“Apurbabala” the name itself brings out her real personality. She is no more but her vibrant personality lingers on in our mind all the time. We relocated to Guwahati from Mezenga Tea Estate when I was six years old and started living in the Barowari Temple area of Uzanbazar. Our most immediate neighbours were two well-known Bharalai brothers,( Ramananda and BibekaNanda), Land Lord, Satyanath Borah , Scientist and Book sellers Purna Bharali beside ace photographer and Sportsperson of yester years Dhaniram Bora . In such august environment the most powerful and outstanding personality was Apurbabala Bharali who commanded respect from all the neighbourhood especially from all the children of the locality. She was loved, respected. adored and sometime feared by all of us –the Children of the community..
She virtually was the mother of the small community where we grew up, hence we used to address her as “Guwahati- MA”. We used to obey her wishes all the time. She was our dear Mom beside our own biological mother. She had such charisma that she could command respect from all of us. She was a strict disciplinarian. As the evening approached she used to advice the children “Evening has set in, now stop playing .It is time for study. Go back home, wash yourself well and sit down for study.” Her wishes were order for us. Guwhati Ma’s Charisma was so great that even all the parents of the neighborhoods valued her suggestions and command.
She was a kind and compassionate person. Once , Dhaniram Bora installed a Table Tennis Board for the children of the neighborhood and every body brought his own rackets to play on the board. I had no racket of my own. So, I used to stand and watch the game from a distance. Perhaps “ Guwhati Ma” was observing my plight from the distance of her compound and advised “Apanti”, her illustrious son , to lend me his racket so that I can also participate in the game. With the cooperation of Apanti ,my childhood friend, I learnt and picked up the game and ultimately played the game representing my school in All Assam Sports Tournament in the year 1956-57. Apurbbala was an emancipated Lady and had no hesitation to talk to any one of the neighbour hood to adhere to discipline behaviors in the community life.
She was indeed a spiritual lady rather than a deeply religious person. She had her own philosophy of life . She believed that the religion was the expression of the divinity with in human heart. It was the extension of this philosophy that found expression in her life.. Her compassion came from her belief in this philosophy. When her eldest son Pranabnanda became one of the toppers in intermediate science examination all the elderly ladies like our mother Progywati started congratulating her for being the proud mother. But she remained steady fast and told her admirers that it was more important to become wise rather than to create record in an university examination.
Though compassionate, she was also a strict disciplinarian. We learnt to behave wisely for she used to take great interest in our activities. Nayanananda, her second son ,now Managing Director of Bharali Brothers Ltd, started a small community library in their House. It was not only for the benefit of their family but for the benefit of the children of the entire neighborhood. Later, we learnt that the prime mover of the concept was Apurbabala along with her only daughter Tutul Baruah (then Bharali).
Guwahatir Ma lived a full life of respect. She was a healthy person and used to cook delicious meals .On every birthday of her children she is to invite all of us and used to feed us “paramanna” to our heart’s content. The taste of that “paramanna” prepared by her is still lingering in the taste buds of my mouth. When she reached the age of Ninty years I received a telephone call from Chandra Da, (Chandra Prasad Saikia- the great literature) to attend a ceremony organized to honour her at her residence at Guwhati. I am still regretting that the ceremony could not be attended by me on that occasion as I had to be away abroad in connection with the publication of my book on Tea . Later, on my return from abroad I visited her and wished her greetings and paid my respect. She was full of humility .She replied “ it is the grace of God that I am still alive .I am neither overwhelmed nor feel sad for my long life.” Guwahati Ma has left for the heavenly abode creating a big vacuum in the society she lived. She is no more in this world but her fond memories remained with us that would keep us alive to the values she cherished most.
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Saturday, May 29, 2010
Monday, May 24, 2010
THE MOTHER OF ALL EVIL IS SPECULATION
Gordon Gekko, a character in the film, “Wall Street: Money Never Sleeps” pronounced “Greed is good”. This one liner lit fires in the heart of young investors ever since 1987. Many people become millionaire and some lost money. Gekko is back after serving eighth years in prisons for insider trading. His new one liner is “The mother of all -Evil is speculation.”
We are borrowing this famous line to forewarn young population of North East of impending turmoil of world economy which may lash the Europe first and later other countries too within a period of a month to two years to come. We believe forewarning means forearming. Our advice to young people is not to indulge in speculation while planning investment strategy. They need to be bold but not speculative. They need not quit from invested money unless there is tearing need for cash. Yes, Share market may get crashed sooner or later. It may be going down and push up again immediately! But do not panic at all. If you are already in, do not redeem rather stay invested. However no new money should be put in except through SIP.
Despite offering of stimulus package of one trillion Euro, Greece may not be able to survive the economic turmoil. It is now apparent that Portugal, Spain and Italy my also get effected badly. The fiscal condition of England is not too happy and new prime Minister of Great Britain has not only proposed salary cut for Ministers but also planning to reduce jobs in Governmental sectors. This may trigger sudden Impact on the fragile economy of Europe. The monetary system may collapse. What would be the condition of Euro currency and Pound Sterling.? Both the currencies are going to take a beating. Already Euro currency has come down considerably. It is expected to go down further unless all the countries of Europe start austerity measures. “The European Economic and Monetary Union (EMU) and the euro are about to celebrate their 10th anniversary. The euro was introduced without serious problems and has since done well” said Martin Feldstein, George F. Baker Professor of Economics at Harvard University. But now he felt that the current economic crisis may provide a severe test of the Euros ability to survive in more troubled times. While the crisis could strengthen the institutions provided by the EMU, it could also create multiple risks, of which member countries need to be aware if they want to avoid them.
“The Stability and Growth Pact, which limits euro-zone members' fiscal deficits, is another reason why a country might want to leave the EMU. In a serious downturn, a country may wish to pursue a traditional Keynesian policy through large-scale, deficit-financed fiscal stimulus”, the Harvard professor of Economics stated. This may turn as boomerang on member countries economy.
Many investors are also asking as to how Indian economy would be also affected. Initially FII may withdraw money from Indian share market to support their own currencies. The export based industry of India is going to take a beating. IT majors who were aggressively pursuing business in Europe may suffer too. In near term Share market is going to go down but is expected to stablise in longer term. How the investors of northeast should behave to survive the turmoil?
According to our considered opinion the investors of Northeast should hold the money with them. Keep it in Bank or in liquid sector of Mutual fund. Even money can be parked in Government guarranteed bond or in Gilt fund for the time being. In these instruments investor may get 4% to 12% return over the year. They can start investing once market stablises at the lower end of the index. Now sensex is 17200 and Nifty is in 5100. Incase Europe take a spin our sensex and Nifty may reach 15,000 and 4800 point or can go down much lower. At this point of time Senior citizen may stop investing in Mutual funds, Share market and in Equities. They can invest in Debt based fund especially in Government guaranteed debt funds where return would be improving in such a situation.
Global investors, who bought Indian shares worth $6 billion this year due to cheap funds in their home nations and prospects for growth here, are showing signs of taking some gains off the table following more than doubling of stock values. Foreign funds net sold Rs 381.42 crore of shares during last week, provisional data showed.
Global investors are panicking as experts such as former Federal Reserve chairman Paul Volcker and Deutsche Bank chief executive Josef Ackermann doubt the strength of financial markets in Europe. Let us not behave like an Ostrich, hiding the head in the sands.
Greece may not be able to repay its debt in full; Ackermann was quoted as saying by Bloomberg News. Volcker has said the euro may break up and Chinese Premier Wen Jiabo said the foundations for a worldwide recovery are not “solid” as the sovereign debt crisis deepens.. What could be done by Indian investors?
Investors flocked to gold, the traditional store of value, pushing it up to a new record of Rs 18,339 for 10 gm. The coincidence of the auspicious Akshaya Tritiya during last weekend, perhaps added to its strength.
