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Monday, November 30, 2009
Sunday, November 29, 2009
Eight-step guide to financial planning
Financial planning is a matter of discipline, as a set amount has to be saved: People on their first jobs don't do much with the salary credited to their account, except spending
When you start earning, there is this rush of power you get by seeing money accumulate in your account month-on-month. And this can be quite addictive. More often than not, most people, especially those in their early twenties on their first jobs don't do much with the salary credited to their account, besides spending it.
If any money is left after the splurging, it usually lies in the account idle. This happens for two reasons: One, you don't know how to go about investing and two, you haven't really thought about investing any money as you have no need for it at the moment.
Now the latter reason is more dangerous because there is no such thing as too early when it comes to investments. The sooner you start the better. As for the former reason, here's a step-by-step guide to assist you in sorting your investment priorities.
Life, Health and Medical: That investments are a must is a given, All you have to do now is to work out how you intend to invest your money, i.e. what are your priorities, where you will invest money and how much. Now, this needn't be compulsory, but for those unsure of where to start from, insuring life and health (mediclaims) is usually a good idea. This is the most basic investment. It's one way of ensuring you don't make your family liable in case something happens to you. A mediclaim even offers cover for family, so it's security during troubled times.
Save judiciously: This is a matter of discipline. Each month, there has to be a set amount of money from your salary that is saved. It could be any amount, Rs 1,000, Rs 5,000 or Rs 10,000. The point is, each month, this amount has to be saved no matter how many birthdays or anniversaries happen. As the saying goes, A penny saved is a penny earned – so start saving!
What's your goal? You need to indentify this early. Each person has a financial goal. For some it is a three bedroom apartment in the suburbs, some others it's a car, or child's education or marriage, etc. The goals vary but these need to be identified quickly. First time earners may not really have an immediate goal, but this is where some thought is required. It's important as soon as you start earning to have some sort of an idea of what you intend to achieve with the money you make. This helps plan your finances immensely.
Prepare to invest: Once you know your financial goals, it helps to draw a basic sketch of the amount of money you will need to invest/save in order to achieve it. The investment options one chooses has a lot to do with a person's risk appetite. You need to gauge your risk-taking abilities. Some people prefer playing it safe, yet others like a bit of a gamble, if it means they can earn some quick bucks. The ideal approach is of course a balance of the two. But either way, investments are crucial. So be it, sedate and secure debt funds or aggressive and unpredictable equity funds, it's never too early to put in some money on these.
Repaying loans: It's unavoidable! At some point or the other, everyone finds themselves in some sort of debt. It could be your house, car, education or even your credit card. Whatever it is, your financial plan must include provision for paying off these debts. If you have more than one, then naturally, the priority will be the high-cost followed by the rest in that order. However, an early understanding of never spending more than you earn should ensure that you don't have to pay off bills and EMIs after the due date.
SOS provision: Emergencies don't call in before knocking on your doorstep. And while there's no guarantee of the degree of damage it brings, it is nevertheless important to have some provision for the same. Say an FD kept safe in the bank or shares of a popular stock or gold in the locker or any other investment that you can dig into if the situation calls for it. The important thing is to identify the funds you will use during emergencies.
Allocating assets: When you are making an investment plan, it's necessary to understand your money needs. Say, you will need money on hand in two years time to pay for your daughter's MBA, or money for down-payment of a car loan the next year. Identifying these needs will help you allocate your assets accordingly, such that you have liquid funds at the appropriate time. So, planning is not just about the end financial destination, it is also about accounting for the little stop-overs on the way. Your dream may be a duplex apartment, but on the way to getting there, you'll find yourself wanting a car, a vacation every year and perhaps some retirement provision as well. And your financial planning has to accordingly have assets distributed such that you can achieve those goals
Ask for help: This is the most important part of planning your own finances. You may have a good head for numbers, but it still doesn't mean you have to do it alone. Planning your finances, allocating assets and monitoring their performance constantly is a huge task and you will definitely need assistance. So, never shy away from looking for that help. And it's a lot easier now. All you need is a relationship manager from your bank who will supervise and monitor your investments. This person will also guide you on various investment options. You should listen closely to all the advice, but never take action on any until you've done your own research.
So, do save, make a plan and start investing now!
So, do save, make a plan and start investing now!
Author: Seema Hariharan
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Tata AIG Life launches child ULIP : InvestAssure Superstar
Tata AIG Life on Wednesday launched a unit-linked life insurance plan (ULIP) for children's education, InvestAssure Superstar.
