Money Multiplying News

TERM INSURANCE IS THE MOST ECONOMICAL WAY TO PROTECT YOUR FAMILY!

Thanks to the growing awareness about the importance of life insurance coverage, many individuals these days make sure that they get a Protection/Risk Cover Solution at the right age and get the benefits of getting insured at an early age. With the growing awareness about term plans along with cutthroat competition, term plans these days are offering much more than their previous versions. In order to make the right choice towards insuring yourselves, one should opt for the term plan best suited for his/her individual need.

LIFE IS UNPREDICTABLE AND UNCERTAIN FOR EVERYONE!

SOME IMPORTANT QUESTIONS TO PONDER - IF YOUR ANSWER IS NO TO ANY OF THE QUESTIONS BELOW, YOU REALLY NEED A LIFE INSURANCE!

? Today, you maintain a certain lifestyle. Will your family be able to continue with the same lifestyle if you do not come home tonight?

? Will your family continue to stay in the same house if you do not come home tonight?

? Will your children continue to get the same education you dreamt of if you do not come home tonight?

? Will you be able to afford the same LIFESTYLE if you live till 100 years?

LIFE INSURANCE

The most common reason for buying life insurance is to protect your dependents from the loss of earning person's income. If someone has a spouse, children, or other dependents, the payout can help the family to survive & write off the financial impact of the earning person's death.

New Age Term Insurance is Flexible in Nature - Pay Premiums per your choice. For example - Regular pay or Limited pay.

Let's understand Regular Pay vs Limited Pay through to the story of Arun and Varun.

Arun and Varun are cousins, both aged 35 years old. They both are worried about the financial protection of their family.

TWIST IN THE TALE

Both paid their premiums for 10 years. Both get posted abroad, Varun forgets to pay premiums further, whereas Arun doesn’t need to pay premiums anymore as he opted for Limited Pay Option. Both met with an accident in an air crash and died at the age of 47.

While Arun's family was paid, Varun's family did not get anything.

WHY?

Since Varun had bought the term plan with Regular Pay Option, which lapses if premiums are not continued, therefore, nothing was paid to Varun's family.

Whereas Arun's family got 1 Cr. of the sum assured and was able to live a better life.

PREMIUM COMPARISON OF NEW AGE TERM INSURANCE WITH REGULAR PAY & LIMITED PAY!

(Please note that all below premiums are exclusive of taxes, Healthy Males, and Non-Smoker)

GENERAL INSURANCE

HOW MUCH DOES IT COST – 50K CASHLESS OPD?

Pay & Get the Cashless OPD Cover as low as ?11/per day for 2 Adults of 35 Years old & Pay ?5/per day Extra for the addition of 1 Child

MUTUAL FUND

Achieving our dreams of owning a car, a house, or the latest gadgets requires more than just wishful thinking - it requires a solid financial plan. Fortunately, one of the best ways to start building wealth is by investing in mutual funds through a SIP (Systematic Investment Plan).

1. WHAT IS SIP?

A Systematic Investment Plan (SIP) is a convenient way to invest in mutual funds, allowing investors to make regular contributions on a periodic basis. By setting investment goals and choosing a mutual fund scheme, investors can plan their long-term financial growth with greater ease and flexibility. For example, an investor might choose to contribute ?500 each month for five years via a SIP with a mutual fund. These contributions can be automated and adjusted according to the investor's preferences, with options for weekly, monthly, quarterly and semi-annual investments. Importantly, it's crucial to understand that SIP is not an asset in itself but rather a method of investing in mutual funds. Any contributions made through a SIP will be invested in the mutual fund scheme of the investor's choice, helping them achieve their financial objectives over time.

2. BENEFITS OF SIP

SIPs provide a diverse range of benefits to investors of all ages and risk profiles. Some of the key advantages of SIP plans include:

Rupee-cost averaging?is a significant advantage of SIPs since it eliminates the need to time the market. Investors who try to time the market can end up losing money due to a lack of expertise. With SIPs, investors invest a fixed amount at predetermined intervals, regardless of the market's position. This approach removes the guesswork involved in market timing. When the markets are low, investors receive more units for the same amount invested, and when the markets are high, they receive fewer units. Over time, this approach reduces the average cost per unit allocated. For example, suppose an investor decides to invest ?5,000 each month for the next 5 months via SIP. In that case, rupee-cost averaging will work in their favour, allowing them to benefit from market fluctuations in the long run.

