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*Four Wrong Retirement Assumptions* Most of us work hard so that we can retire in a financially comfortable position. But interestingly, once we retire, it requires a tremendous shift in mindset, to move from aggressive saving, to eventually shift from savings to spending. Having said that, the entire exercise is based on a number of assumptions. Let's look at a few common ones. *Assumption 1: Retirement is a destination*.: All along retirement has been viewed as a destination, as an end-of-the-road milestone. Nothing could be farther from the truth. The road could be long and winding as the journey keeps unfolding. Rather than a destination, it should be viewed as a transition. We should realize that the concept of retirement is undergoing a fundamental change. Seldom do people just stop work and start drawing a pension. Earlier, it was the case of being shoved off the demographic cliff and being forced to leave the company, saying goodbye to the 9-to-5 lifestyle. Today, ...

Many stock market investors are like Abhimanyu. They know how to enter a stock, but fail miserably when it comes to exiting, says Sunil Damania. In the Mahabharata, Abhimanyu, son of Arjun, knew how to enter the chakravyuha but was not aware of how to exit it. This cost him his life. *Many stock market investors are like Abhimanyu.* They know how to enter a stock, but fail miserably when it comes to exiting. Unless investors get both their entry and exit strategies right, even if they buy a scrip at the right level, chances are they will not make money from it. Ask investors who bought Vakrangee, P C Jewellers, or Manpasand Beverages. All these stocks had moved up substantially, but investors who did not sell at the appropriate time are sitting on huge losses today. Investors live in the hope that the company they hold will be a mega performer. They think that a stock that has fallen will bounce back soon. Often, this hope is belied. A scrip may take more than a decade to re...

*1. LEAD CALLS* Don’t call someone more than twice continuously. If he does not respond, it simply means that he is doing something more important. *2. PUNCTUALITY* Let us understand that we are into Life Insurance business where competition is highest. PUNCTUALITY plays a very important role in image building which is essential ingredient of this business. If you have made a commitment to a prospect, honour it at any cost. For certain unavoidable reason if you are unable to honour the commitment, inform the prospect well in advance. Don't keep the prospect waiting. *3. MANNERISM* PERSONALITY SPEAKS ABOUT THE STYLES WE DISPLAY, BUT CHARACTER IS THE SUBSTANCE WITHIN. IN THE LONG RUN SUBSTANCE WILL ALWAYS OUTLAST STYLE. *4. CAUSING EMBARASSMENT* Don’t ask questions which will embarass the prospect. Avoid questions which are personal in nature like his marital status, owning a house etc. "why are you not married? Why don’t you have your own house? etc. For god’s s...

On June 25, 2020, Dev Ashish, a SEBI registered investment adviser, tweeted: Many DIY investors are DIY not because they are capable, but because they want to avoid paying any fee. The responses to that were very interesting. One said that he burnt his fingers and so became a Do-It-Yourself (DIY) investor. Another said that he did not get sufficient value from his financial planner. Others suggested that the integrity and competence of the IFAs should also be considered. The perception around money is fascinating. And advisers should never downplay the emotional element of money. It is experiences that shape a client’s perception, and the financial adviser will have to combat that to earn someone’s trust and confidence. If you are an adviser, ask your potential client these questions. You should even try it with existing clients who are difficult, who question you needlessly or never listen to what you say. Their answers will help you tackle the emotion and cloudy reasoning that i...

Picture this. You are on a surgical table, your insides open and the one performing the surgery on you is you! When you have woken from that nightmare, let's talk about doing something less scary, yet daunting no doubt -- investing your money. You have been working for some time now. The end of a financial year always reminds you that you can save taxes by making investments. So do banks and other financial institutions who nudge you to invest for a better tomorrow. You want to get better at managing and growing your money, you've probably even researched a bit about investing. You are at a crossroads and are wondering: *should I invest by myself or seek an advisor?* Here are factors to weigh in for each choice: *Do-It-Yourself* There is a lot to know. Let's face it. What we should do with our money is everybody's top concern. There is a lot of information out there on the Internet -- on blogs, videos and mobile apps -- about money management and investing. B...

