Category: General

List of Different Asset Classes for Investing

Posted on by Jagoinvestor

Below is the list of different Asset classes one can consider for investing in Indian markets. For building a successful balanced portfolio one has to understand different asset classes and as per their risk appetite, one has to build his/her portfolio so that it’s optimal from his risk return point of view. In this post you will look at different asset classes and their sub categories with the risk potential. This is not an exhaustive list of categories, however it covers most of them. See the Chart Below

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Readers who are reading it in Email can see the chart here or visit blog article

Points to Remember

  • The above chart does not contain exhaustive list of products and asset classes. See What is Asset Allocation
  • REIT and REMF are yet to come to India, they are not there in market yet
  • Mutual funds classification is not complete. There are different ways to classify mutual funds, the one I have shown is one of the way. Here is the list if good Equity Funds and Debt oriented Mutual funds

Comments! I am sure I missed out somethings in this chart, please suggest me something I can add.

Top 5 things you should do in 2010

Posted on by Jagoinvestor

Look around, the world is lovely and bright
Look inside, understand yourself and you’ll see new light
Follow your dreams, follow your heart
Do everything that fills you with delight

Wish All the readers a Happy New Year

In this short post we will see what are te things you should make sure you have completed . We will actually see the points you should keep in mind through the older posts only . Take it as a guide for what you have to do in coming year if you have not done .

New readers can look at Archives to find out Old articles categorised by Month and Category

Important Points

  • Make sure you have adequate life cover , Calculate how you can calculate your Insurance cover and then take a good Term Plan to cover your self . It is extremely important .
  • Open your PPF account if you have not done it yet , I know its tough to take action , but there is no alternative 🙂 .
  • Make sure you understand the concepts and importance of Debt and Equity , understand the importance of Asset Allocation . Understand that Equity is extremely risky in Short term and Debt is extremely risky in long term.
  • Make sure you don’t buy products which you do not understand. This is important , Don’t get into wrong products . doing nothing is a better thing then doing wrong things . Learn from this blog and other blogs , read before you do . don’t do before you read . This is the common mistake . Read some Tips in Personal Finance .
  • Share, We cant grow unless you share things. 5 ready to learn, less knowledgeable people are better than 1 Albert Einstein. When you share links, tell your friends about this blog, Give your comments in articles, There is conversation happening and that leads to more ideas, disagreements , which are the essential things in life to grow . Do more of it . If you are silent reader , I can understand that you don’t like to talk much , but occasionally come in and say how you feel about the idea , put 2 lines , that’s enough .

What I Wish for in 2010

All the right decisions we can make in life are “simple” and “extremely tough” to take. We get confused because of lots of choices and the simplicity of products. It does not fit with our complicated environment these days.  All the wrong decisions we take in life are easy to take , looks good to us at first moment and hence give an impression that they are great and worth taking. Same thing happens in our financial lives . Simple products like Term Plans , SIP in Mutual funds look too easy and simple and hence make us feel that there is some thing wrong with them , We think that how can they be so simple and so powerful, and when we see them in comparison with complicated products like ULIP’s and money back plans, they make us feel like we are doing some thing wrong by buying something which not much people buy.  More than 80% Insurance p9licies sold in India are ULIP’s, Just because 80% people do it , It does not mean they are right product for you . Think and judge your self . Just like the top of the ladder is never crowded in any profession , the same way the best products is not the one which is most sought after . Don’t let 2010 be a year when you make the same mistakes which you have done earlier in life . Making mistakes is one of the greatest gift , Repeating them is the biggest curse . So make a mistake, don’t repeat it 🙂 .

I am not a religious person and I am yet to discover if I am a spiritual one either , but there is some thing inside me which asks me to wish for each and ever reader of this blog that he/she should be more educated , more empowered with the psychology of how to succeed in Financial Planning . I feel like this blog is a platform where any new person can come , learn , discuss the ideas and one day he/she can become his/her own financial planner , who is capable of taking all the right decisions one should be making , you don’t need to depend on anyone , neither this blog nor me , you can be your own master and together we can and we will do it . It might take some time , but its going to happen . I know .

I thank you all for the great support and motivation you have provided to make this blog one of the best financial planning blog in the country today. Happy And Prosperous New year to you and your Family .

Manish

Comments , Give me suggestions on how I should take this blog in 2010 and what are the different things we can do on this blog . You are a part of this Family and your views matters .

