What is portfolio re-balancing and how is it done ?
stage 1:
Lets assume initial ratio of investment is as follows
Equity : 50%
Debt : 50%
stage 2:
Markets rise rapidly and give very high returns and so the equity component grows faster as compare to debt such that now equity is more then 75%.
Equity : 75%
Debt : 25%
Since market has risen so much and there is high probability of it going down then going up. so its better to sell some of your Equity component and move it to debt fund. you can sell 25% of equity and invest this 25% in debt.
This will re-balance your portfolio to the initial ratio of 50 - 50
Stage 3:
Markets crashes dramatically and equity gives you a maybe even -ve returns and the debt gives you better return and your equity-debt ratio gets skewed such that
Equity : 25%
Debt : 75%
Now in this scenario you should rebalanced your portfolio such that you take 25% of your money from debt and invest it in Equity and make the ratio as was the case initially to 50% - 50%.
NOTE:
you can have your own initial fixed ratio maybe not 50-50 but 60-40 or vice-versa depending on your risk appetite. you can even decide the criteria when to rebalanced your portfolio but the idea is as and when markets give phenomenal results you need to book partial profit. and when the markets crash you need to invest when equity get cheap thereby you getting more units.
Happy Investing !
Tuesday, November 4, 2008
Monday, November 3, 2008
Mutual Funds portfolio is showing a loss ! what should I do in this markets ?
Markets by there very nature will always either go UP or go DOWN. Its a know fact over the years market will surprise most of the times to most of the people. I knew of people who predicting the markets will touch an index 25000 in january 2008 when it was around 20000 now the same people a predicting doom, they are predicting market will go down to 5000 . This may be true or may be not, but the point is markets will always surprise and you need to have patient and understand that it will behave the way it is.
The following are few Rules to follow during tough times.
1) The smartest set of investors are those who even in this trying times dont stop there investment Plans. You should continue doing your SIP in good funds.
2) Analyze your Mutual Fund portfolio or get it analyzed by a Financial professional.
Get rid of the non-performing funds. (The funds which has given comparatively lesser returns then the benchmark or it's similar comparable peer group of considerable amount of time)
3) Get rid of aggressive funds and move more of your allocation to more stable large cap funds.
4) If you cannot accept too much risk then opt for a Balanced Funds.
5) STICK to you Financial plans; do not change your investing plans with short term fluctuations in markets.
This ups and downs are more of an opportunity for us to buy things at a cheaper price.
Try to look for oppurtunity in every adversity !
The following are few Rules to follow during tough times.
1) The smartest set of investors are those who even in this trying times dont stop there investment Plans. You should continue doing your SIP in good funds.
2) Analyze your Mutual Fund portfolio or get it analyzed by a Financial professional.
Get rid of the non-performing funds. (The funds which has given comparatively lesser returns then the benchmark or it's similar comparable peer group of considerable amount of time)
3) Get rid of aggressive funds and move more of your allocation to more stable large cap funds.
4) If you cannot accept too much risk then opt for a Balanced Funds.
5) STICK to you Financial plans; do not change your investing plans with short term fluctuations in markets.
This ups and downs are more of an opportunity for us to buy things at a cheaper price.
Try to look for oppurtunity in every adversity !
Tuesday, October 21, 2008
LIC Jeeven Saral ; 250 times insurance cover of Monthly installment.
Death Benefit:
250 times the monthly premium + loyalty additions + return of premiums excluding first year premiums and extra/rider premium, if any, is payable in lump sum on death of the life assured during the term of the policy.
The policy can be surrendered after it has been in force for at least 3 full years. The Guaranteed Surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.
Special Surrender Value:
80% of Maturity Sum Assured if 3 or more years’ but less than 4 years’ premiums have been paid; 90% of the Maturity Sum Assured, if 4 or more years’ but less than 5 years’ premiums have been paid and 100% of the Maturity Sum Assured, if 5 or more years’ premiums have been paid. The Maturity Sum Assured for this para will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.
250 times the monthly premium + loyalty additions + return of premiums excluding first year premiums and extra/rider premium, if any, is payable in lump sum on death of the life assured during the term of the policy.
Maturity Benefit:
The Maturity Sum Assured plus Loyalty additions, if any, is payable in a lump sum. (e.g This can come to more then Rs. 40 lakhs if you are investing Rs 5000 per month for 25 years at the rate of 10%)
Surrender Value:
surrender value will be the greater of the guaranteed surrender value and special surrender. The plan also allows for partial surrenders.