In the case of the parent's (proposer's) unfortunate demise, the sum assured would be paid to the nominee and further premiums would be paid by the company through the inbuilt Waiver of Premium (WOP), among other benefits.
The fund under the policy would also continue to grow till maturity, the company said in a statement in Mumbai.
Besides the WoP, the plan offers investors Systematic Money Allocation and Regular Transfer (SMART)- a solution for managing investment.
SMART enables simple switching of a part of the customer's investment from the accumulation to the target fund of his or her choice.
Tata AIG Life InvestAssure Superstar offers a flexible policy term between 10-25 years.
The policy can be bought by anyone between the ages of 18-55 years and the maximum maturity age is 65 years.
The fund under the policy would also continue to grow till maturity, the company said in a statement in Mumbai.
Besides the WoP, the plan offers investors Systematic Money Allocation and Regular Transfer (SMART)- a solution for managing investment.
SMART enables simple switching of a part of the customer's investment from the accumulation to the target fund of his or her choice.
Tata AIG Life InvestAssure Superstar offers a flexible policy term between 10-25 years.
The policy can be bought by anyone between the ages of 18-55 years and the maximum maturity age is 65 years.
Friday, November 27, 2009
ICICI Pru SmartKid ULRP
ICICI Prudential's SmartKid is a fixed-term insurance plan that provides you with funds at regular intervals. The plan also keeps your family financially secure should an untoward event ever occur. SmartKid offers an exclusive choice of 3 education insurance plans: SmartKid New Unit-linked Regular Premium, SmartKid New Unit-linked Single Premium and SmartKid Regular Premium. Take a look at the features and benefits of each plan: 1.SmartKid New Unit-linked Regular Premium UIN 105L058V01 SmartKid New Unit-linked Regular Premium is a unit-linked plan, which enables you and your child to accumulate wealth by virtue of the performance of the underlying market-linked instrument. Take a look at the features of the plan: Premium: The minimum premium to be invested is Rs. 10,000 per annum. After deducting premium allocation charges from the premium, the remaining amount will be invested in a fund of your choice. Sum Assured: The minimum Sum Assured is 5 times of Annual Premium, subject to a minimum of Rs 1 Lac Policy term: The term of the policy will be calculated as the difference between your child's current age and the age of your child when the policy matures. Mortality, Policy Administration charges: These and other charges will be deducted from the units in the fund. 2. SmartKid New Unit-linked Single Premium UIN 105L059V01 SmartKid New Unit-linked Single Premium works in much the same way as SmartKid New Unit-linked Regular Premium policy mentioned above. The only different feature is the premium amount-you will be required to pay only a single premium, which starts at as low as Rs. 50,000. Additional Features and Benefits Common to All 3 Plans Regular payouts: As your child approaches key educational milestones such as 12th standard or graduation exams, he or she will receive regular payouts, guaranteeing he or she continues to study, no matter what the circumstance. Death Benefit: Your child will receive the Sum Assured immediately, should something happen to you. ICICI Prudential will pay the remaining premiums, ensuring your child continues to receive policy benefits, as always. Income Benefit Rider: You can choose to add the benefits of this rider to your child's education plan. Should you depart before your son's or daughter's education is complete, you child will receive 10% of Rider Sum Assured, for the balance term of the policy. Add-on riders: 'Accidental Death and Disability Rider' and 'Waiver of Premium Rider' ensure your child stays doubly protected, at all times. You can choose to add these to your child's education policy. Tax benefits: Premiums you pay for a SmartKid policy are eligible for tax savings [u/s 80(C)]. Maturity and death benefits are eligible for tax exemptions [u/s 10(10D)]. 3. SmartKid Regular Premium UIN 105N014V02 Flexible investment option: Choose the amount of premium with which you wish to safeguard your child's education. Flexible policy tenure: The tenure of the plan will be calculated as the difference between your child's current age and his or her age at which the policy matures. Flexible premium options: The premium will be calculated based on 3 factors: Sum Assured, policy tenure and your age. Guaranteed bonus: A guaranteed bonus of 3.5% per annum is declared for the first 4 premium paying years plus an annual vested bonus declared in subsequent years. Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 100 75 Debt, Money market & Cash 25 0 Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 40 0 Debt, Money market & Cash 100 60 Indicative Portfolio Allocation Max (%) Min (%) Debt Instruments, Money Market & Cash 100 100 Indicative Portfolio Allocation Max (%) Min (%) Debt, Money market & Cash 50 0 Equity & equity related securities 100 50 Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 100 80 Debt, Money market & Cash 20 0 Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 60 0 Debt, Money market & Cash 100 40 Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 100 80 Debt, Money market & Cash 20 0 Indicative Portfolio Allocation Max (%) Min (%) Equity & equity related securities 100 80 Debt, Money market & Cash 20 0 Portfolio Allocation Max (%) Min (%) Debt, Money market & Cash 100 100 Disclaimer :
Features and benefits of SmartKid
Fund options available with ICICI Pru SmartKid ULRP
Objective: To provide long-term capital appreciation through investments primarily in equity and equity-related instruments.