Updates

  1. The blog completes 2 yrs
  2. Monthly Pageviews are now touching 70,000 per month
  3. 800+ comments in last 30 posts in less than 3 months

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Last moment tax planing in 30 minutes

Posted on by Jagoinvestor

Just in case you have not done your tax planning for this year and you are in a rush of doing it for providing documents proof to your employer, I will tell you how you can quickly do your tax planning at the last moment. First of all it’s not advised that you wait for last minute for your tax planning investments but now if you are late, let’s see how you should plan for your investments at the last minute to save your taxes. We will also discuss in this short article what are the things you should not do in hurry.

Don’t get mad about tax saving: If you have short term Commitments and can’t afford to lock your money for long term it’s better you do not put money in Tax saving Instruments. You should never do Investments just for tax savings. I have personally not invested for much tax saving this year apart from my company PF and Insurance. I have short term commitments and I cannot afford to lock my money for another 3 yrs. So I better pay tax on the part which I could have invested. There is no point in locking my money and then again running around for personal loan or credit from Friends and Family when need arises.

Life Insurance: Make sure you have adequate life insurance cover. If not, take a term insurance for amount of the cover your are short of. Protection is the first step of successful Financial planning. Take a Term Plan from two Insurers. Look at how to calculate your Insurance requirement. The cheapest Term plan at this moment in market is iTerm from Aegon Religare.

Planning for Long Term Goals: Make a list of goals for long term like Retirement, Child Education, Child Marriage etc (Anything thing with a target date of 5+ yrs). For these goals you can invest in Tax saving Instruments. If the goal is extremely critical and you are not a risk taker then the best thing would be Tax saving Fixed Deposits. If you can take some amount of risk, you can invest your money in ELSS Mutual funds (here is a list of good Equity Mutual funds). For goals which are 10+ yrs away, you can also put partial money in PPF. Investors who have sound knowledge of Markets movement and can spend time and efforts on switching can go for Low cost ULIP’s (see Wealthsurance and Aegon religare). Short term ULIP investing is a BIG and BOLD No No!!

Health Cover: The next thing you should target is your Health Insurance. Better take a Family Floater Plan for your Family  and  the premium will be exempted under Sec 80D up to max of 15,000.

Short Term Goals: If you have any short term goals then do not put money in any tax saving instrument, rather put money in non-tax saving instruments like Plain FD (See, how to find best FD), Debt Oriented Mutual funds, Avoid Equity as far as possible if you are not a risk taker.

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So the hierarchy of your products should be like this

  • Life Insurance
  • Health Insurance
  • Long Term Investment products like ELSS and PPF
  • Medium term Investment Products like tax saving FD

What you should not Invest in?

Another Important Point is what no to do in Hurry? So here are some of the things you need to remember

  • Do not invest in ULIPS in hurry, the last 3 months of financial year is the time when Agents will give their best performance in luring away investors. Don’t listen to their stories of India Shining and other bakwaas, if you don’t understand the product and you do not have skills to manage ULIP’s. Same applies to ULPP’s or any other market linked products.
  • Do not invest in Endowment or Money back plans for tax savings. Your Father, your Grandfather or your Uncle might push for it but investing in those policies is a long term commitment and just for saving tax this year you cant invest in those policies.
  • Evaluate your risk appetite again and then take decision. Most of the people can take risk and their situation allows them but they don’t take risk. On the other hand there are people who’s situation does not allow taking risk, but still they take the risk. They confuse between Willingness to take risk Vs Ability to take risk.

Conclusion

Tax saving should be done at the start of year always so that we dont take wrong decisions in hurry. But if you are late you can take some logical decision and still do your tax planning.

Please share your ideas about what other instruments can be used for long term tax savings. Let other know how early tax saving decision has helped you.

Review of Stockezy.com , A Social Investing Community

Posted on by Jagoinvestor

Ever thought of a Social Investing community website in India . I am glad to review Stockezy.com today which has grown to a popular stock investing community in last couple of months in India . Stockezy.com is one of the best online places you can get education, stock tips , great links for other financial resources (mainly stock market related) . Let me point out main features of this website which you can use to increase your knowledge and also contribute . There are different sections in Stockezy , Below is a short description of each of them .