Thanks to rupee-cost averaging, your average NAV cost per unit amounts to 98.2 [491 ÷ 5] in the given example. Suppose you had invested a lump sum of ?25,000 in January; your NAV cost per unit would have been ?100, and you would have been able to purchase only 250 units (2.11 fewer units, i.e., 25,000 ÷ 100 = 250 units). The investment's value would also have been different. If you had invested ?25,000 in January, its value in May would have been ?25,000. However, due to rupee-cost averaging, your investment's value in May with SIPs would be ?25,211 [i.e., 252.11 units x ?100 NAV]. Therefore, investing through SIPs allows investors to benefit from rupee-cost averaging, resulting in cost-efficient, long-term investments.

Professional Management:?Mutual funds are managed by experienced professionals with a proven track record as portfolio managers, and they have a team of research analysts to monitor markets and gauge investment opportunities. With SIPs, your investments in mutual funds allow you to benefit from the fund manager’s expertise, which is especially important if you don't understand financial jargon or the markets. By outsourcing investment expertise to a fund manager, you can optimize your returns while avoiding the risk of losing capital. In essence, SIPs are a win-win situation for investors.

Financial Discipline:?One of the most significant advantages of SIPs is that they promote financial discipline. When people experience a growth in income, it's easy to succumb to the temptation of upgrading their lifestyle. However, those who are more prudent often choose to invest first and spend the rest. SIPs can help instil this discipline by committing you to invest a fixed amount every month without requiring any additional effort on your part. The funds are automatically debited from your registered account each month, and over time, the small contributions grow into a significant sum thanks to compounding. This not only helps you achieve your financial goals but also helps inculcate good financial habits for the long term.

Compounding is a powerful tool that can help your investments grow over time. As your investment generates returns, those returns are reinvested, allowing your investment to grow even faster. SIPs benefit from the power of compounding just like other mutual funds. To illustrate this, let's take an example where you invest ?1,00,000 per annum with a 12% rate of return. Here's how much you can earn based on the duration of your investment:

3. TYPES OF SIP

? Fixed SIP:?This is the most basic version of SIPs. You choose a fixed amount and a date until which you wish to contribute, and the rest is automated. You should know that unless you set an end date yourself, these SIPs will terminate by default in the year 2099. However, this shouldn't be a concern as it is too far into the future. Fixed SIPs are popular among investors, but there are other types of SIPs that could potentially suit your investment style better.

? Top-up SIP:?Top-up SIPs are ideal for investors who want to increase their SIP contributions periodically. If your income continues to increase each year, you could choose to contribute the entire increment or a part thereof to the SIP by opting for a top-up SIP. For instance, if you currently invest ?20,000 a month, and your income increases by 10% each year, you could choose to increase your contribution by the entire incremental income, a part of it, or just increase your contributions by 10%.

? Perpetual SIP:?Perpetual SIPs are fixed SIPs without tenure. Once registered, your bank account will be debited with the amount of the SIP contribution unless you instruct the fund house to stop withdrawals. If you don’t want your investments to be limited to a certain number of years, perpetual SIPs are an ideal option that eliminates the need for repeated renewals. You can redeem your investments anytime you choose, of course.

? Flexible SIP:?A flexible SIP offers you the flexibility to change the amount per contribution or skip a few contributions if you choose to do so. There are two possible reasons why an investor may want to change the contribution amount or skip a contribution. First, your contributions through SIP are adjusted based on the market’s overall outlook. If the market is valued higher, your monthly contributions through SIP would be reduced and increased again once markets are corrected and valuations look attractive. Fund houses do this based on a pre-decided valuation matrix. You will get to decide the minimum and maximum SIP investment amounts, but it is important to inform the fund house about any changes a week before your SIP instalment is due.