Potential Risk- Reward profile of the Fund: High
Objective: To provide a balance between long-term capital appreciation and current income through investment in equity as well as fixed income instruments in appropriate proportions depending on market conditions prevalent from time to time.
Potential Risk- Reward profile of the Fund: Moderate
Objective: To provide accumulation of income through investment in various fixed income securities. The Fund seeks to provide capital appreciation while maintaining a suitable balance between return, safety and liquidity.
Potential Risk- Reward profile of the Fund: Low
Objective: To provide suitable returns through low risk investments in debt and money market instruments while attempting to protect the capital deployed in the fund.
Potential Risk- Reward profile of the Fund: Capital Preservation
Objective: To generate Superior long- term returns from a diversified portfolio of equity and equity related instruments of large, mid and small cap companies.
Potential Risk- Reward profile of the fund: High
Objective: To achieve a balance between capital appreciation and stable returns by investing in a mix of equity and equity related instrument of large, mid and small cap companies and debt and debt related instruments.
Potential Risk- Reward profile of the fund: Moderate
Objective: To provide long-term capital appreciation from an equity portfolio predominantly invested in NIFTY scrips.
Potential Risk – Reward profile of the fund: High
Objective: To generate superior long-term returns from a diversified portfolio of equity an equity related instruments of companies operating in four important types of industries viz., Resources, Investment-related, Consumption-related and Human capital leveraged industries.
Potential Risk-Reward profile of the fund: High
Objective: The fund seeks to provide guaranteed returns through investment in a diversified portfolio of high quality fixed income instruments.
Risk-Reward Profile of the Fund: Low
© 2009, ICICI Prudential Life Insurance Co. Ltd
Registered Address: - ICICI Prulife Tower, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025; Reg No: - 105
Insurance is the subject matter of the solicitation.
For more details on the risk factors, term and conditions please read sales brochure carefully before concluding the sale.
Unlike traditional products, Unit linked insurance products are subject to market risk, which affect the Net Asset Values and the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns.
Funds apart from return guarantee fund do not offer guaranteed or assured returns.
Investments are subject to market risk.
In this policy, the investment risk in the investment portfolio is borne by the policy holder.
Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time.
Service tax & education cess will be charged extra as per applicable rates. Tax laws are subject to amendments from time to time.
Advt number: W/II/126/2008-09
Lifestage Pension: Form No U49: UIN 105L075V01, Lifetime Gold: Form No. – U53, UIN: 105L077VO1; Lifetime Super Pension: No. – U40, UIN: 105A019V01; Lifestage RP: No. – U48, UIN: 105L073V01; LifeLink Super : UIN 105L053V01; ICICI Pru Health Saver UIN 105L087V01; LifeLink Super Pension UIN:105L057V01; Premier Life Pension UIN - 105L074V01
HDFC Term Assurance Plan
This plan is designed to help secure your family's financial needs in case of uncertainties. The plan does this by providing a lump sum to the family of the life assured in case of death or critical illness (if option is chosen) of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to one's family in the unfortunate event of one's death. This helps your family to maintain their financial independence, even when you are not around.
Features
Please roll over your mouse over circles for explanation.
Advantages
- High cover at a very nominal cost.
- Flexibility to choose the Sum Assured.
- Additional benefit options can be availed at marginal costs.
- Premium amount remains the same over the term of the policy in case of regular premium
- Option of paying single premium or regular premium.
- Tax benefits under sections 80C, 80D and 10(10D) of Income Tax Act, 1961.
For more details on risk factors, terms and conditions, please read the Product Brochure carefully and/or consult Financial Consultant before taking a decision.
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