There are no market geniuses. Just those savvy in controlling their emotions. You can never get wealthy if you let emotion get the better of you. But if you rein in your impulses, you have a very good shot to accumulate wealth. When the market is bullish, everyone is on an investing spree. Along comes the inevitable correction, and those very funds are kicked to the curb. What has changed? Just sentiment. If the market falls on a certain day, fear dominates and investors are reluctant to invest. Once the market bounces back, greed takes over. Ironically is, investors perceive an investment to be more risky when nobody is buying and the price (NAV) is low, and less risky when everyone is buying and the price (NAV) is high. Laughable isn't it? How does one counter the impulse to act? Give thought to your Investment. Value investing is about buying a stock or fund quoting less than its intrinsic value. If you make a purchase higher than its intrinsic value, you are looking at the...

*What Are Alpha And Beta In Investing?* As their names would imply, alpha and beta are fundamental terms in the investing world. In its most popular understanding, alpha represents the excess return on a particular investment—a stock, mutual fund or exchange-traded fund—over a relevant index. In other words, if an investor has managed to outperform a certain index, such as the S&P 500, it is said he or she has achieved "alpha." Beta, by contrast, measures an asset's historic volatility relative to a market benchmark, such as the S&P 500, which has an alpha and a beta of 1.0 because it is considered to be a proxy for the overall stock market. If a stock or fund's beta is 2, for example, that means that it has historically been twice as volatile as the benchmark index, while a beta below 1.0 would indicate that is less volatile than the market. The simplest way to differentiate between alpha and beta is to remember that alpha measures relative ...

*Every Financial Services Intermediary should read this and practice to be successful.* Here’s a list I use now on a daily basis as a reminder to increase my happiness: *1. Give yourself permission.* Permission to be who you are. Permission to laugh big, to cry when you need to, to fail brilliantly, to make stuff. Permission to fall apart, breakdown, and get back up again. Permission to be different and unique. Permission to go too far and reach your dreams. *2. Don’t take yourself so seriously.* Hold yourself with a “light hand.” Laugh at your foibles with amusement. When things get tough or stress arises, lift your shoulders with an “oh well…” Know that it’s never as big or life devastating as your mind thinks. Happy people trust that whatever glitch happens will work itself out. Happy people give a “Ha! Ha!” and a “So what? Who cares? Big Deal! Why not?” when meet with resistances. *3. Don’t self-ruminate*. I remember a friend of mine...

LIC provides a wide range of life insurance plans intended to generate improved returns. The following LIC schemes have the full benefits for you-Jeevan Akshay VI, New Children's Money Back Plan, New Endowment Program, New Money Back Plan- 20 years. These days, consumers are looking into policies promising better returns on the premiums charged. LIC offers a detailed list of policies designed to offer optimal benefits alongside defense. The four best insurance policies given below are: Jeevan Akshay VI, LIC: LIC Jeevan Akshay VI is an instant annuity product that guarantees a steady cash flow up front for a lump sum payment. The annuity as set out in the contract should be paid over the policyholder 's lifetime. It comes with several options about program form and payment modes. The annuity options available under Jeevan Akshay VI are as follows: Annuity payable at a fixed rate over the insured 's life. Any annuity payable for a term of 5, 10, 15 and 20 years. ...

As suggested by its title, the article advocates that investors work backward. They should begin their plans upon entering the workforce, by specifying their desired income during retirement. Once that is known, and an asset allocation is specified, the required contribution rate can be calculated. This process is aspirational. That is, while Javier's model is fixed, providing investment returns, contribution amounts, and withdrawal rates with assurance, investors enjoy no such confidence. As young adults, they know neither what the financial markets will bring nor (yet) what income will meet their retirement needs. Their lives lie ahead of them. The point of the paper is to change the investor's mindset. Javier wishes to combat the standard practice of keeping one's head down, contributing to retirement accounts according to perceived ability, then looking up as retirement approaches and wondering what the accumulated assets will be able to afford. Better to know th...