DIFFERENCE BETWEEN LUMP SUM AND SIP

SIPs involve periodic contributions towards a mutual fund scheme, while a lump sum investment is a one-time investment in a mutual fund. For instance, if you have ?50,000 that you want to invest, you could either make a lump sum investment of ?50,000 or choose to invest ?5,000 every month over the next 10 months by setting up a systematic investment plan. When faced with the decision between SIPs and lump sum investments, most investors will typically do better with SIPs. This is because being able to time the market is key to generating better returns from your lumpsum investment. If you make a lump sum investment when the markets have peaked, you could end up with negative returns. However, with SIPs, you make contributions during both market peaks and market lows, which eliminates the need to time the market. Additionally, there are several other benefits to investing via SIPs.

THINGS TO CONSIDER WHILE STARTING SIP

Before you start your first SIP investment plan, there are several factors to consider about the mutual fund scheme you choose for your SIP investment:

Investment Goals

It is best not to begin investing by merely aiming to grow your wealth. Instead, tie your investments to important milestones in your life that may require a significant amount of money. For instance, a bigger home, your child's college education, or your retirement. By doing so, you can keep track of your investment objectives, assess the performance of each investment, and take corrective action if necessary

Time Horizon and Risk Appetite

Once you have defined your investment goals, you must decide the number of years you want to achieve them. If you have a long time horizon, you may take on more risk than if you had a short time horizon. If you are nearing retirement and do not want to take on a lot of risks, you could stick to short-term mutual fund investments. Your risk appetite is also a factor of your income and psychological fortitude. If you have a consistent income, you may have a higher risk appetite because you have a consistent cash flow coming in each month. Some investors may find it challenging to hold their investments during a sell-off. If they panic and sell while the markets drop, they may end up eroding their capital. If you believe you cannot handle the volatility of equity markets, consider sticking to debt or arbitrage funds.

Mutual Fund Category

Choosing the right mutual fund category is a crucial factor, as there are many options available. You should consider your time horizon and risk appetite when selecting a mutual fund category. A longer time horizon and a greater risk-taking ability could give you the opportunity to earn higher returns by investing in categories like focused funds or small-cap funds. If you have a short time horizon or are risk-averse, opt for debt funds. If you are somewhere in between, hybrid funds may be a good choice.

Disclaimer:?Bajaj Capital Limited (‘BCL’) has taken due care and caution in presenting the factually correct data contained herein above. While BCL has made every effort to ensure that the information/data being provided is accurate. BCL does not guarantee the accuracy, adequacy or completeness of any data/information in the publication, and the same is meant for the use of the recipient and not for circulation. Readers are advised to satisfy themselves with the merits and details of each investment scheme before taking any investment decision. BCL shall not be held liable for any consequences, legal or otherwise, arising out of the use of any such information/ data and further states that it has no financial liability whatsoever to the recipient/ readers of this publication. Neither BCL nor any of its directors/ employees/ representatives accept any liability for any direct or consequential loss arising from the use of data/ information contained in the publication or any information/ data generated from the publication. Nothing contained in this publication shall constitute or be deemed to constitute a recommendation or an invitation, or a solicitation for any product or service. Any dispute arising in future shall be subject to the Court(S) at Delhi. Views given in the articles are the personal views of the contributors and not that of the company. Readers are advised to go through the respective product brochure/ offer documents before making any investment decisions.

Disclaimer:?The rates of interest are applicable as on the data mentioned herein above. The rate may be revised at the sole discretion of the respective companies inviting the Fixed Deposits without further notice. Printed by, Rajiv Wadehra, Published By, Raji Wadehra on behalf of Bajaj Capital Investment Centre Limited, Bajaj House, 97 Nehru Place, New Delhi - 110019, and Printed at Sundeep press C-105/2, Naraina, Industrial Area Phase -, New Delhi - 110028, and Published at Bajaj House,97 Nehru Place, New Delhi - 110019, Editor-Rajiv Wadehra (CIN: U0000DL1988PLC039417))

All Insurance products are sourced by Bajaj Capital Insurance Broking Ltd.