Emerging market equity funds had a second straight week of redemptions, according to EPFR data. China equity funds posted their second straight week of outflows and Latin America equity funds saw outflows rise to the highest in 85 weeks. Despite all these turmoil India is expected to survive better than most countries. It is not because Indian economy is very vibrant. It is because Indian mass can survive with bare minimum needs for a prolonged time. India’s 40% populations are below poverty level .These population can remain unaffected even when share market goes down to even below 12000 Sensex point. In 2008 when growth of Indian economy was under cloud none died of hunger and no revolution broke out like other Asian countries. It is because traditionally Indian knows how to survive a worst situation. This is because of the fact 80% population are dependent on agriculture. The failure of monsoon creates much bigger turmoil rather than crash of Share Market… The biggest support system is internal market of the country. The needs of timing millions are very meager. People get satisfied if one and half meals are available. Market crash is inconsequential for them .So, how should Indian Middle class behave if recession strikes the society again?
Our suggestion is that no senior citizen should enter share market now. Young generation should hold money and get ready to invest when market stabilizes at lower end of the spectrum. Buying of Gold could be taken up on dip. All investment should be made now in Debt instruments and investment in equity should only start as the market goes down considerably. No investment should be made following the example of his neigbours and friends who boasted of making money from equity investment last year, or listen to the advice of his neighborhood brokers who have shown him the Golden Goose of equity investment. Patience and matured handling of wealth would survive the catastrophe, if struck.
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We are borrowing this famous line to forewarn young population of North East of impending turmoil of world economy which may lash the Europe first and later other countries too within a period of a month to two years to come. We believe forewarning means forearming. Our advice to young people is not to indulge in speculation while planning investment strategy. They need to be bold but not speculative. They need not quit from invested money unless there is tearing need for cash. Yes, Share market may get crashed sooner or later. It may be going down and push up again immediately! But do not panic at all. If you are already in, do not redeem rather stay invested. However no new money should be put in except through SIP.
Despite offering of stimulus package of one trillion Euro, Greece may not be able to survive the economic turmoil. It is now apparent that Portugal, Spain and Italy my also get effected badly. The fiscal condition of England is not too happy and new prime Minister of Great Britain has not only proposed salary cut for Ministers but also planning to reduce jobs in Governmental sectors. This may trigger sudden Impact on the fragile economy of Europe. The monetary system may collapse. What would be the condition of Euro currency and Pound Sterling.? Both the currencies are going to take a beating. Already Euro currency has come down considerably. It is expected to go down further unless all the countries of Europe start austerity measures. “The European Economic and Monetary Union (EMU) and the euro are about to celebrate their 10th anniversary. The euro was introduced without serious problems and has since done well” said Martin Feldstein, George F. Baker Professor of Economics at Harvard University. But now he felt that the current economic crisis may provide a severe test of the Euros ability to survive in more troubled times. While the crisis could strengthen the institutions provided by the EMU, it could also create multiple risks, of which member countries need to be aware if they want to avoid them.
“The Stability and Growth Pact, which limits euro-zone members' fiscal deficits, is another reason why a country might want to leave the EMU. In a serious downturn, a country may wish to pursue a traditional Keynesian policy through large-scale, deficit-financed fiscal stimulus”, the Harvard professor of Economics stated. This may turn as boomerang on member countries economy.
Many investors are also asking as to how Indian economy would be also affected. Initially FII may withdraw money from Indian share market to support their own currencies. The export based industry of India is going to take a beating. IT majors who were aggressively pursuing business in Europe may suffer too. In near term Share market is going to go down but is expected to stablise in longer term. How the investors of northeast should behave to survive the turmoil?
According to our considered opinion the investors of Northeast should hold the money with them. Keep it in Bank or in liquid sector of Mutual fund. Even money can be parked in Government guarranteed bond or in Gilt fund for the time being. In these instruments investor may get 4% to 12% return over the year. They can start investing once market stablises at the lower end of the index. Now sensex is 17200 and Nifty is in 5100. Incase Europe take a spin our sensex and Nifty may reach 15,000 and 4800 point or can go down much lower. At this point of time Senior citizen may stop investing in Mutual funds, Share market and in Equities. They can invest in Debt based fund especially in Government guaranteed debt funds where return would be improving in such a situation.
Global investors, who bought Indian shares worth $6 billion this year due to cheap funds in their home nations and prospects for growth here, are showing signs of taking some gains off the table following more than doubling of stock values. Foreign funds net sold Rs 381.42 crore of shares during last week, provisional data showed.
Global investors are panicking as experts such as former Federal Reserve chairman Paul Volcker and Deutsche Bank chief executive Josef Ackermann doubt the strength of financial markets in Europe. Let us not behave like an Ostrich, hiding the head in the sands.
Greece may not be able to repay its debt in full; Ackermann was quoted as saying by Bloomberg News. Volcker has said the euro may break up and Chinese Premier Wen Jiabo said the foundations for a worldwide recovery are not “solid” as the sovereign debt crisis deepens.. What could be done by Indian investors?
Investors flocked to gold, the traditional store of value, pushing it up to a new record of Rs 18,339 for 10 gm. The coincidence of the auspicious Akshaya Tritiya during last weekend, perhaps added to its strength.
Emerging market equity funds had a second straight week of redemptions, according to EPFR data. China equity funds posted their second straight week of outflows and Latin America equity funds saw outflows rise to the highest in 85 weeks. Despite all these turmoil India is expected to survive better than most countries. It is not because Indian economy is very vibrant. It is because Indian mass can survive with bare minimum needs for a prolonged time. India’s 40% populations are below poverty level .These population can remain unaffected even when share market goes down to even below 12000 Sensex point. In 2008 when growth of Indian economy was under cloud none died of hunger and no revolution broke out like other Asian countries. It is because traditionally Indian knows how to survive a worst situation. This is because of the fact 80% population are dependent on agriculture. The failure of monsoon creates much bigger turmoil rather than crash of Share Market… The biggest support system is internal market of the country. The needs of timing millions are very meager. People get satisfied if one and half meals are available. Market crash is inconsequential for them .So, how should Indian Middle class behave if recession strikes the society again?
Our suggestion is that no senior citizen should enter share market now. Young generation should hold money and get ready to invest when market stabilizes at lower end of the spectrum. Buying of Gold could be taken up on dip. All investment should be made now in Debt instruments and investment in equity should only start as the market goes down considerably. No investment should be made following the example of his neigbours and friends who boasted of making money from equity investment last year, or listen to the advice of his neighborhood brokers who have shown him the Golden Goose of equity investment. Patience and matured handling of wealth would survive the catastrophe, if struck.
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Saturday, May 15, 2010
THE MOTHER OF ALL EVIL IS SPECULATION
THE MOTHER OF ALL EVIL IS SPECULATION
G.P.BAROOWAH
Gordon Gekko in the film Wall Street Pronounced “Greed is Good”. This one liner lit fires in the heart of young investors ever since 1987. Many people become millionaire and some lost money. Gekko is back after serving eighth years in prisons for insider trading. His new one liner is “The mother of all -Evil is speculation.”
We are borrowing this famous line to forewarn young population of North East of impending turmoil of world economy which may lash the Europe first and later USA too within a month to two years to come. We believe forewarning means forearming. Our advice to young people is not to indulge in speculation while planning investment strategy now for future. Despite offering of stimulus package of one trillion Euro, Greece may not be able to survive the economic turmoil. It is now apparent that Portugal, Spain and Italy my also get effected badly. The fiscal condition of England is not too happy and new prime Minister of Great Britain has not only proposed salary cut for Ministers but also planning to reduce jobs in Governmental sectors. This may trigger sudden Impact on the fragile economy of the Europe. The monetary system may collapse. What would be the condition of Euro currency and Pound Sterling.? Both the currencies are going to take a beating. Already Euro currency has come down considerably. It is expected to go down further that would create monetary pandemonium in the world. “The European Economic and Monetary Union (EMU) and the euro are about to celebrate their 10th anniversary. The euro was introduced without serious problems and has since done well” said Martin Feldstein, George F. Baker Professor of Economics at Harvard University . He felt
that the current economic crisis may provide a severe test of the euro's ability to survive in more troubled times. While the crisis could strengthen the institutions provided by the EMU, it could also create multiple risks, of which member countries need to be aware if they want to avoid them.