Stock Picks : You can stock picks from members on different stocks in indian stock market . With every stock pick there are important things like  target price , target date , Stop Loss . There are picks for Buy and Sell both .  Link

Opinions : This is a section where you are read opinions of different members on variety of topics from market outlook , stock movement , Short term view , Long term views about something . In short this is a place where you can get to know what a person feels about a topic . There are different categories for opinions so that its easy to find out some opinion . Link

Questions & Answers : You can consider this as a forum for questions and answers , If you have any question on some stock , market direction or any other similar thing , you can just post a question and anyone who wishes can reply to your question . You can see it as a thread which discusses some idea . Link

Portfolio Tracker : This is one of my favorites , this is a place where you can test your investing skills and buy and sell in real time, Its a great platform to test your abilities before you enter the market . You can get your statement which shows your Profit/loss and all the transactions summary in short . So if you are a new investor who is going to enter the market , its an ideal place to test out your strategies and skills . Link

Share Links : This is a very nice addition recently on Stockezy.com . You can view this as a twitter of Financial Markets . Different Financial blogger post links to variety of topics here with different categories . Even I post my personal Finance posts there .  Link

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Other Features

  • You can subscribe to RSS feeds of any particular sub features like  Stock Picks | Opinions | Answers .
  • You can watch out different top traders for different Time frames like Top day trader , Top medium term Investors etc
  • Gives you a list of Most active investors and top pickers , which gives you a good idea of whom to listen and whom not .

Stockezy is a fast growing Investors community with close to 1 million page views a month , You can get lots of great bloggers like Nooresh Merani , Arun the Stock Guru and other famous bloggers.  If you wanted a platform to show your investing skills , Stockezy is the place you belong to . Register to Stockezy using This Link

Further Improvements

There are couple of things which can make its much better . they are

  1. An online  technical Analysis Software system which users can use if they wish . There are many investors who like to technically analyse a stock and hence its a much have .
  2. More data on Derivatives segment . there is lack of quality data on F&O segment , so it can add the segment for that .

How should you use Stockezy ?

There are different ways you can use Stockezy.com , if you are new to stock market and want to learn how to to trading , learn the basics, you should join it and start doing the mock trading and see your porformance over a period of time , there are so many great people with knowledge out there who can give you some wisdom , listen to them . Before that you would like to read my ebook on How a newcomer should start in Stock Market .

Comments, Have a look at it and tell me if you like it , Feel free to give your negative and positive feedback .

Disclaimer : I am part of Stockezy.com Bloggers Network

Till what age should you take your Life Cover ?

Posted on by Jagoinvestor

From some last some days I am getting queries that some Life Insurance Policies are not giving cover for more than 65 yrs of age or for Tenure of more than 25 or 30 yrs and why they dont want to take those policies because they want a cover till 70 or 80 yrs of age . So People are confused on which one to take. They generally want a cover which covers them till 70-80  yrs of age or sometimes whole life . Let us talk about till what age should you target your Life cover generally .

Why do we buy Life Cover ?

Now lets talk Logic and think logically , no expertise required here . What is Life Insurance and How much Life cover do you need ?  Life cover is to cover the risk of early Death of bread winner and for hedging the risk of loss of income due to the sudden unexpected death of the main earning member . So ideally Life Insurance cover should only be there till the retirement of the earning member , because anyways after that he/she wont be earning , so no one will financially dependent on that person . You only think , If you are 70 yrs old , do you need Insurance cover ? Who is dependent on you by that age , generally ? How many of you are dependent on someone who is in that age ? Are you ?

Hence if a person age is 30 and he is planning to get retired at age of 58 . He requires a policy which covers him till age 58 , not more .. See the Diagram Below …

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So what do we learn ?

Life Insurance is in other terms a replacement of your potential Future earnings. Hence, Insurance amount which your dependents gets should be a substitute of all the amount the bread winner is going to earn in his life time and provide for needs of his Family. Therefore when you are near the retirement and  if you die, your potential future income  which you were going to bring in the family will be less and hence your Insurance cover at that time should be less . We today have Level Term Insurance where we have the same level of Insurance at that time , which is ok . Note that we also have decreasing life insurance cover and Increasing Life Insurance cover also . So lets see the main points we learnt here

  • We need High Insurance cover at the start of the Career when have no Investments . Look at iTerm Term Insurance from Aegon Religare and Some Tips while taking Term Insurance
  • We need to be covered till the time we want  retirement .
  • The day we earn enough money which our dependents need even if you die , you can get rid of your Insurance and then you don’t need Insurance .
  • So there is no point in having Insurance after your Retirement , unless your intention is to get a big sum of money at the end even if it does not matter much .
  • This is the main reason why Insurance companies also give Cover till age 65 because that’s the time most of the people on earth get retired anyways .
  • Whole Life p0licies does not make any sense apart from the fact that they provide pension which is very low. See review of Jeevan Tarang Policy from LIC to understand more on this .
  • You should have sound Investment Planning so that when you reach your retirement you have grown your Huge Corpus .
  • Insurance at the end is the hedge against your risk of loosing the earning Potential , its just not a tool to make money on your death .
  • Use Insurance as Protection not for Saving , Dont just invest for Tax saving !!

