Money Multiplying News

Eligibility Criteria: Fortune Guarantee Retirement Read- Systematic Pension StructureMAKE A PERFECT PLAN FOR YOUR RETIREMENT YEARS What happened on 1st April, 2023?

“From 1st April’23, ?proceeds from Life Insurance premium over the aggregate annual premium of?above ?5 lakh will be taxable from new financial year i.e. from 1st April 2023”. The Finance Minister Nirmala Sitharaman made an announcement about this change in income tax rules while presenting the Union Budget 2023 in parliament.

Introducing the TATA AIA Fortune Guarantee Retirement Ready Plan – Your Pathway to a Secure Retirement. This non-linked, non-participating pension plan is meticulously tailored to prepare you for your golden years, ensuring you experience a fulfilling and worry-free retirement. With its unwavering commitment to guaranteed benefits and an array of enticing features, this plan empowers you to savor life to the fullest. “Retirement isn’t the end; it’s the gateway to an endless highway of possibilities”

LIFE INSURANCE

Retirement planning in India has become a challenging task for many individuals. With the increasing life expectancy in the country, people need to plan for a longer retirement period spanning at least 25-30 years. The current life expectancy of 71 years is projected to reach 82 years by 2035. This suggests that Indians need to focus on building a substantial retirement corpus to ensure that they are financially secure during their golden years. Investing in retirement plans that generate a strong and guaranteed income is crucial to achieving this goal. However, it is important to carefully evaluate different investment options and choose one that is aligned with your financial goals and risk appetite. With the right approach, you can secure your financial future and enjoy a comfortable retirement.

Longevity Risk: Increasing Life Expectancy

A Perfect Solution for Long Term Guaranteed Income through SYSTEMATIC PENSION STRUCTURE (SPS) Option

How the Plan Works : Ajay is a working professional. He invest in Tata AIA Fortune Guaranteed Retirement Ready Systematic Pension Structure by paying Rs. 10,00,000 p.a. for a period of 5 years where he gets the tax free income as stated below:

Eligibility Criteria: Fortune Guarantee Retirement Read- Systematic Pension Structure

“So as you plan for retirement, don’t forget the importance of insurance. It can be your financial partner, ensuring that your retirement years are filled with relaxation and financial security”

GENERAL INSURANCE

ntroducing the Niva Bupa Senior First Plan– a health insurance solution designed with meticulous attention to detail to support and nurture our beloved senior citizens during their golden years. Our Senior First Plan offers substantial coverage of up to 25 lakhs, ensuring comprehensive protection without the constraints of sub-limits on common health conditions. Seniors can benefit from comprehensive health check-ups right from day one, and our simplified claims process guarantees a seamless experience.

A HEALTH PROTECTION PLAN WITH A HEARTFELT COMMITMENT

The Senior First Health Plan comes with a range of features that provide our treasured senior citizens with enduring peace of mind regarding their health. Whether it involves multiple treatments for a recurring ailment within a single year or extends coverage to essential consumables, our commitment to safeguarding the health of our seniors remains steadfast and unwavering. We are dedicated to their well-being, and our plan reflects this heartfelt promise.

? Reduce Co-Payment - An optional benefit to reduce Co-Payment from 50% to 0%*/20%/ 30% /40%

? Swap co-payment for deductibles - Choose your annual deductibles option as per your requirements and enjoy a copayment free health cover.

? Enhance sum insured up to 100% with No Claim Bonus - Get rewarded for staying healthy with the no claim bonus feature. Add 10% to your base sum insured every claim free year. Max up to 100% of base sum insured.

? Safeguard (Add-on)*

i. Coverage for non-payable items like gloves, etc.

ii. Inflation protection coverage^ - Increase in base sum insured on a cumulative basis each policy year based on Inflation Rate.

iii. No Impact on No Claim Bonus - There will be no impact on your no claim bonus, if claims in a policy year are up to INR 50,000.

? Tax Savings - Claim deduction% of up to INR 50,000 under Section 80D of the Income Tax Act, 1961. Claim additional tax-saving benefit under 80D, if you pay premiums on your parent’s behalf. Refer to the policy document for policy exclusions.

COMPREHENSIVE HEALTH PROTECTION WITH A PROMISE TO GIVE OUR SENIORS A SECURE SECOND INNINGS

WHAT WILL NOT BE COVERED?

Refer to the policy document for policy exclusions

FIXED INCOME

Fixed Deposits (FD): Secure Savings with Fixed Returns A fixed deposit (FD) is a financial product provided by banks and financial institutions. It involves depositing a lump sum for a specified duration, known as the tenure. In return, depositors receive a fixed interest rate throughout the FD’s term. FDs are renowned for their conservative, low-risk nature, with the principal amount typically safeguarded by the institution up to a specific limit. This reliability makes FDs a secure means of securing a predetermined return on your savings.

