MONEY MULTIPLYING NEWS

LIFE INSURANCE

Don’t miss this opportunity in PROCRASTINATION, make a start with a ‘One Time Investment’.

Money often accumulates in savings accounts from various sources like monthly salary deposits, regular income, or occasional windfalls such as bonuses or profits from business deals. This money can be wisely utilized to secure the financial future of your loved ones and achieve your financial goals. However, the delay in finalizing an appropriate avenue results in missing out on the compounding benefits of time.

Unit linked insurance plans (ULIPs) are designed to encourage action. With a single pay option, you only need to make one payment. This one-time payment can be a small step or a big leap, depending on what suits you best on your financial journey. ULIPs offer flexibility and customization to meet individual needs and priorities. The life insurance component ensures financial security for your loved ones, while also providing liquidity in case of emergencies.

KEY FEATURES:

1. One time investment: Convenience and hassle-free one-time investment.

2. Dual Benefit: ULIPs offer both life insurance coverage and investment opportunities in a single integrated plan, providing financial protection and wealth accumulation.

3. Investment Options: Policyholders can choose from a range of investment funds, including equity, debt, or balanced funds, based on their risk appetite and investment objectives.

4. Tax Benefits: ULIPs offer tax benefits under Section 80C for premium payments and Section 10(10D) for maturity proceeds, making them tax-efficient investment options.

5. Loyalty Additions to help boost your fund value: Loyalty Additions help to boost your fund value as a reward for staying committed for a longer term.

6. Long-term investment discipline: ULIPs typically have a lock-in period of five years, during which withdrawals or surrenders may attract charges. This encourages investment discipline.

7. Partial withdrawals can be made at any time during the policy term after the 5th policy anniversary and with any frequency, if the policy is in force.

UNVEILING THE REAL RETURNS: INFLATION’S IMPACT ON INVESTMENTS

INFLATION’S IMPACT:

Over the past decade, inflation has been on the rise, significantly impacting traditional investment returns, which typically hover around 5% to 6% per annum.

SOLUTION:

These numbers highlight the importance of considering real returns and tax implications when making investment decisions, emphasizing the potential benefits of equity with protection& investments which provides high returns in combating inflation.

SENSEX BENCHMARK RETURNS VS ULIP FUNDS RETURNS:

In the realm of investment, the pursuit of high returns often leads investors to direct involvement in indices or markets. However, a closer examination of recent trends reveals an unexpected narrative: ULIP funds have consistently surpassed the benchmarking returns of the Sensex over the past five years.

1. ULIPs vs. Sensex Benchmark Returns: Comparing ULIP funds returns with the benchmarking returns of Sensex unveils a surprising trend – ULIP funds consistently outperform Sensex returns over the last five years.

2. ULIPs: The Winning Formula: ULIPs not only offer attractive returns but also provide a unique proposition of protection cover. This dual benefit sets ULIPs apart as a compelling investment avenue.

3. Understanding the Superior Performance: Delving deeper into the reasons behind ULIPs’ superior performance, we find a combination of factors at play. These include active fund management, diversification strategies, and the flexibility to switch between funds based on market conditions.

UNIT LINKED INSURANCE PLANS PER ANNUM RETURNS VS SENSEX RETURNS IN THE LAST 5 YEARS:

BEST ULIP SINGLE PREMIUM SCHEMES:

1. Tata AIA - Fortune Pro

2. HDFC Life - Click 2 Invest

3. Kotak Life - Single Invest Advantage

4. Ageas Federal - Wealthsurance Growth SP

5. Aviva - Signature Investment Plan

In conclusion, a dynamic market landscape, ULIPs stand out as a beacon of opportunity, offering the dual benefits of growth and protection. By outperforming Sensex benchmarking returns and providing invaluable life coverage, ULIPs redefine the paradigm of high-return investments.

“NO MORE WAITING: Secure Your Dreams Today with ‘Single Pay’!”

GENERAL INSURANCE

Presenting a New version of Manipal Cigna - Pro Health Prime Plan – It is a Comprehensive and flexible Health Insurance Plan that offers “Better Coverage, Better Control and Better Care”. This Plan offers all round wellness and preventive Care Benefits.