Final Take Away

You have to Notice some imporant point here , Dont take the above diagram by heart and assume that your Insurance cover goes down every year , It can happen that because of other commitments you might have to increase your cover . The main takeaway from this article is that at the end of your career (your retirement life) you should have enough investments and money so that you dont need Life Insurance. Also there can be exception cases where this logic does not apply , we are talking a general case here and not a specific one 🙂 .

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Questions/Doubts ? Share your comments please

A close look at Real Estate Returns in India

Posted on by Jagoinvestor

Real estate is one of the largest employer after agriculture in India. It is also a globally recognized sector which is witnessing a high growth in recent times because of increasing demands of offices and residential places.

One of my friend has shared his own experience about real estate, let me share it with you.

Real estate in India

One of my friends experience about real estate:

“The current market value of my flat in Mumbai is close to 1 crore, I bought it at 28 lacs in year 2000. The returns have been Mind boggling 72 lacs in 9 years, i.e. 8 lacs a year approx. , more than my current salary and now I am planning to invest more in real estate instead of Equity, What do you think”.

A not so close friend was discussing his Real Estate portfolio with me.

He belongs to first category of common sense deprived idiots, who do not understand mathematics well. 28 lacs flat became 1 crore in Value in 9 yrs, the returns are great, but not exceptional enough to make someone eyes pop out.

Simple math’s will tell you that its 15.2% CAGR return over 9 yrs.

Now what’s so great return about this 15.2% Return?

15.2% return over long term is desirable and great and what’s normal return from Real estate in last decade in our Country, The only thing irritating is how people make fuss about it.

Even Gold has outperformed, Gold was $300 per ounce in 2001 and now it’s close to $1100 ounce, that’s 15.5% return, 0.3% more. On the top of that Builders are not keeping their promises of Delivering Projects on Time and with same quality Promised.

Real estate investments have caught everyone’s attention in the past decade and every Tom, Dick and Harry with 5 lacs salary tries to grab a 40 lacs flat. I will try to throw some light on Average Real estate returns in past 8-9 yrs in India.

Coming back to my Friend:

I told him that it’s been a very good return, and I appreciate his timing, good job. But definitely he is bragging more than it deserves. A second person (his friend) suddenly comes to his rescue and challenges me.

“But Manish, I bought a flat in 2003 @20 Lacs with 3 lacs of down payment and rest a home loan. I spent total of 7 lacs till date and the flat is already quoting around 60 lacs, that 40 lacs of profit in just 3 yrs through investment of 7 lacs, that’s 78% return on annual basis”, showing off his fast calculations skills and giving me a “anything-else-you-young-financial-planner” looks his face .

These people are from another category of “common sense deprived and mathematically challenged” people. It is worse than first category. The problem with these people is that they do not understand “leveraging” .

What is mean by Leverage?

A situation of sitting on huge profits by just investing a small amount as down-payment and rest with home loan is pure example of leverage and very common in India, This gives a feel to people that they are very smart.

These people never consider the case when their house value drops by a big margin like say 15 lacs and they have just invested 5 lacs from their pocket, then they are in loss of -300% (absolute). But as you know, investors like to consider a rosy picture; they somehow believe that it can’t be the case with them.

When Real Estate broke in US:

As US citizens who bought Real estate in the middle of the Bubble just because credit was cheap and they could have made a lot of money by taking a Home loan and almost nil Down payment, When Real Estate broke in US, people who has put $10,000 from their pockets for a $4 million house were in losses of $1 million, because they had to pay $4 million as a loan money for something which is now costing $3 million.

That’s an unrealized loss of $1 million in a short time. That’s the problem of Leverage. Investors never think about this, India is a success story and housing is scarce, that’s enough for them to take a chance.

With my amazing quality of self-control, I kept all this in my mind and didn’t argue with him, sometimes your skills of explanation is limited to blogs only.

What is RESIDEX?

Don’t feel amazed if I tell you that there is an Index for tracking Real Estate in India. Its called Residex and maintained by National Housing Bank in India. It’s updated once every 6 months.

It covers all the major cities and the sub-areas in that city. The index Value over time will tell you how real estate prices are doing in some area or city.

Please understand that these prices are average real estate prices and not some general case which would negate what we discuss here today.

I don’t know how that is calculated but a common sense way of calculating it is to take a sample of real estate plots/flats in an area (for example 1000 units) and calculating the appreciation in value from last 6 months .

Lets see the RESIDEX values for 5 cities

Here is the chart of the same table

What is the mistake people do when they calculate Returns?

The beautiful mistake which everyone does is that they calculate pure absolute returns from Real estate which is in many lacs of rupees obviously.