How would India be affected? Indian economy would be also affected. Initially FII May withdraw money from Indian share market to support their own currencies. The export based industry of India is going to take a beating. In near term Share market is going to go down but is expected to stablise in longer term. How the investors of northeast should behave to survive the turmoil?
According to our considered opinion the investors of Northeast should hold the money with them. Keep it in Bank or in liquid sector of Mutual fund. Even money can be parked in Government guarranteed bond or in Gilt fund for the time being. In these instruments investor may get 4% to 12% return over the year. They can start investing once market stablises at the lower end of the index. Now sensex is 17200 and Nifty is in 5100. Incase Europe take a spin our sensex and Nifty may reach 15,000 and 4800 point or can be much lower. At this point of time Senior citizen may stop investing in Mutual funds, Share market and in Equities. They can invest in Debt based fund especially in Government guaranteed debt funds where return would be improving in such a situation.
Global investors, who bought Indian shares worth $6 billion this year due to cheap funds in their home nations and prospects for growth here, are showing signs of taking some gains off the table following more than doubling of stock values. Foreign funds net sold Rs 381.42 crore of shares during last week, provisional data showed.
Global investors are panicking as experts such as former Federal Reserve chairman Paul Volcker and Deutsche Bank chief executive Josef Ackermann doubt the strength of financial markets in Europe. Let us not behave like an Ostrich, hiding the head in the sands.
Greece may not be able to repay its debt in full; Ackermann was quoted as saying by Bloomberg News. Volcker has said the euro may break up and Chinese Premier Wen Jiabo said the foundations for a worldwide recovery are not “solid” as the sovereign debt crisis deepens. “The Stability and Growth Pact, which limits euro-zone members' fiscal deficits, is another reason why a country might want to leave the EMU. In a serious downturn, a country may wish to pursue a traditional Keynesian policy through large-scale, deficit-financed fiscal stimulus”< Harvard professor of Economic stated. What could be done by Indian investors?
Investors flocked to gold, the traditional store of value, pushing it up to a new record of Rs 18,339 for 10 gm. The coincidence of the auspicious Akshaya Tritiya during last weekend, perhaps added to its strength.
Emerging market equity funds had a second straight week of redemptions, according to EPFR data. China equity funds posted their second straight week of outflows and Latin America equity funds saw outflows rise to the highest in 85 weeks. Despite all these turmoil India is expected to survive better than most countries. It is not because Indian economy is very vibrant. It is because Indian mass can survive with bare minimum needs for a prolonged time. India’s 40% population are below poverty level .These population ion remain unaffected even when share market goes down to even below 12000 Sensex point. In 2008 when growth of Indian economy was under cloud none died of hunger and no revolution broke out like other Asian countries it is because traditionally Indian know how to survive a worst situation. This is because of the fact 80% population are dependent on agriculture. The failure of monsoon creates much bigger turmoil rather than crash of Share Market… The biggest support system is internal market of the country. . The needs of timing millions are very meager. It gets satisfied if two square meal are available. So how should Indian Middle class should behave if recession strikes the society again?
Our suggestion is that no senior citizen should enter share market now. Young generation should hold money and get ready to invest when market stabilizes at lower end of the spectrum. All investment should be made now in Debt instruments and investment in equity should only start as the market goes down considerably. No investment should be made for his neighbour had made money from equity investment last year, or neighborhood brokers have shown him the Golden Goose of equity investment.
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G.P.BAROOWAH
Gordon Gekko in the film Wall Street Pronounced “Greed is Good”. This one liner lit fires in the heart of young investors ever since 1987. Many people become millionaire and some lost money. Gekko is back after serving eighth years in prisons for insider trading. His new one liner is “The mother of all -Evil is speculation.”
We are borrowing this famous line to forewarn young population of North East of impending turmoil of world economy which may lash the Europe first and later USA too within a month to two years to come. We believe forewarning means forearming. Our advice to young people is not to indulge in speculation while planning investment strategy now for future. Despite offering of stimulus package of one trillion Euro, Greece may not be able to survive the economic turmoil. It is now apparent that Portugal, Spain and Italy my also get effected badly. The fiscal condition of England is not too happy and new prime Minister of Great Britain has not only proposed salary cut for Ministers but also planning to reduce jobs in Governmental sectors. This may trigger sudden Impact on the fragile economy of the Europe. The monetary system may collapse. What would be the condition of Euro currency and Pound Sterling.? Both the currencies are going to take a beating. Already Euro currency has come down considerably. It is expected to go down further that would create monetary pandemonium in the world. “The European Economic and Monetary Union (EMU) and the euro are about to celebrate their 10th anniversary. The euro was introduced without serious problems and has since done well” said Martin Feldstein, George F. Baker Professor of Economics at Harvard University . He felt
that the current economic crisis may provide a severe test of the euro's ability to survive in more troubled times. While the crisis could strengthen the institutions provided by the EMU, it could also create multiple risks, of which member countries need to be aware if they want to avoid them.
How would India be affected? Indian economy would be also affected. Initially FII May withdraw money from Indian share market to support their own currencies. The export based industry of India is going to take a beating. In near term Share market is going to go down but is expected to stablise in longer term. How the investors of northeast should behave to survive the turmoil?
According to our considered opinion the investors of Northeast should hold the money with them. Keep it in Bank or in liquid sector of Mutual fund. Even money can be parked in Government guarranteed bond or in Gilt fund for the time being. In these instruments investor may get 4% to 12% return over the year. They can start investing once market stablises at the lower end of the index. Now sensex is 17200 and Nifty is in 5100. Incase Europe take a spin our sensex and Nifty may reach 15,000 and 4800 point or can be much lower. At this point of time Senior citizen may stop investing in Mutual funds, Share market and in Equities. They can invest in Debt based fund especially in Government guaranteed debt funds where return would be improving in such a situation.
Global investors, who bought Indian shares worth $6 billion this year due to cheap funds in their home nations and prospects for growth here, are showing signs of taking some gains off the table following more than doubling of stock values. Foreign funds net sold Rs 381.42 crore of shares during last week, provisional data showed.
Global investors are panicking as experts such as former Federal Reserve chairman Paul Volcker and Deutsche Bank chief executive Josef Ackermann doubt the strength of financial markets in Europe. Let us not behave like an Ostrich, hiding the head in the sands.
Greece may not be able to repay its debt in full; Ackermann was quoted as saying by Bloomberg News. Volcker has said the euro may break up and Chinese Premier Wen Jiabo said the foundations for a worldwide recovery are not “solid” as the sovereign debt crisis deepens. “The Stability and Growth Pact, which limits euro-zone members' fiscal deficits, is another reason why a country might want to leave the EMU. In a serious downturn, a country may wish to pursue a traditional Keynesian policy through large-scale, deficit-financed fiscal stimulus”< Harvard professor of Economic stated. What could be done by Indian investors?
Investors flocked to gold, the traditional store of value, pushing it up to a new record of Rs 18,339 for 10 gm. The coincidence of the auspicious Akshaya Tritiya during last weekend, perhaps added to its strength.
Emerging market equity funds had a second straight week of redemptions, according to EPFR data. China equity funds posted their second straight week of outflows and Latin America equity funds saw outflows rise to the highest in 85 weeks. Despite all these turmoil India is expected to survive better than most countries. It is not because Indian economy is very vibrant. It is because Indian mass can survive with bare minimum needs for a prolonged time. India’s 40% population are below poverty level .These population ion remain unaffected even when share market goes down to even below 12000 Sensex point. In 2008 when growth of Indian economy was under cloud none died of hunger and no revolution broke out like other Asian countries it is because traditionally Indian know how to survive a worst situation. This is because of the fact 80% population are dependent on agriculture. The failure of monsoon creates much bigger turmoil rather than crash of Share Market… The biggest support system is internal market of the country. . The needs of timing millions are very meager. It gets satisfied if two square meal are available. So how should Indian Middle class should behave if recession strikes the society again?
