Insurance – Protect yourself from Miss-selling & Purpose of Insurance

In the context of Insurance the golden rule is Never mix Insurance with investment. Which means that insurance is basically meant to protect against an unpleasant (and unforeseen) happening. If it is a insurance policy that pays at an event that you look forward to than it is an investment um insurance policy and in all likelihood has been miss-sold. Another way to find out is a simple test – Was the concerned sales person overeager to sell the product – that is a fairly reliable sign of a miss sale in progress.

CNBC Your Money: How can i achieve my goals?

Uti sip 1000/- per month, franklin india me sip 1000/- per month mujhe 15 saal baad 20 lac chahiye 25 saal baad 30 lac chahiye.
rakesh kumar gaya bihar

It’s good that you have started SIP investment in Equity mutual fund to achieve your long term goals.
You have mentioned that you want to generate a corpus of Rs. 20 lakhs after 15 years. Assuming inflation rate of 8%, 20 lakhs will be equivalent to Rs. 63 lakhs after 15 years. Similarly 20 lakhs of that will be equal to rs. 6 lakhs in today’s terms. Assuming return of 12.60% in equity mutual fund, you need to start a sip of Rs. 4,000/-

For the other goal which you will require Rs. 30 lakhs after 25 years. Assuming inflation rate of 8%, 30 lakhs will be equivalent to Rs. 2.05 crore after 25 years. Similarly 30 lakhs of that will be equal to rs. 4.38 lakhs in today’s terms. Assuming return of 12.60% in equity mutual fund, you need to start a sip of Rs. 1,500/-

You can continue and increase you SIP allocation in your existing two mutual fund schemes.

CNBC Awaaz Your Money: Greece crisis effect on your portfolio

1)Greece issue – Consider this – a householder has expenses that are way above what he earns and he borrows to pay for these expenses and keeps on increasing his expenses as well as continues paying interest. He now has to borrow to pay even interest and cannot payback the principal. The only solution is cut back on expenses and earn more and use the surplus to pay off the debt slowly (with the creditors also agreeing to take less payment).

Earning more in government parlance is raising taxes and spending less is austerity measures – both are difficult and wildly unpopular.

2. If you are talking investment in equity then it should anyways be for the long term (10 years +) and should be invested systematically over a period of time. If you have a lump sum you wish to invest in equity I would advise that you put it into an liquid/income fund and systematically transfer to equity over a period of time rather than try to time the market.
3. I cant really speculate on the impact of Greece and I would think the long term investor too should not really worry overmuch about it.
4. If you build your equity portfolio systematically over a period of time and want to hold on to it for a long time then you should not really worry about momenatray impact on the equity portion. The only portion that you might seek to protect is your debt portion which you can move to the shorter end (liquid/Income) of the debt fund market. If a goal is due in the next few quarters you can hasten the tapering that might have already happened. These 2 (moving to shorter end of the debt market and hastening your taper for near term goal) is the only pro-active steps that a long term investor needs to consider , if at all.
5. Gold is like equity – build exposure systematically upto the asset allocation earmarked for it
6. & 7 – avoid knee jerk. Have an asset allocation strategy and you can rebalance at periodic intervals – say yearly – This off course is nearly impossible to do unless it has been planned in advance as it is scary for most people to invest more into equity when the equity markets are down . the standard re-action is to move to safety. That’s why a prepared financial plan with a prepared asset allocation helps you remain disciplined.

CNBC Awaaz Your Money: Where should i invest to earn maximum daily ?

As I want to invest money on daily basis, where should i invest to earn maximum daily ?

Depends upon the amount in your bank account daily and depending on the amount you can do a SIP daily or monthly into an appropriate mutual fund. Your investment decision should be based on time horizon, goals, risk taking ability. You should have a realistic assumption. It is possible to invest daily by way of SIP in mutual fund. Please consult a certified financial Planner/ Investment Adviser before starting any investment.

CNBC Awaaz Your Money: Where do i invest for my Retirement goal?

GROSS:- Rs.37000/MONTH
EQUITY(shares):- Rs.200000/-
FIX WITH BANK:- Rs.1200000/-
I can invest 15000 to 18000/- monthly kindly direct me where to invest such that liquidation may be easy and any time in case of any emergency. Blockage of mony should not be more than 3yr.
Also I want to take some money back type of policy kindly suggest.
Abhishek Gupta

Liquidity requirement is best met through a contingency fund which can be a short term or liquid fund. You should invest in balanced fund only if you have at least a 5 years time horizon.
Money back policy are offered by insurance company and which will generate a return less than inflation rate 8 %. Systematic Investment in mutual fund will be a good pathway towards achieving your goals.

You have mentioned that you want to generate a corpus of Rs 40 lakhs in 10 years for house goals. Assuming a return of 11.60% in balanced mutual fund to generate a corpus of Rs. 40 lakhs in 10 years you need to start investing Rs. 17000/- Monthly. Assuming inflation rate of 8%, 40 lakhs in after 10 years will be equivalent to Rs. 85 lakhs. Similarly present value of Rs. 40 lakhs is Rs. 18 lakhs in todays terms.

You have not mentioned the time horizon for both the other goals hence it will be not possible for us to analyse the same. Please consult a Certified Financial Planner or Investment Adviser before making any investment decision.

Recommended Balanced Mutual Fund: ICICI Pru Balanced Fund.
Recommended Liquid Fund: ICICI Pru money market fund.

CNBC Your Stocks: Want to invest in pure debt funds for indexation benefits?

Name: Narasimmamurthy
Age: 57
City: Puducherry
Profession: Retired
Question: What are the type of debt funds suitable for a person in 20% tax bracket who wants to shift from Fixed Deposits to harness the benefit of indexation to reduce tax?

Details from Call: Want to invest in pure debt funds for indexation benefits, No dividend option,
You can invest in debt mutual fund which will provide you a risk profile like fixed deposit and but which may provide you better returns if you hold it for more than 3 years. So if a bank fixed deposit gives you a post-tax return of around 6.80% (8.50% less 20% tax) the pure debt fund 3 years returns maybe higher around at 8.5%-9% (which is also likely to be the post-tax return due to indexing). You can consider to invest in Income Fund category of Mutual Fund which is the pure debt category. It is within your debt allocation

Another option you can consider is long term gilt fund which may provide even better post tax return but carries interest rate risk (Relatively Higher Risk) or Arbitrage fund (Relatively Lower Risk).

Recommended debt (Income Funds) mutual fund: ‘Franklin India Income Opportunities fund’
Recommended Arbitrage Mutual Fund: ‘ICICI Prudential Blended Plan – Plan A
Recommended Gilt Fund: ‘’ICICI Pru Long Term Gilt Fund’’


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