So, if a person invested 30 lacs in a flat and it becomes 60 lacs in 5 yrs, they are sitting on a 30 lacs profit.

That’s a lot of money and people are excited to see that much money, but you also have to see that they invested damn 30 lacs !! for that, which is not every one’s cup of tea and the returns are normal 14-15% return/year on investment if you compare it with Gold or Equity.

You could have made more returns if you had invested in Equity (SIP in mutual funds in some top funds) . If you consider the risk taken for the return people have got in Real estate , personally I am not very much excited then, Investors forget the risk taken to get some return and only concentrate on Return part.

See an Article on GFactor , A tool to find out if an investment suits you.

What you have to see is how much return you got from something after adjusting the risk taken for that . So given a time frame of 1 year .

  • If you do a FD and make 9%, it’s amazing !!
  • If you invest in Real estate and make 10%, its ok
  • If you invest in Equity and make 11%, its just fine.. not a big deal
  • If you speculate in Options for one year and make your money grow by 500%, I would be personally disappointed a lot .

Some smart (second category people) people think that they can buy Real Estate on loan and make 30-40 lacs in 4-5 yrs from house value appreciation, While that is possible and has happened to a lot of them and definitely the return would be amazing.

But this exposes them to a great amount of risk which they don’t understand, its pure leveraging. There are better ways of leveraging than this. This kind of Leveraging is still nothing in front of Options trading in Nifty or some Stocks.

Not that I discourage people from taking a home loan and invest in real estate , but don’t overdo it , and understand and accept the risk involved, be ready for it.

“Risk happens when you have no idea what you are doing”. If you pre-calculate it and consider it, then it’s called Speculation, which is my favorite 🙂 .

An option trading is something I would recommend who have great risk appetite and dream of millions in short span of time, better than real estate.

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What is Average Real Estate Returns in India

IF we see the above chart of RESIDEX Values (for 8.5 years), you can find out the CAGR return of Real Estate in different cities. Let me show that for 5 cities in India.

Chart f or the same data

Note : I have assigned Index value for “India” by assigning weights of 25% , 25% , 25% , 10% and 15% to all five cities in same order .

What Should you Do ?

First of all, understand that Real Estate is important and you should always invest in it for Diversification of your Portfolio (If you can afford it right now). But that does not mean compromising with your Risk Appetite and investing just for the sake of Investing.

If you want to buy home, make sure you afford it, Buy a 1 BHK which you can afford if you want to live in it. If you want more than 1 BHK, plan for it, take it later. There is no rush. Real Estate is not the last thing in the world.

Don’t feel left out when you see others minting money in Real Estate, believe me they are making similar returns which you can make from Equity, just that the magnitude of profits they are making is high, not the returns on average. So Chill !! .

Note: Understand that whatever we have talked here is based on the RESIDEX index and there will be many specific cases which would make this all talk a nonsense, but we have to look at general case and not a specific case.

Download More data on Residex from HERE (From 2001-2007) and after 2007 at NHB website. Note that you can’t get all data of Residex at one place.

I combined the data from NHB from 2001-2007 and combined it with data on their Website to construct all 8.5 yrs of data. There was a shift in Base year because of which I had to do so.

What do you think about the Real Estate Prices at the moment in India?

I do not feel they are justified and the prices are mainly driven because of unnatural demand created by easy access to Loan. People buy it, but cannot afford it, If things continue for some more years. I would be surprised to see a big bubble burst in India like we saw in 2007.

Leave your Comments and let me know you are reading this blog.

Disclaimer: I have not invested in Real Estate, I am not very much excited about it and I don’t have money for it.

Readers Reviews of this Blog

Posted on by Jagoinvestor

Jagoinvestor is one of the simplest blogs that you can find to kick start your investing.There is such a nice variety of posts that all individuals can get benefits from it.Manish Chauhan the blogger behind it seems to spend a lot of time making his blog perfect for his readers.It is no surprise that his blog is so popular.It is a constant reference for all financial basics, explained in a very light manner.Whether you are a blogger, an investor,analyst or just someone passing by it is definitely worth spending some time here. — Sumayya Shaikh

Jagoinvestor is a great blog on investing. It is extremely rich in content, some of the posts are written extensively. The interesting part of this blog is most of the queries are answered from different posts present here itself. And by the way he’s a great cook…so you can expect a treat J — Charu Gupta

Jagoinvestor blog is an excellent one stop destination for understanding basics on a variety of topics in money management and stock markets.The content is presented in a way that is easy to grasp avoiding the complex lingo that usually scares away readers.This helps in a big way to get those crucial money matters fixed in one’s life without becoming too dependent on other advisors. — Saif Shakeel