Our suggestion is that no senior citizen should enter share market now. Young generation should hold money and get ready to invest when market stabilizes at lower end of the spectrum. All investment should be made now in Debt instruments and investment in equity should only start as the market goes down considerably. No investment should be made for his neighbour had made money from equity investment last year, or neighborhood brokers have shown him the Golden Goose of equity investment.
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Thursday, May 6, 2010
Invstors education & transparent dealing are must for wealth creation
Now a days many people approach share market , mutual fund and insurance with a vengeance.But most of them do not take informed decision consciously. They try to invest because their friends and neighbors have made money in the share market overnight. This misconception of making money overnight is only a myth. In reality unless investment is made for long term most of the people have lost money.According good old saying keeping all the eggs in the same basket should be avoided. The same principle is applicable in respect of investment. The earned income of persons should be kept invested in different class of investment instruments. We always need to remember that , diversification is the name of the game when it comes to investment. IT IS THE RESPONSIBILITY OF Mutual Fund Association and insurance fraternity to educate investors so that investors can take informed decision in respect of investment and insurance. Just putting money recklessly by investors in FD, Mutual fund, in Stock or in Gold will not help them in getting the best overall returns. While all the investors need exposure to equities to get the growth in capital and in beating inflation in the long run., Debt instrument must be subscribed to avoid turmoil of the market. Hence it is advisable to invest into both equities and debt. It will help investors in getting higher returns from equities, while enjoying the capital safety offered by FD. To make investment and insurance investors friendly and savvy the Association of Mutual fund and Insurance must play a proactive role.
In order to educate investors IRDA has recently started clarifying important points through Media. According to the latest circular Partial withdrawal can be made only after five years of buying them, effective July 2010. Till now policy holders were in a position to redeem partly of their investment in three years. Many investors did withdraw early resulting in heavy losses. IRDA's new rule would prevent the situation. Hopefully when people redeem after fifth years there would higher returns. The distributors and brokers misguide or concealed information at times and that damaged the cause of investment rather than promoting creation of wealth. The transparent dealing is essential to build up confidence of the clients. While vending ULIPs some distributors failed to inform the clients that premature withdrawal( at least before five years) would land them in a state of loss, yet in case the full term could be survived it would give them handsome returns. Insurance companies have not given proper attention to educate the clients in this regards. IRDA have taken up the cause of protecting the insurance plans but have not taken up insurance education programme for the clients. Insurance is a product of solicitation. While soliciting business the companies,distributors and Advisers should be truthful and transparent.The new guideline for Mutual Fund distributors are in anvil, according to SEBI chairman .
With the stock markets in the continuous downward spiral, it comes as no surprise that nobody wants to invest in equity markets during recession. AMFI has a responsibility to educate their investors. The crash in the share prices during 2008 has proved to be a boon for the banks, whose fixed deposits (FDs) were ignored by the investors in favor of equities for higher returns. These banks came out with various FDs, offering attractive rates. This tempted many investors to opt for FDs. However every investor in FD must remember that FD is also an investment option and as with any investment option, it has its own pros and cons. So be prepared to get the complete overview of this investment option before opting for it.
At present gilt funds are doing very well. but how many MF advisers have asked their clients to invest in Government guaranteed Gilt fund? Presently some of the gilt fund are giving high returns( 8% to 10%) beside safety. The dividend out of this income is also tax free.This is ideal investment for senior citizens and risk averse investors at least for a year.
FD( Fixed Deposit) is also a term deposit. It is similar to a savings account, except that your money is locked in for a certain specified period, also called as term. Hence the name term deposits. However while you cannot access your money, the bank rewards you by giving you a higher interest rate than your savings account.The recent transparent direction of IRDA on death benefit is very good.In case of ULIP and Insurance minimum death benefit payable must be mentioned from now onward and ULIP s cannot be used to obtain loans from any sources. The death mentioned would not be mandatory for ULIP, the circular stated. From now onward the insurance policy would have to specify the minimum commission and provide illustration of benefits clearly
The term deposit is good investment option but not the best one. When inflation goes up( as is the case of 2010) the real value goes down. In 2010 when inflation is around 10% the FD rate for three years return provide interest at the rate of 7.5% This means keeping money in FD would incur loss for real value would go much below the rate of inflation.Remember, under such circumstances diversification would help realising better return. people may like to invest in GOLD ETF or may like to buy Paintings by reputed artists. Just putting your money in FD will not help you get the best overall returns. You also need exposure to equities to get the growth in capital and beating inflation in the long run. Hence it is advisable to invest into both equities , debt or in Gold and art segmentsd. To over come such situation a few Fund House have brought in Fund which invest only in Equity(25%), 35 percent in Gold ETF and 4o% in Debt instrument. It will help investors get higher returns from equities, while enjoying the capital safety offered by Gold and FD.
While discussing about the transparency and educating investors let us make some simple observation regarding Fixed Deposits in Bank. FD has various benefits that make it an ideal investment option for those looking for capital safety. But we donot recommend Fixed deposit in Private Limited Companies even if that company has been a market leader in their business. Once a great company like Carrit Moran, who enjoyed unenviable reputation of safe fixed Deposit, got busted and many investors lost huge money. FD of Bank is comparatively lot safer than equities, as the deposit up to Rs. 1 lakh is insured by Deposit Insurance Credit Guarantee Corporation. So in case, if the bank fails, your money is still secured. This makes an FD an ideal investment option for senior citizens.
Global Trust Bank got busted but deposits did not loose any money. These facts are never highlighted either by AMFI, SEBI or by IRDA. It should be noted that Unlike dividends given by the companies, the interest earned on an FD is fixed, as the rate of interest for the particular term is constant. Even if the rates increase or decrease subsequent to your opening an FD, your rate of interest will not be affected. So you are guaranteed a regular income, making it an ideal investment option for those looking for regular income.The FD of Bank help secure Loan in case of need. Are you looking for a secured loan? Then you can avail of a loan by offering your FD as collateral. While your FD continues to earn interest, the rate of interest for the loan will be a few notches higher than that of the FD. Hence this type of loan works out cheaper than any other type of loan, since the bank has the assurance of claiming your deposit if you fail to repay the loan > It is a proven fact that for those looking for an efficient tax saving investment option, FD is a good option. While ELSS has the shortest lock-in period of 3 years, your capital is not secured. On the other hand, PPF offers capital security, it has a lock-in period of 15 years. The tax saving FD offers the best of both the world, as your money is locked for just 5 years while your capital is safe.One thing must be kept in mind that in bank fixed deposit erosion of worth of capital due to inflation is possible. Inflation effect the purchasing power of the money. When the inflation goes up, the purchasing power of money goes down. As the interest rates of the FDs are lower than rate of inflation, the purchasing power of money deposited does go down. As a result, you end up eroding the worth of your capital. Except for the tax saving FDs, the interest earned is taxed. So you end up incurring tax liability. You are particularly affected if you are a high income earner. In equity you are free of Income tax liabilities so far as dividend is concerned. and there is no long term Capital gains tax.
Unfortunately most of the brokers of Mutual fund or advisers of Insurance have not clearly stated the advantage and disadvantage of their products. The clients get dis illusioned when they donot get expected rate of return in short term. All ULIP advisers must informed their clients that earlier than four years no great returns are possible. they can take out their money but with a fine which would mean loss of capital invested. The transparency and investors education would only help the cause of insurance and Mutual fund. Let the investors take a conscious decision after getting themselves fully informed and educated. Our society is evolving from a middle class mentality to a pro- capitalist mentality. During this transition transparency and investors education programme would ultimately help the cause of insurance an Mutual fund Industry more than investors themselves.