In the present health care scenario, Manipal Cigna have come across 3 Major need of the client’s

1. Customization of product

2. Higher Medical cover for self and family

3. Increasing SI to meet increasing medical inflation.

“ManipalCigna ProHealth Prime”, that provides enhanced benefits which will offer you Sabse Pehle and Sabse Fast up to 13X coverage.

PRESENTING THE PINNACLE OF INSURANCE INNOVATION:

NEW FEATURES IN PRO HEALTH PRIME PLAN:

PRIME PLUS: 4 NEW ADD ON COVERS:

BENEFIT AT A GLANCE:

MUTUAL FUNDS

Diversification plays a crucial role in building a solid investment portfolio. Smart investors aim to distribute their funds across different types of assets, such as stocks, bonds, real estate, gold, and more. Furthermore, they go a step further by diversifying within each asset class to minimize risks. When it comes to investing in stocks, one effective approach to reducing risks is to diversify your portfolio by investing in shares of companies from various sectors and with different market capitalizations. And that’s where Index Funds come into play.

WHAT ARE INDEX FUNDS?

An Index Mutual Fund, just as the name implies, is a type of investment fund that focuses on mimicking the performance of a specific stock market index, such as the NSE Nifty or BSE Sensex. These funds operate on a passive management strategy, which means the fund manager invests in the same securities that make up the underlying index, maintaining the same proportions without making significant changes to the portfolio composition. The primary goal of these funds is to provide returns that closely align with the performance of the index they are tracking.

HOW DOES AN INDEX FUND WORK?

Imagine you’re looking at an Index Fund that tracks the NSE Nifty Index. In this case, the fund’s portfolio will consist of 50 stocks, and each stock will be represented in proportions similar to those in the index. It’s worth noting that an index can include various types of securities, such as stocks and bonds. The index fund ensures that it invests in all the securities that are part of the index it is tracking. Now, let’s contrast this with an actively managed mutual fund. While an actively managed fund aims to outperform its benchmark index, an index fund takes a different approach. As a passively managed fund, its goal is to match the returns offered by the underlying index. Instead of trying to beat the benchmark, an index fund focuses on mirroring its performance as closely as possible.

WHO SHOULD INVEST IN AN INDEX FUND?

Index Funds are known for closely tracking a specific market index, which means their returns are generally in line with the performance of that index. This makes them a popular choice for investors who prefer more predictable returns and want to invest in the equity markets with minimal risk.

On the other hand, actively managed funds operate differently. In an actively managed fund, the fund manager actively adjusts the portfolio composition based on their assessment of the potential performance of the underlying securities. While this approach may offer opportunities for higher returns, it also introduces an element of risk into the portfolio.

One of the advantages of index funds is their passive management style, which means they don’t involve the same level of risk associated with active management decisions. However, it’s important to note that index funds may not generate significantly higher returns compared to the index they track. If investors are seeking the potential for higher returns, actively managed equity funds may be a better option to consider.

FACTORS TO CONSIDER BEFORE INVESTING IN INDEX FUNDS

1. Risk and Return: Index funds, due to their passive management approach and tracking of market indices, tend to be less volatile compared to actively managed equity funds. This generally translates to lower risks. During a market rally, index funds typically deliver good returns. However, it is often recommended to switch investments to actively managed equity funds during a market slump. Ideally, maintaining a healthy mix of index funds and actively managed funds in your equity portfolio is advisable. It’s important to note that since index funds aim to replicate the performance of the index, their returns are similar to those of the index. However, one crucial aspect to consider is the “Tracking Error.” Before investing in an index fund, it’s essential to look for a scheme with the lowest tracking error.

2. Aligning with Your Investment Plan: Index funds are generally suitable for investors with a long-term investment horizon of seven years or more. These funds may experience short-term fluctuations, but they tend to average out over the long term. With a minimum investment window of seven years, investors can anticipate earning returns in the range of 10-12%. It’s advisable to align your long-term investment goals with index fund investments and stay invested for as long as possible.

3. Tax Considerations: As index funds fall under the category of equity funds, the tax treatment applicable to equity schemes will also apply to index funds.

By carefully evaluating these factors and considering your investment goals and risk tolerance, you can make a well informed decision regarding index fund investments in India.