The policy can be surrendered after it has been in force for at least 3 full years. The Guaranteed Surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.
Special Surrender Value:
80% of Maturity Sum Assured if 3 or more years’ but less than 4 years’ premiums have been paid; 90% of the Maturity Sum Assured, if 4 or more years’ but less than 5 years’ premiums have been paid and 100% of the Maturity Sum Assured, if 5 or more years’ premiums have been paid. The Maturity Sum Assured for this para will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.
UTI Mastershare Declaring dividends year after year even in this bearish market as well !
UTI Mastershare Lambi race ka goda !
UTI's Mastershare has been in the market for now over more then two decades.
It has declared dividend every year since its launch in 1986.
I thought this year it will be difficult to declare dividend when there is liquidity crunch but again they have announced a dividend of 22% (Re.2.20 per unit on a face value of Rs.10/-). The record date for the dividend is October 23, 2008.
The scheme has also rewarded its investors with 3 bonuses and 2 rights during its existance.
Ms Swati Kulkarni, fund manager of the scheme said, “UTI Mastershare has a 22 year acquaintance with its investors. The scheme has consistently declared dividends year after year since its launch in 1986, irrespective of the market phases. UTI Mastershare, a large cap oriented fund, that invests, in a well diversified portfolio of fundamentally strong companies. The scheme is trusted by over 6 lakh investors and has a fund size of Rs.1689 crore”
I would recommend this Fund for the people who want regular yearly income through tax free dividends. The last five year returns is above 15% compounded annually this is when the markets are at sub 11k levels.
UTI's Mastershare has been in the market for now over more then two decades.
It has declared dividend every year since its launch in 1986.
I thought this year it will be difficult to declare dividend when there is liquidity crunch but again they have announced a dividend of 22% (Re.2.20 per unit on a face value of Rs.10/-). The record date for the dividend is October 23, 2008.
The scheme has also rewarded its investors with 3 bonuses and 2 rights during its existance.
Ms Swati Kulkarni, fund manager of the scheme said, “UTI Mastershare has a 22 year acquaintance with its investors. The scheme has consistently declared dividends year after year since its launch in 1986, irrespective of the market phases. UTI Mastershare, a large cap oriented fund, that invests, in a well diversified portfolio of fundamentally strong companies. The scheme is trusted by over 6 lakh investors and has a fund size of Rs.1689 crore”
I would recommend this Fund for the people who want regular yearly income through tax free dividends. The last five year returns is above 15% compounded annually this is when the markets are at sub 11k levels.
Thursday, September 18, 2008
LIC Health Plus Plan Table no. 901
LIC Health Plus Plan Table no. 901
Health Plus Plan Provides
1) Hospital Cash Benefit (HCB) (Initial Daily Benefit ranges from Rs 250 to Rs 2500 per day depending on amount of premium you pay)
2) Major Surgical Benefit (MSB) (200 times of HCB)
3) Domiciliary Treatment Benefit (DTB)
How it works:
*A unit linked product where premium paid will be subject to deduction of Allocation Charge. Balance credited to Policy Fund account.
*Policyholder is entitled to claim benefits for self and other members of the family as mentioned in the Policy.
*Policy Administration Charges, Premium for HCB and MSB with Service tax @ 12.36% are deducted on a monthly basis. (First year admin charges Rs.75 per month and Rs 25 per month from 2nd year). Fund Management charges of 1.25% per annum.
FUND INVESTMENT:
FUND TYPE HEALTH PLUS FUND
* Govt./ Govt. guaranteed Securities / Corporate Debt : Not Less than 50%
* Shorter investments, such as Money Market Invt. Including Govt. Securities & Corporate Debt: Not more than 90%
* Investment in listed equity shares > 10% and <50% style="FONT-WEIGHT: bold">Eligibility Conditions & Features:
Min. Premium
(in multiples of Rs 500/-) On Single life- Higher of Rs. 5000/-
and 6 times the HCB of Principal insured.
On 2 lives - Higher of Rs.7,500/- p.a. and 6 times the HCB of Pl and 3 times the HCB of other insured.
On more than 2 lives- Higher of Rs.10,000/- p.a. and 6 times the HCB of Pl and 3 times the HCB of each of the other insured.
Min. Entry Age Pl and Spouse - 18 years LBD Dependent Children -3 month completed.