The best option for a middle class investor is to invest as per his personal goals. If you have any short term goals i.e. goals that have to be met within 3 years, like buying a car, or going on a holiday, then FD is your best bet. On the other hand, for long term goals like retirement planning or your child’s education, go for equities, Mutual fund and insurance products.
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In order to educate investors IRDA has recently started clarifying important points through Media. According to the latest circular Partial withdrawal can be made only after five years of buying them, effective July 2010. Till now policy holders were in a position to redeem partly of their investment in three years. Many investors did withdraw early resulting in heavy losses. IRDA's new rule would prevent the situation. Hopefully when people redeem after fifth years there would higher returns. The distributors and brokers misguide or concealed information at times and that damaged the cause of investment rather than promoting creation of wealth. The transparent dealing is essential to build up confidence of the clients. While vending ULIPs some distributors failed to inform the clients that premature withdrawal( at least before five years) would land them in a state of loss, yet in case the full term could be survived it would give them handsome returns. Insurance companies have not given proper attention to educate the clients in this regards. IRDA have taken up the cause of protecting the insurance plans but have not taken up insurance education programme for the clients. Insurance is a product of solicitation. While soliciting business the companies,distributors and Advisers should be truthful and transparent.The new guideline for Mutual Fund distributors are in anvil, according to SEBI chairman .
With the stock markets in the continuous downward spiral, it comes as no surprise that nobody wants to invest in equity markets during recession. AMFI has a responsibility to educate their investors. The crash in the share prices during 2008 has proved to be a boon for the banks, whose fixed deposits (FDs) were ignored by the investors in favor of equities for higher returns. These banks came out with various FDs, offering attractive rates. This tempted many investors to opt for FDs. However every investor in FD must remember that FD is also an investment option and as with any investment option, it has its own pros and cons. So be prepared to get the complete overview of this investment option before opting for it.
At present gilt funds are doing very well. but how many MF advisers have asked their clients to invest in Government guaranteed Gilt fund? Presently some of the gilt fund are giving high returns( 8% to 10%) beside safety. The dividend out of this income is also tax free.This is ideal investment for senior citizens and risk averse investors at least for a year.
FD( Fixed Deposit) is also a term deposit. It is similar to a savings account, except that your money is locked in for a certain specified period, also called as term. Hence the name term deposits. However while you cannot access your money, the bank rewards you by giving you a higher interest rate than your savings account.The recent transparent direction of IRDA on death benefit is very good.In case of ULIP and Insurance minimum death benefit payable must be mentioned from now onward and ULIP s cannot be used to obtain loans from any sources. The death mentioned would not be mandatory for ULIP, the circular stated. From now onward the insurance policy would have to specify the minimum commission and provide illustration of benefits clearly
The term deposit is good investment option but not the best one. When inflation goes up( as is the case of 2010) the real value goes down. In 2010 when inflation is around 10% the FD rate for three years return provide interest at the rate of 7.5% This means keeping money in FD would incur loss for real value would go much below the rate of inflation.Remember, under such circumstances diversification would help realising better return. people may like to invest in GOLD ETF or may like to buy Paintings by reputed artists. Just putting your money in FD will not help you get the best overall returns. You also need exposure to equities to get the growth in capital and beating inflation in the long run. Hence it is advisable to invest into both equities , debt or in Gold and art segmentsd. To over come such situation a few Fund House have brought in Fund which invest only in Equity(25%), 35 percent in Gold ETF and 4o% in Debt instrument. It will help investors get higher returns from equities, while enjoying the capital safety offered by Gold and FD.
While discussing about the transparency and educating investors let us make some simple observation regarding Fixed Deposits in Bank. FD has various benefits that make it an ideal investment option for those looking for capital safety. But we donot recommend Fixed deposit in Private Limited Companies even if that company has been a market leader in their business. Once a great company like Carrit Moran, who enjoyed unenviable reputation of safe fixed Deposit, got busted and many investors lost huge money. FD of Bank is comparatively lot safer than equities, as the deposit up to Rs. 1 lakh is insured by Deposit Insurance Credit Guarantee Corporation. So in case, if the bank fails, your money is still secured. This makes an FD an ideal investment option for senior citizens.
Global Trust Bank got busted but deposits did not loose any money. These facts are never highlighted either by AMFI, SEBI or by IRDA. It should be noted that Unlike dividends given by the companies, the interest earned on an FD is fixed, as the rate of interest for the particular term is constant. Even if the rates increase or decrease subsequent to your opening an FD, your rate of interest will not be affected. So you are guaranteed a regular income, making it an ideal investment option for those looking for regular income.The FD of Bank help secure Loan in case of need. Are you looking for a secured loan? Then you can avail of a loan by offering your FD as collateral. While your FD continues to earn interest, the rate of interest for the loan will be a few notches higher than that of the FD. Hence this type of loan works out cheaper than any other type of loan, since the bank has the assurance of claiming your deposit if you fail to repay the loan > It is a proven fact that for those looking for an efficient tax saving investment option, FD is a good option. While ELSS has the shortest lock-in period of 3 years, your capital is not secured. On the other hand, PPF offers capital security, it has a lock-in period of 15 years. The tax saving FD offers the best of both the world, as your money is locked for just 5 years while your capital is safe.One thing must be kept in mind that in bank fixed deposit erosion of worth of capital due to inflation is possible. Inflation effect the purchasing power of the money. When the inflation goes up, the purchasing power of money goes down. As the interest rates of the FDs are lower than rate of inflation, the purchasing power of money deposited does go down. As a result, you end up eroding the worth of your capital. Except for the tax saving FDs, the interest earned is taxed. So you end up incurring tax liability. You are particularly affected if you are a high income earner. In equity you are free of Income tax liabilities so far as dividend is concerned. and there is no long term Capital gains tax.
Unfortunately most of the brokers of Mutual fund or advisers of Insurance have not clearly stated the advantage and disadvantage of their products. The clients get dis illusioned when they donot get expected rate of return in short term. All ULIP advisers must informed their clients that earlier than four years no great returns are possible. they can take out their money but with a fine which would mean loss of capital invested. The transparency and investors education would only help the cause of insurance and Mutual fund. Let the investors take a conscious decision after getting themselves fully informed and educated. Our society is evolving from a middle class mentality to a pro- capitalist mentality. During this transition transparency and investors education programme would ultimately help the cause of insurance an Mutual fund Industry more than investors themselves.
The best option for a middle class investor is to invest as per his personal goals. If you have any short term goals i.e. goals that have to be met within 3 years, like buying a car, or going on a holiday, then FD is your best bet. On the other hand, for long term goals like retirement planning or your child’s education, go for equities, Mutual fund and insurance products.
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EVERYDAY IS A GOOD DAY FOR INVESTMENT NOW
We have received lots of mail from our readers asking us whether they can start investing now. This question has been raised for the simple reason that in our earlier article on investment it was recommended to hold on to the money in hand to enable them to invest after correction. The correction, as expected, has set in. By now the market has corrected around 17% from the high of January. It is possible some more correction may follow in due course of time. But investors can put their money from now onward provided they follow the systematic investment route. To be frank enough genuine investors should not try to time the market and should stick to long term investing. What is the meaning of long term? The investment horizon should be for a period of five years. Due to higher volatility of share market some time adequate returns are not delivered in short term, most of the time. Only rarely high returns are delivered in one years time. Last year(2009) was an exceptional year when market delivered a very high return within a year(almost 83%). This was unusual. Now the question arises what should investors of Northeast do?
The investors of Northeast are generally new investors. It would be prudent for them to be cautious. We have advised number of times that no equity investment should be made for short term .It would be prudent for investor with low risk appetite to keep away from the market. They can keep investment in Bank FD or at best in Short term Debt fund. Investors with moderate risk appetite should invest in MIP and Balanced fund for a period of five years. Only persons who can withstand volatility in the market should subscribe to Shares of the stock market or subscribe to diversified Mutual fund of four and five star rating by Value research.