THE ROLE OF FIXED DEPOSITS IN DIVERSIFICATION:

1. Stability and Security: Fixed deposits are renowned for their stability and low-risk profile, making them an attractive option for the conservative portion of a diversified portfolio. With a predictable rate of return and guaranteed principal, FDs provide a sense of security even in turbulent market conditions.

2. Counterbalance to equities: In a diversified portfolio that includes stocks, fixed deposits serve as a counterbalance. During periods of equity market volatility or downturns, FDs offer a stable source of income, helping to reduce overall portfolio risk. Their steady performance acts as a buffer, protecting the portfolio from significant losses.

3. Income generation: One of the key benefits of fixed deposits is their ability to generate regular interest income. This income stream is particularly appealing for retirees or investors seeking a consistent source of cash flow. By providing reliable returns, FDs contribute to the overall stability and resilience of the portfolio.

HOW FIXED DEPOSIT CAN BE USED FOR PORTFOLIO DIVERSIFICATION:

1. Balancing a retirement portfolio: Imagine a retiree with a significant portion of their saving invested in stocks for long term growth. To balance a portfolio and reduce risk they allocate a portion of their savings to FDs with varying maturity. This strategy ensures a stable source of income during retirement while still benefiting from potential equity gains.
2. Emergency fund and investment mix: An individual decides to build an emergency fund for unexpected expenses. Instead of keeping all the funds in a traditional savings account, They allocate a portion to a short term FD. This choice not only safeguards the emergency fund but also earns a higher interest rate than a regular saving account.
3. Risk mitigation in a business portfolio: A business owner who has invested heavily in their company’s growth recognizes the importance of risk mitigation. They allocate a portion of their personal savings to FDs, which act as a financial safety net in case the business faces unexpected challenges.

ADVANTAGES OF DIVERSIFIED PORTFOLIO WITH FIXED DEPOSIT:

1. Risk Reduction: Diversification with Fixed deposit key benefit lies in its capacity to lower the overall risk within a portfolio. When you distribute your investments across equity and Fixed deposit, the negative impact of equity under performance on your entire portfolio is minimized. Diversification effectively prevents the risk associated with “putting all your eggs in one basket.”
2. Reduced Emotional Bias: Diversification keeps you frommaking snap decisions when one investment isn’t doingwell due to short-term market changes. It helps you stay steady and avoid hasty choices.
3. Customization to Goals and Risk Tolerance: empowers investors to ustomize their portfolios to align Fixed deposit with their unique financial objectives and comfort with risk. With a well-diversified portfolio, you can address both immediate needs for accessible funds and long-term goals like saving for retirement.
4. Protection against volatility: In times of market turbulence or economic uncertainty, Fixed deposit act as safe havens, providing a cushion to the overall portfolio when other riskier assets decline in value.
5. Consistent returns: To add Fixed deposit in our portfolio tends to result in steadier and more predictable returns in the long run. Even if certain investments have ups and downs, having a Fixed deposit that the overall performance is more likely to stay stable.
6. Improved Risk-Adjusted Returns: A diversified portfolio may achieve better risk-adjusted returns, meaning it delivers a higher return for a given level of risk compared to a non-diversified portfolio.

FOR INSTANCE

You have 20 lakh investment portfolio and you are concerned about market volatility and want to reduce risk while still earning a reasonable return.

Option A: All in on equity: Invest the entire 20 lakh in a equity portfolio, Expected annual return is 12% and annual standard deviation (volatility) is 18%.

Option B: Equity and fixed deposits (FD): Allocate 70% (14 lakh) to equity portfolio and 30% (6 lakh) to 3 year FD with a guaranteed return of 7.5%.

In Option A: Expected annual return is 12% and standard deviation is 18%.

In Option B: Portfolio expected return (weighted) is 10.65% and portfolio standard deviation (Volatility)* is 12.56%.

*Portfolio standard deviation means how much the investment will deviate from its portfolio expected return.

CONCLUSION:

By Including fixed deposit into our investment strategy, we observe that our portfolio’s return only drops by a modest 1.35% . However, the Risk of a portfolio is significantly reduced by 5.44%. This reduction in risk underscores the effectiveness of fixed deposit in stabilizing our investment portfolio, demonstrating their crucial role in balancing risk and return plus FD provides stability, capital preservation, and insulation from market volatility.

This is particular valuable during economic downturn or when you want to safeguard a portion of your investment.

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))

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