pressures and speed of the day to day life.

 You can also follow me on my page: www.facebook.com/stocksbmawealth or email me at vivekshah83ster@gmail.com with your feedback and queries. Thank You each and everyone!!!!!! Have a great life and career ahead.

Regards,
Vivek Shah