Human civilization has an insatiable lust for gold. Because gold is dispersed widely throughout the geologic world, it became prevalent in human cultures and religious ceremonies across the globe. Dating back millennia. Last year, two large tombs were discovered and excavated at the site of the ancient city of Pylos in southern Greece. Inside the 3,500-year-old tombs, archaeologists found remains of gold jewellery and thousands of pieces of gold foil, remnants of the sheets of gold that once lined the tomb floors. The ancient Egyptians considered it a symbol of eternity and referred to it as “flesh of the gods”. Consider the tomb of the boy-king Tutankhamun. He was enshrined in three gold coffins and his finery included a gold funerary mask. Gold may no longer be used in tombs, but it does line the walls of the vaults of central banks. Gold has been a symbol of wealth and power, a store of value, a means of exchange, legal tender, and has facilitated global trade. It is evident ...

The subject of luck in investing is a fascinating one. MORGAN HOUSEL of Collaborative Fund once commented that luck and risk are the opposite sides of the same coin but we treat them very differently. Being a fan of his writings, I went through his views on “luck” and decided to reproduce a few them from 2017 to 2020. *What have you changed your mind about in the last decade? - 2017* I respect the role of luck more today than I did a decade ago. I used to view successful people as clearly having more intelligence and drive than others. I’ve come to appreciate how much of success is due to luck, not the least of which is being born into a good family in a good country. It doesn’t take a lot of imagination to see that if Bill Gates were born in Berlin in 1920, his outcome would have been different. The common rebuttal to this is “Luck is what you’re dealt, fate is how you play your cards.” Which is 100% true. But some people are born with a pair of aces. Worse, they never reali...

Financial Services Intermediaries usually focus on various factors while promoting a mutual fund to the investors, but seldom do we give any importance to the factors that warrant exiting an investment. While the benefits of investing, especially in equity funds, are derived in a longer time frame, that doesn’t mean one should forget about these investments and only take a look at them as the goal nears its target. This is because there are various factors that impact the growth journey of investments. Here I would like to highlight the importance of the right time to redeem mutual fund investments in the financial planning process and look at the major scenarios under which investors should be advised to take an informed decision to exit their mutual fund investments. *When to sell* While it’s true that mutual fund investments should be for the long term, a smart investor must also know when to make an exit and sell his or her mutual fund holdings. For most investors though, deci...

Financial temperature is a term used to define one 's personal monetary affairs. Financial temperature has many dimensions including how much savings you have, how much you put away for retirement and how much of your income you spend on fixed or non-discretionary expenses. Personal Net Worth However, the net worth of an individual can be quantified simply because he measures the tangible. By tangible like personal property, cash, art works, antiques, jewelry, collectibles, stocks , bonds, rare books, cars, the cash value of entire life insurance policies, 401ks, IRAs and other things that can be assigned a definitive monetary value. Those tangible items are described as the assets of an individual. On the other side, we have liabilities. These could include mortgages, auto loans , credit cards, installment loans , student loans and, to name a few, tax liabilities. In simple terms, the liabilities represent the debt of a person and other monetary obligations.Since the assets ...

Life insurance companies pay death benefits to their policyholders every day,Providing them with the requisite funds, and definitely welcoming them. Essentially, life insurance offers leverage: You pay the insurance provider a fairly small sum of money in the form of a "premium," And the insurance provider must have a guaranteed payout of fairly significant amounts of money after the insured's death. Though thousands of life insurance policies are available, there are certain unpaid duties or liabilities after you, life insurance may come handy. Some life insurance companies also promise to pay for funeral expenses which after you can be a major cost to your family. Bridging the Wealth Gap A good lump sum can pay off the education fee and marriage costs for your child. Such expenses can be enormous and can be easily taken care of with Life Insurance help. When one is searching for life insurance, there are three specific things relating specifically to life insur...