This is one of the best blogs i have come across which explains the nuances of financial planning and investing in a way which everyone can understand.Especially the articles on financial planning, compounding power of money and endowment plans are real eye openers. This blog really help me avoid many pitfalls and I have educated my friends also.In a nutshell ,it is a one stop blog for anyone who wants to reap good harvest for their hard earned money. Keep going Manish !! — Swathi Kota

This is a great website ! Thanks for all the information. This website has provided a wealth of information for me and i really appreciate it and look forward to learning more. Now i know no agents can fool me anymore. Thanks Manish for the great job. — Anu Lopez , Dubai

Discover tips on saving money, investing smartly, managing your finances and getting the most for your hard earned money from the Smart Investor blog by Manish Chauhan. This would be the one website I would suggest to anyone who is new to investing or just starting up. — Skandhakumar

It is a must read for the people who want to plan their personal finances using a range products available in market.You would be wrong if you think it is a stock market blog .The title ‘Smart investor’ perfectly suits this blog — Sandip Naidu

I just happened to see Manish’s blog few months ago accidentally while reading other links in famous TA analyst. Manish brings out very simple but important issues on personal finance, stock market, insurance, interest rates etc. I am an Accounts Manager by profession but i never looked in to these aspects in my personal financial planning. After following his blog regularly i could review my financial planning and advise my peers. I appreciate Manish’s efforts — Venkateswara Ravi Prasad

If you want to Add your Review : Click Here

Questions and Answers , Part 6

Posted on by Jagoinvestor

I am putting some questions answered by me to users on “Ask a Question” form . I am putting 3 questions and there answers  . If you have any comments or better suggestions please feel free to add as comment . You can see other questions and answers done in the past Here .

You can also ask your questions from other experts on recently started Jagoinvestor Forum

ask a question

Question 1#

I’d like to invest Rs 5,000 – 7,000 a month through SIP to build a corpus for my child’s education in 20 yrs from now. I think I will need around 20 lakh (which will be around 60 lakh when we count the inflation). I’d like around 80% to go in equities for 1st 15 years and then switch to a more risk averse equation. Which funds do you suggest? Child will be born in Apr 10, can I start rightnow?

I’ve a term plan for 70-80 lakhs. So, ULIP would not be appropriate for this goal, right?

Answer 1 :

Excellent , congrats on planning this .

>>> 7000*(1.01)*(1.01**240 – 1)/.01
6994035.4332886515

Understand the Formula here

7000 per month can make around 70 lacs assuming 20 yrs and 12% yearly (1%) return . This is as per your requirement , which looks achievable easily , considering you review your investments every year and maintain your asset allocation .. .

You can put some amount (20-30%) in PPF (child name or yours) .. and then rest divided in some 2-3 good funds through SIP .. this should do the job .

you can choose any good fund listed on the article some days back .. You can also look for Balanced funds if you dont want to take too much risk ..

Question 2#

I am planning to invest my money in some CHIT fund scheme where in on an average you get more interest than in SB/Fixed deposits. What is your view on it and can we really trust these chit fund companies.
Following are links of couple of chitfund companies:

Answer  2:

I havent looked at what they have to offer , but without seeing that I am telling you dont invest in these .. Have you every heard these names from more than 3-4 people , Might be they have made some money out of this , but is that under law and are there contracts which are legally binded .

There are cases of frauds in these kind of chit funds . I found some complaints against these chit funds on net .. please go through them .. they might be offering higher returns but always remember that anyting above 8% is with risk 🙂 otherwise everyone will go with them only .. Don’t get into this unless you are ready to loose all your money someday ..

https://www.consumercomplaints.in/complaints/shriram-chit-funds-c41300.html
https://www.consumercomplaints.in/complaints/margadarsi-chits-karnataka-pvt-ltd-c217337.html

I feel even options trading is safer than these .. because you only loose because of yourself there , not someone else .

Question 3#

I would like to invest Rs.7000/ month by auto SIP ( for 2to 4 Years. My risk profile is moderate and my preference is to invest in Balanced Fund, Debt Fund & Diversified fund. My age is 45 years. Please recommend some of the good fund and amount to be invested per month.

Answer 3:

2-4 yrs is a modetate time frame .. You should go for Equity funds or Balanced funds only if you can take some risk on your investments , Risk does not mean negative return , it means below normal returns also ..

If you are ok to invest 7k per month , then even if you invest in something which gives 10% , you can generate around  4.14 Lacs . If you take risk and target equtiy funds , you can get 15% returns also , which will make 10 Lacs ..

