[carboy]

Originally Posted by ghodlur

Debt funds normally invest in govt securities or bonds and are the best bet in a falling market.

So are you suggesting that when the market falls, you should exit out of equity & get into debt? And when the market rises, get out of debt & get into equity?

[Technocrat]

Originally Posted by aargee

Well, I I saw it this way...
Half yearly 4450 X 2 X 25 = 222500
Annually 8725 X 25 = 218125
Single premium - 110,575


Yes; nice point, got me thinking...
First year saving 110575-8725 = 101850, invest the money & even if one gets mere 8% interest, that is sufficient to pay the next year's premium. That's a good option too, but still, I somehow feel uncomfortable. Probably its all in the mind I guess.

So when I'm clear on term insurance confusion on insurance company & mode of payment are smiling at me.

A couple of points that you may want to Consider

- The Value of the 4k~ rs would be much less than what it is now (Time value of money) Yes same would apply for the 1 L too but then this 1L will give you interest which can pay for a couple of a your premiums.

- God Forbid if something unfortunate happens within the insurance period, the gain would be max if the premiums paid are less, its like paying for your car's five years insurance in one shot.

- Also the idea with Term Insurance is that you can close it as & when you want to e.g. Say I have covered my self for X amount for 25 years, after 15 years I realize that I have enough resources that will take care of my family & that I dont really need that insurance & in which case I can simply stop paying the premium for the insurance.

For life insurance I would say stick to LIC, although there are other options too.

Btw check for the riders e.g. this policy in LIC(forgot the name) has disability rider built in, which IIRC means that if due to some reasons I have a disability which impacts my earning then this policy will pay me 10% of insured amount every year till the last year of policy.

[aargee]

Originally Posted by Technocrat

- The Value of the 4k~ rs would be much less than what it is now (Time value of money) Yes same would apply for the 1 L too but then this 1L will give you interest which can pay for a couple of a your premiums.

You're right. It makes a perfect sense. I'll pay an annual payment. If that's the case, I can buy one even by next few days as I planned earlier.

Originally Posted by Technocrat

For life insurance I would say stick to LIC, although there are other options too.

Yeah, but check out this post. I'm not biased with them, but you see there's a good difference in the premium amount. Anyway, I'll do the homework for some more time & post the updates.

Originally Posted by Technocrat

Btw check for the riders

Yep; when I opt for annual payment, the charges on riders will also be less. I'll check on the policy details & post an update here.

Thanks Technocrat; your points are more than valid & had a great impact with my decision.

[Technocrat]

Originally Posted by aargee

Yeah, but check out this post. I'm not biased with them, but you see there's a good difference in the premium amount. Anyway, I'll do the homework for some more time & post the updates.

Thanks for sharing the link, thats some good info, like I said others are good too, i know a few folks who got their term policies from SBI & HDFC. So whichever works out better & has more rider options.

[aargee]

Originally Posted by Technocrat

i know a few folks who got their term policies from SBI & HDFC. So whichever works out better & has more rider options.

3 years ago, I was very much impressed with the ad on HDFC life insurance. There were series of them where it portrays a elderly gentleman still makes a good income (trip to Singapore) even at that age.

Once when I went to my regular bank where they convinced me to take an insurance from HDFC that was also a market linked policy. Since I was already impressed, I was determined to buy one. It was But when they mentioned the charges I was like

The first year the charges was around 28%, second year 12% & third year 5%. So you see 55% in first 3 years which means they're running on 60% profit.

And that was the last time I inquired about any insurance until someone mentioned about term & endowment insurance, I was determined to take an endowment, but now this has turned to term

So that was one of the reason as why I was determined with LIC, but then RKG helped me understand the lower premium on Aegon Religare & the strong backup of Religare with Aegon. So in a way both you & RKG were most influential.

Let me once again compare & see as my PO agent's wifey works in LIC & for Religare, I can pay through online. So both are hassle free IMO. I'll keep this posted the updates.

[coolclouds]

Originally Posted by ghodlur

No smartness needed in invetsing in blue chip stocks or a large cap stock. There are the first to nose dive and these are the first to soar high.

Take an eg of Tata Motors. the stock price in March 2009 was 157 and today it is 1057 and increase of 900 rupees which is 575% returns. This kind of returns can be expected from the stock market only.

I am not advising into putting entire money into stock market. Invest like an SIP for a specific stock say 1000/- every month, same philosophy as MF and you are bound to get atleast 30-40% returns if all goes well.

+ my one cent:

Here is an article seen in moneycontrol yesterday. Just detailing here to show the potential of stock market though very few stocks do like this and the risk factors are high.

It is advised to invest a small portion of balance money in good stocks.


Rs. 1 Lakh invested in Opto Circuits (b/n Year 2002 to 2003) is now 8,14,00,000/- now in Sept 2010. Stunned?....read further....

Date : between 2000 & 2002

Investment: Rs. 1,00,000/-

Market Price: Rs. 5/-

No of Shares purchased: 20,000 nos.....now follow the timeline below.....

29.06.02 - Bonus 1:10 - 22,000 (including Bonus Shares......)
26.06.03 - Bonus 2:10 - 26,400
29.06.04 - Bonus 3:10 - 34,320
09.05.05 - Bonus 5:10 - 51,480
13.06.06 - Bonus 1:01 - 1,02,960
29.06.07 - Bonus 1:02 - 1,54,440
27.05.08 - Bonus 7:10 - 2,62,548

Market price now (Sept 2010): 310 * 2,62,548 shares = 8,13,89,880 or 8,14,00,000 approx!!!!!!


