2008 Market Crash and People's Reaction

Currently Indian market is in bull phase and the new investors are happy by seeing the growth of their investments. They are hoping that the bull phase will continue forever. 

The idea of this post originated from the discussion about the actions people has taken during the 2008 market crash on Facebook Group “Asan Ideas for Wealth”. 

In 2008 market crash almost all fund’s NAV dropped significantly. People who are sitting on huge profits suddenly found that now they are sitting on losses. After seeing the market crashed some people stopped investment, some people redeemed their funds and some people continued with further investment.

Why Early Retirement Planning is Important

Now a days one video has gone viral where one person at the age of 75 year sells toys for making living. He travels daily 150 KM to and from Delhi to sell the toys. He was the manager at one big American company before retirement. You can see it here. 

After seeing the video I was wondering how many people after seeing this video will take charge of their own financial life and plan for retirement and start investing for the same. 

5 Reasons why ULIPs are BAD

ULIP is unit link insurance plan, which provide insurance as well as capital appreciation of the premium paid. ULIP provides the combination of two products in the premium of one. So what are the problems with ULIPS? 

1. Un-sufficient Insurance 

Before purchasing insurance plan we should know how much cover we required. ULIP provides very less life cover with high premium. For most of the ULIPs premium paid is tax exempted under section 80(c) subject to premium is not more than 10% of sum assured hence most of ULIPs life cover is 10 times of premium paid. Suppose I want 20L life cover then I have to purchase a ULIP with the premium of 2L. Is this cover is justified with this premium? 

Endowment Policy Vs. Combination of Term Insurance and PPF

Term Insurance is the best way to provide the cover for one’s life. Currently there are lot of term insurance plans available in the market and the premium is getting cheaper, thanks for the competition.

I talk to people and ask them whether they have term insurance or not and in reply I got different-different answers. Some say they do have term insurance (very few), some say they have endowment policy and ULIP and some say they do not have but they are planning to purchase.

A Conversation with Insurance Agent

Long-time back I got call from XYZ Insurance agent and the conversion was like this.

Agent :- Sir we have very good Insurance plan with guaranteed return.

Me :- How much? 

Agent :- 5.5% + life cover worth of 20 times of Premium.

Mutual Fund Basics Part 3 - General Terms

In this part I am going to explain the general terms which is used in mutual funds.

1. Fund Category

Funds category determines by the fund’s portfolio. Large Cap Fund :- Invests in large cap company stocks. Mid Cap Fund:- Invests in mid cap company stocks.