Incase your Goal after 4 yrs can be met by 4 lacs , then i would recommened 10% route which will involve mostly debt funds or Balanced funds .. or Debt funds + Equity funds (30-40%) ..

You have to ask your self if you want your goal to be met or Generate higher returns with RISK 🙂

The best thing I think would be

  • 3k in Debt fund or FD
  • 1k,1k in 2 Balanced Fund
  • 1k,1k in 2 ELSS funds (equity , tax saving also)

Have a look at

Best of Luck , Dont hesitate to ask any other question and reply back if there is any doubt yet

Do you have a question ? Ask it here on “Ask a Question” Form or talk to others readers on Forums

iTerm , Term Insurance Aegon Religare

Posted on by Jagoinvestor

Did you recently bought a Term Insurance from some other Company ? Because here comes iTerm, the new sensational Term Insurance from my favorite Aegon Religare. This product has power to change the way Indians Look at Insurance. iTerm is currently the cheapest Term insurance in market, not only cheap, its dirt Cheap.

Imagine how much Rs 8162 provide as an Insurance cover? I went to their website and found out that I can get astonishing Rs 1 crore Insurance for tenure of 25 yrs (My age is 26) just for Rs 8162 (including Service Tax)

iTerm insurance policy by aegon religare

Update 18th Dec 2009 :

Disclaimer : Please note that this is my personal View and should not be taken as Promotional Review , Hence take decision only after you are satisfied . The customer care of AR is not working well and hence the user experience is not that great . I personally feel it will get better in coming week and months . So I will buy mine only after that .

If you are concerned about Security and do not understand Insurance products and their pricing , please do not get into this product and stay will well known names like LIC and SBI or HDFC . Thanks

Main features  of iTerm Term Insurance

  • How to Buy : Can be bought “only online” from Aegon Religare website. (Only Internet Explorer Supported)
  • Sum Assured can  be Minimum – Rs. 10,00,000 , Maximum – No limit (subject to underwriting requirements)
  • Entry Age : Minimum – 18 years , Maximum – 60 years
  • Policy Term : Minimum – 5 years , Maximum – 25 years
  • Maturity Age : Maximum – 65 years
  • Premium Payment Frequency : Only Yearly
  • Free Look up Period : 15 days (you can return the policy if you dont like it)
  • Service Tax : Right now iTerm Shows you all the figures inclusive of Service tax . So in the above example I took , The total premium is just Rs 8162 (Smart company)
  • More Details : iTerm Brochure or get more Information by calling on 1800 209 9090 .

Comparison with other Insurers

If I compare Term Insurance Premiums of Different Insurance Companies , iTerm Comes out to be really really cheap , The second cheapest Policy around was 85% more costly than this , and it was ICICI Pru Protect  . I found this amazing tool which can compare Premiums of Different Insurance Companies with iTerm Term plan (Thanks to Ganesh)

Some Quotes

  • 30 years Male, Tenure 25 years, Insurance Cover  50 Lacs, Premium 5600
  • 30 years Female, Tenure 25 years, Insurance Cover  50 Lacs, Premium 4850
  • 35 years Male, Tenure 25 years, Insurance Cover 1 Crore, Premium 14500
  • 35 years Male, Tenure 25 years, Insurance Cover 1 Crore, Premium 11800
  • 50 years Male, Tenure 10 years, Insurance Cover 50 lacs, Premium 17200
  • 40 years Male, Tenure 20 years, Insurance Cover 75 Lacs, Premium 14925
  • 35 years Male, Tenure 20 years. Insurance Cover 60 Lacs, Premium 8220  (11640 if Smoker)

My Notes

iTerm Term Insurance was announced at Bloggers meet in Mumbai on 21st Nov, 2009 and I feel proud to tell you that “Jagoinvestor was also invited” to be part of the Blogger meet and part of Discussion on iTerm and overall Insurance Industry. Though I was not able to go there personally, I had one representative attend the meet on my behalf  (Thanks Abhishek Chandran) .

From the day Aegon Religare was Launched, I always knew that this Company has an attitude , It really know what to do and How to do it in Indian Insurance Sector . I think iTerm is one of the best products launched in the history of Indian Personal Finance System .

You can not miss this product , especially if you are still looking for Insurance. iTerm is a value for Money . India had a total internet base of over 60 million .  I am sure that this product will rock our Insurance Industry and in coming years Aegon Religare will lead the Industry for at least Pure Protection Plans .

Important Doubts

What should you do if you already taken Term Insurance recently ?

You don’t have Term Insurance but you are Planning to take one?