I must admit that investors of today are lucky that the provision of Systematic investment plans have been introduced by most of the Fund houses. When in 1998 Templeton introduced SIP system most of the people took it to be a market gimmick.. But it proved to be a great plan. The return of investment in SIP for the same of money for the same period is much higher than lump sum investment for the same amount for the same period .For middle class and lower middle class it is always difficult to make Lump Sum payment. They can save slowly and steadily while they keep earning every month. Earlier
Systematic investment could be carried out annually , six monthly or weekly. But of late a few fund houses have introduced Daily “SIP” provision. This would be greatly beneficial to daily wage earners and for self employed people like Doctors , Advocate, Shop keepers who receive fees daily from their clients, but do not know how to account it for.
Many investors of northeast has kept themselves away from the share market for higher chances of losses. They kept money in Bank FD which hardly earns them anything. ultimately low return and higher inflation of food product make them frustrated. I would like to recommend highly now for such persons to invest in Diversified mutual on a daily SIP plan. This plan was not available earlier. In such plan it would be difficult to loose money if kept on investing for a period of four to five years .Rather it would provide an avenue for excellent return. Srikumar Bandyopadhyay, an investment analyst, calculated and showed that systematic monthly investment in reliance vision fund gave 32.44% return while lump sum amount gave annualized return of 26.14% compared to BSE Sensex’s benchmark return of 13.40% for a period of 10 years. Daily SIP plan is a recent phenomenon and at present ING, BharatiAXA, IDFC and Sahara have come up with Daily SIP. The Daily SIP is a better option compared to weekly and mothly option. The share market is known for its volatility but nobody knows on which days market would fall or rise. In daily SIP the investor would gain everyday when market fall because it would buy shares Cheaper. It would gain when ultimately market goes up.It should be clearly understood that share market do not remain static . It travels up and down.depend on the sentiment of the economy .The daily SIP is the only method when investors gain both the ways provided keep invested for longer time.
One of the expert mentioned that while investing Rs1000/- per day ,through daily SIP, from First January 2010 till Fourth February 2010 an investor gained Rs21,853 whereas the lump sum investment mode could have provided a return of Rs21,252 only. This difference would be stupendous over a period of Five to ten years. Not too many fund houses are offering daily SIP. But it can be organized by on line purchase daily by investors without any extra charge
My advice to our young investors would be to go ahead and invest through Daily
SIP. House wives would be able to take care of investment daily by saving some expenses of family. It is most ideal for Doctors and Advocate to park their daily income from their clients and get great return without any income tax.
The investors of Northeast are generally new investors. It would be prudent for them to be cautious. We have advised number of times that no equity investment should be made for short term .It would be prudent for investor with low risk appetite to keep away from the market. They can keep investment in Bank FD or at best in Short term Debt fund. Investors with moderate risk appetite should invest in MIP and Balanced fund for a period of five years. Only persons who can withstand volatility in the market should subscribe to Shares of the stock market or subscribe to diversified Mutual fund of four and five star rating by Value research.
I must admit that investors of today are lucky that the provision of Systematic investment plans have been introduced by most of the Fund houses. When in 1998 Templeton introduced SIP system most of the people took it to be a market gimmick.. But it proved to be a great plan. The return of investment in SIP for the same of money for the same period is much higher than lump sum investment for the same amount for the same period .For middle class and lower middle class it is always difficult to make Lump Sum payment. They can save slowly and steadily while they keep earning every month. Earlier
Systematic investment could be carried out annually , six monthly or weekly. But of late a few fund houses have introduced Daily “SIP” provision. This would be greatly beneficial to daily wage earners and for self employed people like Doctors , Advocate, Shop keepers who receive fees daily from their clients, but do not know how to account it for.
Many investors of northeast has kept themselves away from the share market for higher chances of losses. They kept money in Bank FD which hardly earns them anything. ultimately low return and higher inflation of food product make them frustrated. I would like to recommend highly now for such persons to invest in Diversified mutual on a daily SIP plan. This plan was not available earlier. In such plan it would be difficult to loose money if kept on investing for a period of four to five years .Rather it would provide an avenue for excellent return. Srikumar Bandyopadhyay, an investment analyst, calculated and showed that systematic monthly investment in reliance vision fund gave 32.44% return while lump sum amount gave annualized return of 26.14% compared to BSE Sensex’s benchmark return of 13.40% for a period of 10 years. Daily SIP plan is a recent phenomenon and at present ING, BharatiAXA, IDFC and Sahara have come up with Daily SIP. The Daily SIP is a better option compared to weekly and mothly option. The share market is known for its volatility but nobody knows on which days market would fall or rise. In daily SIP the investor would gain everyday when market fall because it would buy shares Cheaper. It would gain when ultimately market goes up.It should be clearly understood that share market do not remain static . It travels up and down.depend on the sentiment of the economy .The daily SIP is the only method when investors gain both the ways provided keep invested for longer time.
One of the expert mentioned that while investing Rs1000/- per day ,through daily SIP, from First January 2010 till Fourth February 2010 an investor gained Rs21,853 whereas the lump sum investment mode could have provided a return of Rs21,252 only. This difference would be stupendous over a period of Five to ten years. Not too many fund houses are offering daily SIP. But it can be organized by on line purchase daily by investors without any extra charge
My advice to our young investors would be to go ahead and invest through Daily
SIP. House wives would be able to take care of investment daily by saving some expenses of family. It is most ideal for Doctors and Advocate to park their daily income from their clients and get great return without any income tax.
lURE OF gUARANTEED NAV IS DIFFICULT TO RESIST
Of late, the lure of highest guaranteed net asset value is creating waves in our society. Insurance companies are vigorously publishing advertisement in support of such scheme. Though SEBI objected to such declaration but IRDA has permitted insurance company to continue with their plans. The existing ULIP subscribers need not worry unnecessarily on this count. The problems of ULIP would get resolved soon with the intervention of Finance Ministry.
The new set of unit-linked plans (Ulips) that guarantee highest net asset value (NAV) during the policy term is gaining popularity. These schemes look attractive since the downside arising from volatility in the market seems to be capped. These plans need to be demystified as soon as possible so that our readers can take informed decision. Ulips were among the favorite investment avenues for retail investors. However, the equity market crash in 2008 has shaken investors’ confidence in these products.
Recently, there have been many launches of insurance plans that offer "guaranteed highest NAV" during the term of the insurance plan. Here we demystify these products for your benefit, so that you can be better informed about how they work.
ULIPs are exposed to market ups and downs yet it cannot be considered as an investment product. It is truly an insurance product hence mortality charges and administration charge are required to be paid. The costs of insurance product have been brought down yet the cost of ULIP remains higher than mutual funds.
The Guaranteed ULIP or unit linked insurance plans are those where you buy a life insurance policy that comes clipped to an investment plan? Part of the premium you pay goes towards buying you protection on your life, and part of the premium goes towards buying “units” that invest in equity or debt instruments in the capital markets. These instruments are exposed to the randomness of the markets and prices can move around.
During the 2008-09 periods, the stock market went down about 60%, and then has gone up again. So, the price of the units, as measured in net asset value (NAV), can fluctuate a lot if based on equity planks. This is true for both ULIPs as well as Mutual fund.
To avoid such fluctuations the concept of Guaranteed NAV was introduced. But can this be really achieved?
Insurance companies operating in India have come up with a structured product to overcome this potential risk of loss of damage to one’s investment units in the ULIP. The Money is invested in the market instrument of equity. After it gains at least 10% OR more return, the product is canalized through Debt fund. These transformations ensure less volatility and protect erosion of return already earned. This system protects erosion of Value as the debt instruments do not fluctuate as much as the equity schemes do. This ensures protection but does not translate into the highest return. The highest NAV which client would get is that of Debt fund and not of equity fund. Many people may like it, because there is no certainty of getting very high return, rather it may give lowest return, at the time of maturity if product is based on equity plank. Suppose our readers buys an 8-year guaranteed ULIP in 2010 and the investment units are priced at Rs 10 NAV. The price of the underlying equity and debt instruments is volatile, so the NAV fluctuates wildly from being as high as Rs 21 to as low as Rs 10 a unit.
