Mar 2023

Market overview of last month?

The Nifty 50 index touched the month's high at 18,134 and the month's low at 17,255 (last month was 18,251 and 17,405 respectively). The markets showed a downward trend for much of the month. The reasons contributing to this were geopolitical tensions between USA and China, the continuing Ukraine - Russia war rising crude oil prices, and the U.S. Federal Reserve's interest rate increases.

What can investors do?

Equity investors who have monies to invest can enter now via a very short-term STP. Investors who have a requirement for funds in the next 6 months can consider redeeming their investments. Debt fund investors should keep a watch for interest rates peaking out as this could be a good time to enter medium-term or long-term duration funds (with a due assessment of investment horizon, risks, ratings etc)?

Things to keep in mind while purchasing a new car insurance

it is essential to note that insurance costs for your new car can range from 5% to 8% of its value. But we often overlook thoroughly assessing the details as we are caught up in deciding the colour, model, and other accessories. Most dealerships offer add-on covers that may not be useful. They usually have a tie-up with only one insurance company, and cannot provide you with comparative quotes. That is why it is crucial to approach an agent and get at least 2-3 quotes and compare them with the one provided by the dealership. If you find that the dealer's offer is better or similar, you can go ahead with it. However, if you find better deals elsewhere, you can use them to negotiate with the dealer for a better deal. A little effort on your part can help you save up to 25% on your new car insurance. So, the next time you plan to buy a new car, remember to give ample consideration to insurance coverage and get multiple quotes to compare and make an informed decision.

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Tempted to choose the ‘return on premium’ option in term insurance?

When it comes to availing of term insurance, we are often presented with the tempting option of ‘return of premiums’. In other words,?on surviving the policy term, the total premiums paid will be given back to the Policyholder.?However, is this the right move for us in the long run?

Let us consider a scenario. Suppose a 30-year-old individual takes term insurance for 30 years with a monthly premium of Rs 1,125. If they opt for the return of premium option, the cost increases to Rs 1,805, which is 50% more. Over 30 years, this amounts to Rs 4 lakhs and Rs 6.50 lakhs, respectively. While receiving Rs 6.50 lakhs after 30 years may appear attractive, do note that the insurance company is merely refunding the premiums you paid,. Any returns they have made are retained with them. However, there is an alternate scenario to consider. Suppose you opt for term insurance without the return of premium option and invest the difference of Rs 680 in an equity SIP. Assuming a return of 10% over 30 years, the investment grows to Rs 15.50 lakhs. Of course, this requires discipline and staying invested for the long term, which may be challenging for some. Remember, term insurance is primarily for protection and not for ‘returns’ purposes.

An update on Indian mutual funds with US Tech stock portfolios

Before the pandemic, the NIFTY 50 was trading at around 12,000 levels. However, post-COVID, it rose all the way to 18,600 levels. It is currently trading at around 17,300 levels. On the other hand, the NASDAQ was trading at around 9,000 levels before the pandemic. Post-COVID, it rose to 16,000 levels but has since dropped sharply to around 11,500 levels. Looking at these indices as a proxy for valuations, one can assume that US tech stocks are available at far cheaper valuations than Indian stocks. For investors keen on entering the market through the mutual fund route, it's worth noting that many mutual fund houses have breached or are close to breaching the foreign exchange limits set by RBI. This may soon result in these fund houses being unable to accept fresh inflows. Considering these factors, investors may want to consider allocating some portion of their portfolio to mutual funds that invest in US tech stocks, to take advantage of the current low valuations.

That’s all, folks. Have a great month ahead!

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.