  • You are the perfect person , Not that you have not done the sin of being without Term Insurance till now , Your timing is perfect 🙂 . Go for this .

Make sure you dont miss the future Updates , Subscribe through Email for FREE !!

But I am a hardcore fan of Endowment and Money back Policies ? Why do I take Term Insurane when it does not pay me anything back at the end ?

Is it Safe to Buy Online Product from This company , I trust public limited Companys only ?

  • Here is the Answer of Are private Insurance Companies Safe . Regarding Buying online products, don’t worry .. Indian Insurane market is much advanced these days and we already have companies like ApnaInsurance and InsuranceMall where you can Buy, Sell, Manage and even make the Claims for your Policies.

I want to go for a Big Enough Cover and Want to take only iTerm , no other . What should I do ?

  • Break your Policy into two and take two policies . so Instead of taking one Policy for 1 crore ,  take two policies of 50 Lacs .

How to Buy iTerm Term Insurance online ? Can I get a Demo Please ?

Below is a Presentation with each slide showing you each page you need to fill while Buying iTerm Term Insurance online , Make sure you see it in Full screen to get a better feel .

“I Term Term Insurance From Aegon Religare Online Buying Demo”

View more documents from manish.pucsd

If you are reading this in Email , you can see the presentation on the Blog .  Readers with decent Internet Speed can also see Video Demo on Youtube.

  • Are you a Jagoinvestor Fan , let Manish know what do you think about this Blog ,  Fill the Guest Book

Shortcomings

Nothing is perfect and Everything has shortcomings , and so has iTerm , Which are

  1. Will take time to reach in Rural Areas as iTerm can only be bought Online , because of this the first layer of target audience are people who have access to Internet . Aegon Religare need to formulate a Strategy to Capture Rural market .
  2. As their is no agent involved in between there are many people who would not be able to keep track of yearly payments and they are more vulnerable to forget the payment unlike the scenario where agents made sure premium was paid on time , Not sure how far its an issue , tough not a big one .
  3. iTerm came out with this Policy without Much Advertisement and hence it would take some time for people to know about this .
  4. There are no Riders available with this Policy , which  may look little bad , but the primary objective of Cheap cover is provided , so I think its fine .
  5. Company is pretty new , so it will take time for the company to gain confidence , and given its pretty cheap premium , its subject of Crticism and Suspicion form general public .

Conclusion

iTerm is a innovative Term Insurance, Its a must have Product in everyone Portfolio because of its Value for money and amazing simplicity and importance as a Life Insurance Protection . Aegon Religare is showing some great leadership in Insurance Area and the only thing I am waiting for is its IPO 😉 .

Comments Please , Are you going to take iTerm Policy ? Do you need any more Insurance , Please share with us in comment and feel free to raise more doubts .

Happy To Announce JagoInvestor Forum

Posted on by Jagoinvestor

Jagoinvestor now has a Forum !! . I am extremely happy to announce that I have added Forums to this blog and how are one step ahead of what we were earlier . I was working on finding the best forum I can integrate and Finally I used SimplePress Forums which is a Plugin in WordPress . The link of the Forum is https://www.jagoinvestor.com/forum

Jagoinvestor_Forum

Main Points

  • You can now Interact through Other readers and do all the discussions on the Forum
  • I have added 4 main forums currently called Insurance , Mutual-Funds , Tax and Financial Planning . I can add more Sub Topics like “Stock Market” and many more .. this is just a Start .
  • You can register on the Forum from Register Link which you can see on Right hand corner at the top of Forum Page .You can then fill your Profile Page and don’t forget to use gravatars so that I can see your Face 🙂 .
  • I am sure we have lot of knowledgable people here who can help newcomers with their basic questions and this will save me a lot of time answering the question . I can also make some of you as moderators when I feel you are perfect 🙂

Suggestions

The Forum is in Initial Shape and I am learning how to make it better Look wise , So feel free to post your Suggestions Here and May be your tips if you are a Forum or WordPress or CSS expert here 🙂

Click Here to Make a Suggestion

Feel free to tell me how you like it and if you dont like it and It sucks 🙂 . I am learning WordPress slowly and making changes in the look and feel of blog , Wait for some weeks (read months) and It would look much better and beautiful than what it is today 🙂 .

UPDATE

Jagoinvestor Has Collected Rs 3,600 for the 3 families we Talked at 3 stories that might change your perception about your own financial situation .

Here is the list of people who made the Contributions and I would like to thanks them for their Kindness and Help , every help is a Big help . I will be sending the money to My father who will hand it over to each of them . In case you want to make any contributions , It would be great .. you can make as small contribution as you wish .

Contributors List

Contributors