Investment Advisor: How Does an SIP Help in Investment Management

Investments in mid-cap funds via an SIP yielded larger returns than large-cap funds from 2010 to 2015, says an article published in The Economic Times in August 2015. SIP is that tool that lets you diversify your investments over a long period of time. It is a structured route that lets you contribute towards your mutual fund(s) on a regular basis. Much like mutual funds help to hedge stock market risks through portfolio diversification, SIPs help you tide over market volatility. They also help inculcate the habit of saving and bring discipline to your investment. Your investment advisor may advise an SIP if you are a beginner and cannot invest a large sum of money in various schemes or if you are saving for a long-term goal, such as child’s education and marriage or for your retirement corpus.

How Does an SIP Work?

Through this tool, you can contribute towards the mutual fund on a monthly, quarterly, half-yearly basis and so on. Since its launch in India in 1997, a host of plans have come up, including one that lets you invest daily. All you have to do is instruct your bank for auto-debit. A certain sum of money is auto-debited from your bank every month on a pre-set date. This money is now used to buy units of the mutual fund(s), you wish to invest in. The purchase takes place at the net asset value (NAV) for the day. More units of funds are bought each month and transferred to your demat account. This practice lets you buy fewer units when the prices are higher and more units when the prices are low. This lowers the average investment cost per unit in the long-run. This is called rupee cost averaging.

Benefits

SIPs allow you to tide over market volatility through rupee cost averaging. They eliminate the need to time the market. Unlike traditional share market investments, which were done during market peaks, you can invest through an SIP both when the markets are rising and when they are falling. In case of rising markets, you benefit from the high value of your fund units. On the other hand, in case of a falling market, you buy the same units at a lower price. It is ideal for long-term investments, since it helps you maximise the power of compounding and rupee-cost averaging. The more money you invest, the more it gets compounded. Contributions are made in open-ended schemes, therefore you can exit and withdraw your money any time you wish you. You can also increase or decrease the amount you wish to invest anytime, with the right suggestions from your investment advisor.

Returns

An SIP is one of the most appropriate tools for investment management. It helps to build a significant corpus. You can calculate the expected returns from an average monthly contribution over a period of time at a certain interest rate through the SIP calculator available online. You can also check the ranking of a fund online before investing.

5 Things You Should Do Before You Decide to Buy a New Home

At least two projects must be held by an REIT, either directly or through Special Purpose Vehicles. Also, not more than 60 percent of the asset value must be invested in one project, according to the SEBI regulation, says an article published in The Economic Times in September 2014. Conventionally, people would invest in the real estate sector for long-term capital gains. But with the introduction of real estate mutual funds and Real Estate Investment Trusts (REITs), you can expect to make short-term gains as well. REITs are managed funds that invest in commercial properties. The rental income generated from such an investment is distributed as dividends and bonuses to the investors. It lets you invest without going through the hassle of finding the right property and doing all the paperwork. However, when you are buying a home of your own, you must be extra cautious about each and every aspect of the deal.

real estate mutual funds

Things to You Should Double Check Before Buying a House

You can either opt for real estate investment advisory services of an NBFC or buy a property yourself. Buying a house can be a lengthy procedure and you must be extra cautious, especially if you are a first time buyer. Here are a few things you must check before buying a house:

1.      Developer’s Profile – You must go through previously completed projects from the same developer. You must also check if the projects have been completed on time. Also check the foundation, construction and structural stability of the property.

2.      Necessary Approvals – Check whether the property has all the necessary approvals. The entire construction plan should have been cleared by the concerned authorities.

3.      Internal Work – You should get the wiring, plumbing and drainage checked before closing the deal. This is applicable both for new and used homes. Also look for ceiling or wall stains. These stains, if any, could be due to a leak. Get all such problems fixed before you close the deal.

4.      Location – It is a good idea to buy a house near public amenities, such as police stations, hospitals, public transport, schools, and more. Buying a house in a developing area will only help in significant capital appreciation in future.

5.      Budget – This is possibly the most important aspect. Your budget will help you shortlist potential properties. You can also take a home loan to finance your dream home. A bank may offer you a loan much higher than your pre-decided budget, However, you must not get lured and take a loan beyond your repayment ability.

Shop around, since this will broaden your choices and you will able to make an informed decision. You can also invest in this sector through real estate funds. These funds help diversify your portfolio and hedge risks 

Because life is unpredictable so plan wisely

It is said that the only constant in life is change. This is especially true of the state of our health. While outwardly we may appear to be in good health, we are unaware of a disease spreading its tentacles all over our body. Sadly, most serious illnesses only come to light once they have truly settled in the body. What we think is a routine doctor’s visit turns out to be the worst news possible.

This is exactly what happened with Suresh Poddar* (47), a businessman in Gujarat. “I used to work late nights and travel frequently for my business. I began to get severe headaches. Sometimes they would go away after a good night’s sleep. But then the headaches became a constant factor, with blurry vision. I panicked when I blacked out in office one day,” he explains.

critical illness insurance plan

His doctor ran a series of tests and asked him to go for an MRI. “Till this point I thought it was probably a migraine or sinus issues. When the MRI report came, my doctor told me I had a brain tumour. It was the worst moment of my life,” he remembers.

However, he rallied around quickly for the sake of his family. “There was no time to feel depressed. I immediately called up my insurance broker and told him of my predicament. He visited me and gave me the first bit of good news I had heard since the test results – the health insurance I had taken had a critical illness cover.”