LIC's JEEVAN TARUN is a participating, unlinked, restricted premium payment plan that offers an attractive combination of protection and saving features for children. This plan is specifically designed to meet growing children's educational and other needs through annual Survival Benefit payments from ages 20 to 24 years and Maturity Benefit at age 25. It is a flexible plan in which the proposer can select the proportion of Survival Benefits to be used during the policy period as per the following four options at the proposal stage: Option Survival benefits Maturity benefits Option 1 No survival benefit 100% of Sum Assured Option 2 5% of Sum Assured every year for 5 years 75% of Sum Assured Option 3 10% of Sum Assured every year for 5 years 50% of Sum Assured Option 4 15% of Sum Assured every year for 5 years 25% of Sum Assured Benefits available under an in-force po...

Growing monetary concerns among people in India, during the time when the country's economy is on the edge of recession, are not groundless, as many employers have imposed cuts in salaries and benefits. With the number of coronavirus cases increasing exponentially in India, frightening narratives of lack of bed availability, exorbitant charges levied by private hospitals to treat COVID-19 patients have emerged. The need for a health insurance policy to cover medical expenses is of primary importance during this time. According to the Asia Insurance Review, less than 4 per cent of COVID-19 patients in India have health insurance coverage, which is not surprising considering that total insurance coverage in India is very small. In April 2020, the Insurance Regulatory Authority of India (IRDAI) announced that all health insurance policies that cover the cost of hospitalization care provided by both general and health insurance firms should also cover the cost of hospitalization fo...

Most of us worry of the possible aspects of the coronavirus pandemic. It is only normal for people to wonder that their loved ones will be financially covered in the event of their absence. You already have thought about it yourself, if you’re reading this. Here’s the good news: You will earn a death payout if you had an active life insurance policy and died from a pandemic disease, such as COVID-19, even though you were traveling to an area with a confirmed coronavirus outbreak. You may be only unable to do so if you were approved recently and have not been able to divulge certain information concerning your application regarding your travel plans and/or coronavirus exposure. Furthermore, by paying the premiums on time, you can’t increase the premiums if you get sick at COVID-19 if you keep the active life insurance policy intact. And here’s some more good news: You can still apply if you don’t know have life insurance cover. Depending on where you live and what the ...

The Jeevan Umang Program of LIC provides your family with a mix of income and insurance. This arrangement allows for annual payments from the end of the premium period up to maturity as well as a lump sum at the time the policyholder matures or dies. Features of the LIC Jeevan Umang It is a combination of both regular income and Lumpsum payment. Offers an option to choose a premium paying term of 15 years, 20 years, 25 years or 30 years. It is a non-linked life insurance plan with profits. Offers life cover till the policyholder turns 100 years. Offers a loan facility up to 90% of the surrender value if the policy holder has paid the premiums for 3 years regularly and if the plan has reached a Surrender Value. The LIC Jeevan Umang Plan offers a simple reversionary bonus as well as final addition bonus if any. Benefits of LIC Jeevan Umang Plan Death benefit LIC will refund all premiums charged without interest to the applicant in the c...

In most urban middle-class households with children schooling has become a major cost head. Personal finance experts quickly point out that while schools are more costly than they were 20 years ago, daily salaries are enough to pay for schooling. The problem is to fund university research, usually postgraduate research or master’s. Although a large number of parents are conscious of the need to build a corpus for education, it is difficult for most parents to assess the cost of education for children. Two considerations make it difficult to quantify – firstly, it is a long-term goal and secondly, it does not know which path the child will select. “It is all about assumptions now. So you should be focussing on what you can afford now,” says Pankaj Mathpal , founder and CEO of Optima Money Managers. For example, if you think an engineering degree is a minimum you would be willing to pay for, start with it. If it costs Rs 10 lakh, then apply inflation to it. “Education costs in I...