Bonds: Investing in Bonds -

A World of Capital Opportunities Bonds are essentially debt securities issued by entities such as governments, municipalities, and corporations, with the primary purpose of raising capital. When you invest in a bond, you’re essentially loaning money to the issuer. In return, you receive periodic interest payments, known as coupon payments, as well as the return of the principal amount (face value) upon the bond’s maturity. Bonds take on various forms, including government bonds, municipal bonds, and corporate bonds, each with its unique risk level and potential for returns. Here are some of the main distinctions between fixed deposits and bonds:-

1. Nature: ? Fixed Deposit (FD):

? FD is a type of savings account offered by banks and financial institutions.

? It is considered a low-risk investment.

? It is a form of deposit where you invest a lump sum amount for a fixed tenure, typically ranging from a few months to several years. ? FDs are typically used for short to medium-term goals.

Bonds:

? Bonds are debt securities issued by governments, municipalities, or corporations to raise capital.

? When you invest in bonds, you are essentially lending your money to the issuer in exchange for periodic interest payments and the return of the principal amount at the end of the bond’s term.

? Bonds can have varying maturities, ranging from short-term (e.g., a few months) to long-term (e.g., 30 years or more).

2. Issuer:

? Fixed Deposit (FD): FDs are issued by banks and financial institutions.

? Bonds: Bonds can be issued by governments (government bonds or treasury bonds), municipalities (municipal bonds), or corporations (corporate bonds).

3. Risk:

? Fixed Deposit (FD): Fixed deposits are generally considered a secure investment option . They offer a predetermined interest rate and a fixed maturity period, which makes them relatively low-risk . However, the level of security depends on the financial institution offering the fixed deposit.

It’s important to choose a reputable bank or highly rated NBFC/HFC to ensure your investment is protected . An AAA-rated company is considered extremely credit worthy, and it is expected to have a strong ability to meet its financial commitments. This makes it a relatively secure investment.

Bonds: The level of risk associated with bonds can vary widely depending on the issuer and the creditworthiness of the entity issuing the bond. Government bonds are often considered very low-risk (especially those issued by stable governments), while corporate bonds can carry higher risk, especially for companies with lower credit ratings.

4. Returns:

? Fixed Deposit (FD): Returns on FDs are typically fixed and predetermined, with interest rates set at the time of investment.

? Bonds: Bond returns can vary based on the prevailing interest rates in the market. If market interest rates rise, the value of existing bonds may decrease, affecting their returns. Conversely, if rates fall, bond values may rise.

5. Liquidity: t

? Fixed Deposit (FD): FDs are less liquid compared to bonds, as they often have penalties for early withdrawals before the maturity date.

? Bonds: Bonds can be more liquid, as they can be bought and sold in secondary markets, allowing investors to exit their investments before maturity, although market conditions can affect bond prices.

6. Taxation:

? Fixed Deposit (FD): Interest income from FDs is taxable.

? Bonds: Interest income from bonds may be taxable, but some government bonds may offer tax advantages in certain countries.

Note:- In summary, fixed deposits are typically lower-risk investments with fixed returns issued by banks, while bonds can have varying levels of risk and returns, are issued by various entities, and have a broader range of maturities. The choice between the two depends on your financial goals, risk tolerance, and investment horizon. It’s advisable to consult with a financial advisor to determine which option suits your specific circumstances and objectives. Let’s take some calculative example about Fixed Deposits & Bonds for better understanding:-

Example of Fixed Deposit

Let’s say you have some surplus funds, and you decide to invest Rs. 100,000 in a company fixed deposit offered by “ABC Finance Ltd.” The company is offering an interest rate of 8% per annum for a tenure of 3 years. Here’s how your investment would work:

1. Amount (Investment): Rs. 100,000

2.Interest Rate: 8% per annum

3.Tenure: 3 years To calculate the interest and maturity amount at the end of the tenure, you can use the following formula:

Formula:- Maturity Amount = Principal Amount + Interest Earned Interest Earned = Principal Amount × Rate of Interest × Time (in years) / 100

In this case: Interest Earned = 100,000 × 8% × 3 / 100 = Rs. 24,000 Maturity Amount = 100,000 + 24,000 = Rs. 124,000

So, at the end of 3 years, your investment of Rs. 100,000 in the company fixed deposit with ABC Finance Ltd. will mature to Rs. 124,000.

Note: The interest earned on company fixed deposits is typically subject to TDS (Tax Deducted at Source) if it exceeds a certain threshold. Additionally, it’s important to research and choose reputable companies for fixed deposits and consider factors like credit rating and liquidity before investing. Please keep in mind that the interest rates, terms, and conditions for company fixed deposits can vary widely among different companies, so it’s essential to read the offer document carefully and consult with a financial advisor if needed before making any investment decisions.