Now, Dividends....

2003 - 30% - 79,200/-....(which is Rs. 3/- per share)
2004 - 30% - 1,02,960/-
2005 - 35% - 1,80,180/-
2006 - 40% - 4,11,840/-
2007 - 50% - 7,72,700/-
2008 - 50% - 13,12,740/-
2009 - 40% - 10,50,192/-
2010 - 40% - 10,50,192/-
Price when posted : BSE: Rs 307.50 ( -0.63 % ), NSE: Rs. 307.30 ( -0.73 % )
about 46 min 28 sec ago

[aargee]

@Coolclouds - Sorry to say that these articles are only to encourage people to invest. I'm not sure who's this opto circuits, what are they into & what they do? Let me give another excellent example

During the same period (2001) Bharti Airtel went IPO & their listed price was around 47 & soon it fell to Rs 21. I knew for sure that this stock would come to Rs 100 (my limited knowledge that time). I didn't buy because I was not prepared nor had a demat account. Now I don't need to tell anything more on Airtel as what it would fetch today.

Same case with Wipro, TCS, Infy during 2008/09, not so long. Like I said before, everyone knows what's the risk & returns involved in equity market. What's still a mystery is the time of entry & exit & which share to buy & when. That's why I'm of the opinion that one should be smarter enough to keep watching the markets every weekend & do a thorough analysis.

Just to give an example, one of my uncle in the family is a avid investor who works in a reputed bank & he also takes lots of calculated risk. To just state one example, he took a housing loan for 15 years which he closed in less than 5 years & bought a land & rented out to M.A.S.S. I'm not adding more of his achievements here. On the flip side, we can hardly get him speaking to us unless we were brokers or talking about markets. Like petrol head, he's a share market head!!!

[ampere]

Just for illustration of the 2008 conditions, here is a book:

The Quants:

Amazon.com: The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (9780307453372): Scott Patterson: Gateway

Again just an illustration not on to details. Just talks about the hedge fund power houses and the whiz kids behind it.

I never even realized that there are companies like AQC, Citadel who are sitting on top of a heap!

[vivekiny2k]

Since we have gone a little OT, let me talk a little about quants. this started back in late 20th century when people realized computing and maths could be used to play the stock game

one of the famous quants

there were two arguments given against their fame.
1. It was the time of boom. no matter what you played, you would win.
2. Since everybody was using the same algorithm to bet on stocks, you were not only following the trend, you became the trend. The algorithms were not tracking the stocks market, they were shaping them.

But to me the failure of the system lies in the sad fact that one of he sharpest mind and greatest mathematician (we have a lot to learn from him) has a couple of gambling strategy to show for his whole life. And this is what's happening even today. The sharpest minds are headed to cozy buildings where they make money on betting which index goes which way.

And then, 2008 arrived.

Originally Posted by ampere

Just for illustration of the 2008 conditions, here is a book:

The Quants:

Amazon.com: The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (9780307453372): Scott Patterson: Gateway

Again just an illustration not on to details. Just talks about the hedge fund power houses and the whiz kids behind it.

I never even realized that there are companies like AQC, Citadel who are sitting on top of a heap!

[sridhga]

Mathematicians are smart. That does not mean that they understand business. It also does not imply that they can run the whole world. It is so unfortunate that the Nobel Prize for economics has often been given to mathematicians especially to those who found algorithms for tracking stock indices based on historical data. No offence meant to mathematicians, or economists. To understand share prices for long term, you need to understand the business model, read the annual reports, look at the ethics and intentions of the mangement and all of this cannot be programmed on computers to be put on auto pilot.

[ghodlur]

Originally Posted by carboy

So are you suggesting that when the market falls, you should exit out of equity & get into debt? And when the market rises, get out of debt & get into equity?

All I am suggesting is that have Debt funds also in your portfolio along with your Equity funds.
During a falling market most of the selling is panic selling and Equity funds tend to offload to make the most of the profits if any. Debt funds due to their limited exposure to equity related instruments like stocks tend to hold back during the free fall.
However if you have an SIP in any equity funds, it helps during a market fall since you accumulate more units for the same SIP amount.

[carboy]

Originally Posted by ghodlur

Debt funds due to their limited exposure to equity related instruments like stocks tend to hold back during the free fall.

A debt fund by definition should have zero exposure in stocks (not limited
exposure).

[aargee]

Here's a little tip on PPF, if there's anyone who has discontinued like me

To renew a PPF account, simply pay a minimum amount of Rs 500 & add Rs 50 from the year it has been discontinued. Eg. If there's no activity on the PPF account from 2005, then simply pay Rs 50 X 5 + Rs 500 & activate the account.

[Technocrat]

I have one question here, is there a 70k cap for PPF a/c or is it that the max gain on PPF a/c in a year is only 70k & hence people dont put more money?

[carboy]

Originally Posted by Technocrat

I have one question here, is there a 70k cap for PPF a/c or is it that the max gain on PPF a/c in a year is only 70k & hence people dont put more money?

It's a hard cap. You can't put more than 70K in a year.
You can however open an account in your spouse's name also & put 70K there, irrespective of whether she is working or not.