Suresh underwent an arduous surgery to remove the tumor, but unfortunately, it was found to be a malignant cancerous growth. “I know that I am living on borrowed time,” he explains. “Cancers never really go away, and remission can happen at the most unexpected time. But at least my family has never suffered due to my illness. My critical illness insurance plan has paid for my tests, surgery and hospitalization. Though I am relatively healthy now, I am prepared to face whatever comes next.”

He has since taken a critical illness insurance plan also for his wife, Medha*. “After I am gone, my children will be wholly dependent on her. I have kept aside sufficient money for her to run the house and even pay the premiums for the policy. If, God forbid, she also suffers from a serious illness in the future, her medical expenses will be taken care of,” he reasons.

Suresh’s story is an important testament to the power of critical illness insurance. Every person must purchase this plan, whether or not they ever need it. 

How to choose the perfect health insurance plan

Buying health insurance has become a necessary task in today’s times. Normal ageing processes notwithstanding, many younger age groups are also falling prey to lifestyle diseases and serious ailments. Apart from these, there is the threat of unexpected accidents and natural disasters. All in all, we live in extremely unpredictable times.

While it is imperative to take health insurance in India, it can become confusing to choose the perfect plan. The plan you choose must be appropriate to your needs in every way. We break down this process in 7 simple steps.

1. Select the right insurer.

This is the most crucial step. You can do your own research online or ask your friends and colleagues about their health plans and their personal experiences. Normally, it is better to look for a company that has a high claim settlement record. Also look for the variety of plans, customer service responsiveness and numbers of subscribers to their plans. Look for general insurance companies that will also offer good health insurance components in their plans.

                                               (Source: lifeinsuranceforseniors80.com)

2. Choose as per needs.

The health plan you purchase will depend on the size of your family, future needs and composition of the family. If your family includes aged parents, spouse and children, it is better to invest in a family health plan. If you are single with no dependents, a smaller health insurance plan will suffice.

                                                         (source: nypost.com)

3. Select between cashless and reimbursement plans.

You can make a choice between cashless hospitalisation and reimbursement plans. In the former, all medical and hospital bills are settled by third party administrators directly with the hospital. While in the latter, the customer makes all the payments and then files for insurance with the provider. There are several good options in both areas in health insurance in India, so choose wisely.

                                                 (Source: www.medimanage.com)

4. Compute the correct sum assured.

The sum assured of the policy is not a random, high number of your choice. It is computed basis your current income, future inflation and add-ons you take in the policy. You can compute it roughly this way: Sum assured = 8 to 10 times current gross income + at least Rs 50,000 for inflation. Ask your insurance provider the sum assured calculation before you make a decision.

                                                      (source: www.livemint.com)

5. Understand the premium payments.

Simply choosing a high sum assured does not serve any purpose, except for tagging a high premium payment per annum. The premium payment depends on the tenure of the policy, the desired sum assured and the claims already filed against the policy. If you want a high sum assured at low premiums, you can opt for a term insurance plan. Your insurance provider can provide you with a list of plans that will suit your needs.

                                                     (source: wealth18.com)

6. Look for bonuses and rewards.

Many providers in health insurance in India offer bonuses for policies where holders have not made a claim for a certain number of years. Some plans offer a discount on the premium for not claiming insurance the previous year. Also check if the policy levies any additional interest or charges on the increased premiums.

                                            (Source: paymentcardsolutions.tumblr.com)

7. Check the network hospitals.

This is important especially for those taking cashless hospital insurance. Many people wrongly assume that cashless hospital insurance in India will give them the leeway to get admitted in the hospital of their choice and claim insurance. When taking the health policy, go through the policy document carefully and know the hospitals networked with the insurance provider. You can avail of cashless hospitalisation in these hospitals only.

                                          (source: www.healthcareglobal.com)

4 ways to claim your term plan

All over India, more and more people are increasingly investing in term insurance plans. Term plans are extremely affordable insurance instruments, which also accord high sum assured on the fruition of the policy. Term insurance helps the deceased’s family stay afloat despite the trauma of losing a loved one.

However, it is important to claim the term insurance money in the correct way. The MetLife term insurance plans have a very simple claim settlement process. Do follow these steps to ensure a speedy settlement of your claim:

1. File through the right channels.

PNB MetLife allows multiple channels for claim settlement. Customers can file a claim through the company’s financial advisor or sales manager. Or he or she can directly file it at the company’s nearest branch office. The company also has a Claims Department at its Head office in Mumbai. Alternatively, there is the option of filing through a partner bank which coordinates the procedure with the company. One more option is to file through the Regional Service Team. It is important to keep all updated contact numbers with you at all times.

2. Mode of intimation.

The customer can intimate PNB MetLife through letter, email or fax. The beneficiary should avoid making claims intimation over the phone. A written communication with a date, subject matter, relevant policy details and your contact details is ideal.

3. Documents requirement.

In case of term insurance plans, the claims fall under the ‘death claims’ and ‘accidental death claim’ categories. You must be very careful to prepare a documents docket to submit to the company with your claims application. The documents required are: Original or notarised death certificate, claimant’s signed statement, attending physician/certifying doctor’s statement, family physician statement, test reports and hospital reports (in case of death due to illness), photo ID and residential address proof of the nominee listed in the policy, attested copy of police FIR in case of unnatural death) and attested copy of post mortem report (in case of unnatural death).

Any other documents such as cremation/burial certificate and newspaper-announced (obituaries and news coverage) items may be called for in case of extraordinary circumstances.

4. Knowing the company policy on claims.

PNB MetLife settles term insurance plans claims within 15 days of receiving the complete and correct set of documents and claim application form. Once these documents are received, there is a scrutiny process to check all the documents and furnished information. The insurance money is then computed. Claims may take longer to settle in case the documents are incomplete or the information is found to be incorrect or misleading.