Example of a Bond: Suppose the Government of India issues a 10-year bond with a face value of Rs. 1,00,000 (1 lakh INR) and an annual coupon rate of 7%. The bond is sold to investors in the open market. Key details of the bond:

1. Face Value: Rs. 1,00,000

2. Coupon Rate: 7% per annum

3. Maturity Period: 10 years Calculating Annual Interest Payments: The annual interest payment can be calculated using the following formula:

Formula:- Annual Interest Payment = Face Value × Coupon Rate

In this case: Annual Interest Payment = Rs. 1,00,000 × 7% = Rs. 7,000

So, the Government of India will pay an annual interest of Rs. 7,000 to the bondholder for the next 10 years.

Maturity Value: At the end of the 10-year maturity period, the bondholder will receive the face value of the bond, which is Rs. 1,00,000.

Total Return: The total return for the bondholder over the 10-year period can be calculated by adding up all the annual interest payments and the face value:

Total Return = (Annual Interest Payment × Number of Years) + Face Value Total Return = (Rs. 7,000 × 10) + Rs. 1,00,000 Total Return = Rs. 70,000 + Rs. 1,00,000 Total Return = Rs. 1,70,000

So, if you invest in this 10-year government bond, you will receive a total of Rs. 1,70,000 over the bond’s life, which includes both the annual interest payments and the face value at maturity.

Please note that this is a simplified example, and real world bonds may have more complex features, such as different coupon payment frequencies, call provisions, and varying interest rate structures. Additionally, the market price of bonds can fluctuate based on changes in interest rates, which can impact their yield to maturity.

MUTUAL FUNDS

SIP (Systematic Investment Plan) investing is like that trusty companion on your financial journey, guiding you through the ups and downs of the market. It’s an approach suitable for investors of all kinds, especially if you’re eyeing long-term goals and looking to ride the wave of equity exposure. The beauty of SIP lies in its ability to cushion the blows of market volatility across different cycles and harness the remarkable power of compounding. But, the real magic happens when you pick the right SIP for your investment. So, let’s delve into the essential Dos and Don’ts for selecting SIP investments.

The Dos Before Selecting a SIP Plan

? Define Your Goals: Picture your financial dreams, specify your investment amount, and set your time horizon. Keep a weather eye on the eroding power of inflation. Your investment horizon dictates the type of asset classes that will suit you best. Tailor your fund selection to align perfectly with your investment goals.

? Analyze Your Risk Tolerance Level: Consider your tolerance for market turbulence. Your risk profile is deeply intertwined with your financial objectives. If you’re a daredevil with a long-term perspective, equity mutual funds could be your wingman. But if you’re more risk averse, debt funds may be your safe haven.

? Have a Long-Term Investment Horizon: Remember, mutual funds are your marathon companions, not sprinters. Embrace a longterm perspective to ride out market volatility and harness the compounding effect. Slow and steady often wins the race when it comes to investment.

? Analyze and Monitor Mutual Fund’s Performance: Keep an eagle eye on your fund’s performance as it navigates through market cycles. Markets ebb and flow, and external factors can sway your investments. For instance, rising interest rates should have you steering clear of long maturity debt funds.

? Understand the Tax Implications: Before diving in, it’s crucial to understand the tax implications of your investments. Whether you choose a lump sum payment or opt for SIPs, knowing the tax landscape will enable you to gauge your potential returns.

The Don’ts Before Selecting a SIP Plan

? Don’t Try to Time the Market:

Leave the crystal ball at home; predicting market movements is a Herculean task. Make it a habit to invest regularly, and you’ll sidestep the market-timing puzzle. Stay committed to your SIPs, irrespective of the market’s whims.

? Don’t Invest Based on Peer Pressure: Just because your buddy or aunt raves about a particular scheme doesn’t mean it’s the one for you. Select funds that align with your unique goals and requirements. Be your own financial guru, or seek professional advice.

? Don’t Panic in the Face of Market Volatility: Market volatility is as inevitable as the changing seasons. While it doesn’t guarantee returns, it’s important to remember that markets often bounce back after a tumble. A bull market isn’t forever, so knowing your investment horizon is key. Keep your cool, stay invested, and ride out the turbulence.

? Don’t Discontinue or Exit Your SIPs: Impatience is not a virtue in the world of investing. Pulling the plug on your SIPs prematurely won’t lead you to your financial destination. Stick to your long-term plan, and you’ll find the rewards you seek.

? Don’t Over-Diversify: Avoid scattering your investments across too many funds that essentially expose you to the same assets. Seek balance and diversification to fortify your portfolio against market turbulence. This way, when the storm clouds gather, your financial ship will stay steady. SIP investing is your compass on the financial voyage. Remember these Dos and Don’ts as you set sail toward your investment goals, and you’ll be better prepared to navigate the everchanging financial seas.

Disclaimer: Bajaj Capital Limited (‘BCL’) has taken due care and caution in presenting 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 about 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 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 solicitation for any product or services. 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))