The client will get maturity proceeds at the price of Rs 21, even though the NAV has dropped to Rs 10 at maturity. This is the “guaranteed” feature of this product – whatever the price at maturity; the policyholder is guaranteed the highest price during the term of the product. At maturity, you will receive the higher of the fund value or the guaranteed value of your units. To achieve that most of your money would be kept in Debt fund hence return would be lower compared non guaranteed ULIP. In guaranteed Ulip you would not lose but would never get very high return.
The Most of the plans are for an 8-10 year term and in most plans you need to pay a premium for at least 3 years, however there is the feature where you can pay a single premium as well. But if you take out before four years you need to pay some kind of fine. So don’t invest in ULIP if you cannot spare money for very long term.
In the unfortunate scenario where a person dies before the maturity of the policy, the guaranteed NAV would not be applicable. Your beneficiary will get the sum assured by the policy, and some products might also give you your fund value at the time of your death
.ULIPs might be good products for someone who wants to buy insurance cum investment plan for the long-term. If you are looking for a ULIP and are worried about market fluctuations and losing your capital, then it might be worth reviewing these guaranteed ULIP products. In this product you cannot dictate where to invest your money. That would be the responsibility of the fund manager for he needs to protect your money invested. In guaranteed ULIP you may not loose money but would not also get best return as in case of general non guaranteed ULIP or diversified Mutual fund.
However, it is unlikely that these are the best substitute for equity mutual funds. So, please be clear whether you are buying guaranteed product as an insurance policy or as an investment product, you would not lose capital and would get moderate return. If you are risk averse then buy guaranteed ULIP. Otherwise go for non guaranteed ULIP or diversified Mutual fund with better return in the long run.
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The new set of unit-linked plans (Ulips) that guarantee highest net asset value (NAV) during the policy term is gaining popularity. These schemes look attractive since the downside arising from volatility in the market seems to be capped. These plans need to be demystified as soon as possible so that our readers can take informed decision. Ulips were among the favorite investment avenues for retail investors. However, the equity market crash in 2008 has shaken investors’ confidence in these products.
Recently, there have been many launches of insurance plans that offer "guaranteed highest NAV" during the term of the insurance plan. Here we demystify these products for your benefit, so that you can be better informed about how they work.
ULIPs are exposed to market ups and downs yet it cannot be considered as an investment product. It is truly an insurance product hence mortality charges and administration charge are required to be paid. The costs of insurance product have been brought down yet the cost of ULIP remains higher than mutual funds.
The Guaranteed ULIP or unit linked insurance plans are those where you buy a life insurance policy that comes clipped to an investment plan? Part of the premium you pay goes towards buying you protection on your life, and part of the premium goes towards buying “units” that invest in equity or debt instruments in the capital markets. These instruments are exposed to the randomness of the markets and prices can move around.
During the 2008-09 periods, the stock market went down about 60%, and then has gone up again. So, the price of the units, as measured in net asset value (NAV), can fluctuate a lot if based on equity planks. This is true for both ULIPs as well as Mutual fund.
To avoid such fluctuations the concept of Guaranteed NAV was introduced. But can this be really achieved?
Insurance companies operating in India have come up with a structured product to overcome this potential risk of loss of damage to one’s investment units in the ULIP. The Money is invested in the market instrument of equity. After it gains at least 10% OR more return, the product is canalized through Debt fund. These transformations ensure less volatility and protect erosion of return already earned. This system protects erosion of Value as the debt instruments do not fluctuate as much as the equity schemes do. This ensures protection but does not translate into the highest return. The highest NAV which client would get is that of Debt fund and not of equity fund. Many people may like it, because there is no certainty of getting very high return, rather it may give lowest return, at the time of maturity if product is based on equity plank. Suppose our readers buys an 8-year guaranteed ULIP in 2010 and the investment units are priced at Rs 10 NAV. The price of the underlying equity and debt instruments is volatile, so the NAV fluctuates wildly from being as high as Rs 21 to as low as Rs 10 a unit.
The client will get maturity proceeds at the price of Rs 21, even though the NAV has dropped to Rs 10 at maturity. This is the “guaranteed” feature of this product – whatever the price at maturity; the policyholder is guaranteed the highest price during the term of the product. At maturity, you will receive the higher of the fund value or the guaranteed value of your units. To achieve that most of your money would be kept in Debt fund hence return would be lower compared non guaranteed ULIP. In guaranteed Ulip you would not lose but would never get very high return.
The Most of the plans are for an 8-10 year term and in most plans you need to pay a premium for at least 3 years, however there is the feature where you can pay a single premium as well. But if you take out before four years you need to pay some kind of fine. So don’t invest in ULIP if you cannot spare money for very long term.
In the unfortunate scenario where a person dies before the maturity of the policy, the guaranteed NAV would not be applicable. Your beneficiary will get the sum assured by the policy, and some products might also give you your fund value at the time of your death
.ULIPs might be good products for someone who wants to buy insurance cum investment plan for the long-term. If you are looking for a ULIP and are worried about market fluctuations and losing your capital, then it might be worth reviewing these guaranteed ULIP products. In this product you cannot dictate where to invest your money. That would be the responsibility of the fund manager for he needs to protect your money invested. In guaranteed ULIP you may not loose money but would not also get best return as in case of general non guaranteed ULIP or diversified Mutual fund.
However, it is unlikely that these are the best substitute for equity mutual funds. So, please be clear whether you are buying guaranteed product as an insurance policy or as an investment product, you would not lose capital and would get moderate return. If you are risk averse then buy guaranteed ULIP. Otherwise go for non guaranteed ULIP or diversified Mutual fund with better return in the long run.
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SELF EMPLOYED AND PRIVATE SECTOR EMPLOYEES NEED PENSION PLAN
There was a time when none in Northeast thought of contributing to Pension fund during their career. They were almost unconcerned of their retirement needs. Only the Government employees used to get pension that made their life easier compared to other professionals. Even the teachers of schools and Colleges never used to get pension. Large companies are to pay Contributory provident Fund and Gratuity and most of them were never paid pension. Only a handful of Multi National companies used to contribute to Pension fund managed by independent trust and LIC. Many of our readers of late have asked as to how important Pension funds are and whether all the wage earners should try to subscribe to New Pension Scheme launched by government of India during May Day Last year. Whether pension of Government is better or schemes launched by Private and public sectors insurers and Mutual Funds are better?
I would like to advice that all wage earners should be a member of a pension scheme of their choice for it helps in making their life easier and secured. The most persons fail to think of pension plan during youth. But as the time progress they realize the importance pension. To be frank enough pension by Government to its employees are boon. Now a days beside officials and clerical staff, teachers of aided colleges and provincialised schools get pension and they are a happier lot. The government’s pension scheme is inflation neutral product and is a great scheme. However the old system has been replaced by the new scheme that is only a contribution oriented pension scheme.
Beside the Government, LIC has a few individual oriented pension schemes’ like Jiban Dhara”. SBI Life, ICICI and HDFC also have their own pension schemes based on Annuity payment. But by far the best pension scheme for the” Aam Janta” or individual wage earners is New Pension Scheme launched last year. Surprisingly there are not many takers of this great scheme. I am sure in the long run people would realize its necessity and would surely subscribe. New pension scheme is a great scheme for Middle class and could be subscribed to make life easier after retirement. Franklin Templeton is the only Mutual fund which has a debt oriented pension scheme.
The new voluntary pension scheme came into force in India with young people as its main target, and hoped to reach out to the 87 percent of the nation’s workforce that remained uncovered by any retirement benefit.
The Pension Fund Regulatory and Development Authority have extended the scheme on May Day to all citizens, after introducing it for fresh recruits of the central government since Jan 1, 2004. It took 10 years of conceptualisation.
“Under the new scheme, beneficiaries can divide their investments in three categories,” These can be in equity, government securities and corporate bonds and mutual funds.
“One can opt to invest only 50 percent of the funds in equity, which will be in index funds of the Bombay Stock Exchange and the National Stock Exchange. It can be 100 percent for the other two categories,” according to “PRD Authority”. Contributions will be made towards two accounts, one of which will be entirely for savings towards retirement, which cannot be withdrawn. The other portion will be voluntary and can be encashed whenever the beneficiary pleases.
The second portion, however, takes effect only six months of joining the scheme, for which the eligibility is 18-55 years. Those who join will be allotted a permanent retirement account number so that the account can be operated from anywhere.
The beneficiaries can exit the scheme after reaching 60 years of age. They can continue only up to the time they are 70.
According to regulatory authority, out of 425 million estimated workforces in the country, as many as 370 million were still not covered under any pension scheme. “Twenty years down the line, it is expect majority of them will be covered,” But present position is very low.
Officials at the regulatory authority said that Rs.2,100 crore (Rs.21 billion or $420 million) stood invested in the new pension scheme for central government employees, giving an annual rate of return of an impressive 12-16 percent. This return is very decent when compared to debt fund based pension scheme. There is a good pension scheme also in mutual Fund domain but New Pension Fund initiated by government seemed better though there are not enough takers for unknown reasons. Perhaps this scheme needs to be marketed much more aggressively.
Six pension fund managers have been appointed by the regulator for the new scheme, with 22 points of reference - the institutions that beneficiaries can approach to join. The persons willing to join the scheme can approach Nationalized Banks and Large private banks for applications forms
The minimum contribution is Rs.6,000 per annum. The money has to be paid in at least four installments a year. No installment can be of less than Rs.500. There is no upper limit on the number of installments or the money one can put in per installment.
Upon registration,( between the age of 18-55Years) person will receive a permanent retirement account number. Minimum annual contribution is Rs.6,000. The minimum number of installments per year is four. There is no upper limit on the contribution per installment or on the number of installments.
The account would be closed in case of the death of account holder, or when account value reduces to zero and change in citizenship status. The subscribers can exit the policy before 60 years also provided he or she annuitise at least 80 percent corpus. The self initiated pension is a new concept and could be greatly beneficial to subscribers. If a person fail to contribute minimum installment in a year then he would have to bear a default penalty of Rs.100 per year of default and the account would become dormant. In order to re-activate the account, pay the minimum contributions, along with penalty due. A dormant account will be closed when the account value falls to zero.
The NPS is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS.
It should be clearly understood that as with every investment, there is a degree of risk under NPS also. The value of investment in NPS may rise or fall, but investment in equity will be maximum fifty percent or lower. It would be like a balanced fund. You would be able advice the minimum exposure to equity
In case someone start contribution to NPS at the 30 years of age he/she would need a pension wealth of Rs.319,000 (at today's prices) at the age of 60 to get a pension of Rs.2,000 per month. To realise this, he/she would need to contribute approximately Rs.16,600 every year or Rs 1350/- per month If someone contribute Rs6000/- per month he or she would get Rs10,000/- every month after sixty. So carry with the NPS till 70 and get around 20,000’/ or more per month. This is a conservative calculation. You may get more depending on the market conditions at the time of retirement. Pensioners would have an option of selecting an annuity which will pay a survivor pension to his/her spouse.
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I would like to advice that all wage earners should be a member of a pension scheme of their choice for it helps in making their life easier and secured. The most persons fail to think of pension plan during youth. But as the time progress they realize the importance pension. To be frank enough pension by Government to its employees are boon. Now a days beside officials and clerical staff, teachers of aided colleges and provincialised schools get pension and they are a happier lot. The government’s pension scheme is inflation neutral product and is a great scheme. However the old system has been replaced by the new scheme that is only a contribution oriented pension scheme.
Beside the Government, LIC has a few individual oriented pension schemes’ like Jiban Dhara”. SBI Life, ICICI and HDFC also have their own pension schemes based on Annuity payment. But by far the best pension scheme for the” Aam Janta” or individual wage earners is New Pension Scheme launched last year. Surprisingly there are not many takers of this great scheme. I am sure in the long run people would realize its necessity and would surely subscribe. New pension scheme is a great scheme for Middle class and could be subscribed to make life easier after retirement. Franklin Templeton is the only Mutual fund which has a debt oriented pension scheme.
The new voluntary pension scheme came into force in India with young people as its main target, and hoped to reach out to the 87 percent of the nation’s workforce that remained uncovered by any retirement benefit.
The Pension Fund Regulatory and Development Authority have extended the scheme on May Day to all citizens, after introducing it for fresh recruits of the central government since Jan 1, 2004. It took 10 years of conceptualisation.
“Under the new scheme, beneficiaries can divide their investments in three categories,” These can be in equity, government securities and corporate bonds and mutual funds.
“One can opt to invest only 50 percent of the funds in equity, which will be in index funds of the Bombay Stock Exchange and the National Stock Exchange. It can be 100 percent for the other two categories,” according to “PRD Authority”. Contributions will be made towards two accounts, one of which will be entirely for savings towards retirement, which cannot be withdrawn. The other portion will be voluntary and can be encashed whenever the beneficiary pleases.
The second portion, however, takes effect only six months of joining the scheme, for which the eligibility is 18-55 years. Those who join will be allotted a permanent retirement account number so that the account can be operated from anywhere.
The beneficiaries can exit the scheme after reaching 60 years of age. They can continue only up to the time they are 70.
According to regulatory authority, out of 425 million estimated workforces in the country, as many as 370 million were still not covered under any pension scheme. “Twenty years down the line, it is expect majority of them will be covered,” But present position is very low.
Officials at the regulatory authority said that Rs.2,100 crore (Rs.21 billion or $420 million) stood invested in the new pension scheme for central government employees, giving an annual rate of return of an impressive 12-16 percent. This return is very decent when compared to debt fund based pension scheme. There is a good pension scheme also in mutual Fund domain but New Pension Fund initiated by government seemed better though there are not enough takers for unknown reasons. Perhaps this scheme needs to be marketed much more aggressively.
Six pension fund managers have been appointed by the regulator for the new scheme, with 22 points of reference - the institutions that beneficiaries can approach to join. The persons willing to join the scheme can approach Nationalized Banks and Large private banks for applications forms
The minimum contribution is Rs.6,000 per annum. The money has to be paid in at least four installments a year. No installment can be of less than Rs.500. There is no upper limit on the number of installments or the money one can put in per installment.
Upon registration,( between the age of 18-55Years) person will receive a permanent retirement account number. Minimum annual contribution is Rs.6,000. The minimum number of installments per year is four. There is no upper limit on the contribution per installment or on the number of installments.
The account would be closed in case of the death of account holder, or when account value reduces to zero and change in citizenship status. The subscribers can exit the policy before 60 years also provided he or she annuitise at least 80 percent corpus. The self initiated pension is a new concept and could be greatly beneficial to subscribers. If a person fail to contribute minimum installment in a year then he would have to bear a default penalty of Rs.100 per year of default and the account would become dormant. In order to re-activate the account, pay the minimum contributions, along with penalty due. A dormant account will be closed when the account value falls to zero.
The NPS is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS.
It should be clearly understood that as with every investment, there is a degree of risk under NPS also. The value of investment in NPS may rise or fall, but investment in equity will be maximum fifty percent or lower. It would be like a balanced fund. You would be able advice the minimum exposure to equity
In case someone start contribution to NPS at the 30 years of age he/she would need a pension wealth of Rs.319,000 (at today's prices) at the age of 60 to get a pension of Rs.2,000 per month. To realise this, he/she would need to contribute approximately Rs.16,600 every year or Rs 1350/- per month If someone contribute Rs6000/- per month he or she would get Rs10,000/- every month after sixty. So carry with the NPS till 70 and get around 20,000’/ or more per month. This is a conservative calculation. You may get more depending on the market conditions at the time of retirement. Pensioners would have an option of selecting an annuity which will pay a survivor pension to his/her spouse.
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