Max. Entry Age Pl and insured Spouse -55 years NBD Insured Dependent Children -17 years NBD
Max. cover ceasing age Pl and insured Spouse -65 years
Insured Dependent Children -25 years
Max. cover ceasing age Pl and insured Spouse -65 years
Insured Dependent Children -25 years
Policy Term 65 years NBD of Pl minus age at entry of Pl
Mode of Payment Yly, Hly, Mly (ECS Only
Day of grace 30 days for yly /hly modes and 15 days for ECS
WHO IS ELIGIBILE
*Cover can be taken for self (Principal Insured ), Spouse, Dependent children (no limit of numbers)
*Any eligible existing spouse / children if not covered initially, cannot be covered in future.
*Any subsequent spouse (on marriage / remarriage ) or children (on birth / adoption) can be covered within one year from policy anniversary.
HOSPITAL CASH BENEFITS:
* Depending on the cover opted, HCB is payable if insured is hospitalized due to Accidental body injury or sickness
*Daily Hospital Cash Benefits at selected rate which increases by 5% at each Policy Anniversary up to a maximum of 1.5 times of Initial Daily Benefits (IDB). IDB must be in multiples of Rs 50/-
*In case of ICU, the Benefit is TWO times of the daily Hospital Cash Benefit.
*If stay in hospital exceeds a continuous period of 48 hours, then payment will be made for any continuous period of 24 hours or a continuous part thereof, which exceeds 4 hours (after having completed 48 hours).
Max annual Benefit Period
18 days in 1st Year Max. 60 days per year thereafter, inclusive of stay in ICU Max. No. of days in ICU is restricted to 9 days in 1st Year and 30 days thereafter.
Max. Benefits
Period
365 days 365 days 365 days
90 days upto age 5
MAJOR SURGICAL BENEFITS:
Principal Insured Insured Spouse Insured Children
Sum Assured 200 times of IDB of HCB of Pl 200 times of IDB of
HCB of Insured Spouse 200 times of IDB of HCB of each Child
Min. age for cover 18 yrs lbd 18 yrs lbd 18 yrs lbd
Max. age for cover 65 yrs nbd 65 yrs nbd 25 yrs nbd
Max. Annual benefit 100% of Sum Assured
100% of Sum
Assured
100% of Sum
Assured
Max. Life time
benefit
3 times the Sum Assured 3 times the Sum Assured 3 times the Sum Assured
Major Surgical Benefit as a Percentage of Sum Assured a few examples:
Open Heart Surgery 100% Lung Transplantation 100%
Implantation of Pacemaker 60% Open surgery for peptic ulcer 60%
Angioplasty (stent) 40% Replacement of Hip/ knee joint 60%
Bone marrow transplantation 60% Partial resection of liver 60%
Surgery to remove Tumor (Brain) 100% Partial excision of Thyroid/ Adrenal 40%
Renal Transplantation 100% Eye Surgery for corneal /retinal repair 40%
Nephrectomy due to medical advice 60%
WAITING PERIOD
* A waiting period of 180 days from the date of cover commencement in respect of each insured during which no HCB/MSB shall be payable.
* A child included in the policy will be automatically covered for MSB from policy anniversary on which the age lbd is 18 years without any waiting period.
* A waiting period of 90 days from the date of Revival/Reinstatement in respect of each insured during which no HCB/MSB shall be payable.
* There shall be NO waiting period for HCB/MSB in case of Accidental Bodily Injury.
Health Plus Plan Provides
1) Hospital Cash Benefit (HCB) (Initial Daily Benefit ranges from Rs 250 to Rs 2500 per day depending on amount of premium you pay)
2) Major Surgical Benefit (MSB) (200 times of HCB)
3) Domiciliary Treatment Benefit (DTB)
How it works:
*A unit linked product where premium paid will be subject to deduction of Allocation Charge. Balance credited to Policy Fund account.
*Policyholder is entitled to claim benefits for self and other members of the family as mentioned in the Policy.
*Policy Administration Charges, Premium for HCB and MSB with Service tax @ 12.36% are deducted on a monthly basis. (First year admin charges Rs.75 per month and Rs 25 per month from 2nd year). Fund Management charges of 1.25% per annum.
FUND INVESTMENT:
FUND TYPE HEALTH PLUS FUND
* Govt./ Govt. guaranteed Securities / Corporate Debt : Not Less than 50%
* Shorter investments, such as Money Market Invt. Including Govt. Securities & Corporate Debt: Not more than 90%
* Investment in listed equity shares > 10% and <50% style="FONT-WEIGHT: bold">Eligibility Conditions & Features:
Min. Premium
(in multiples of Rs 500/-) On Single life- Higher of Rs. 5000/-
and 6 times the HCB of Principal insured.
On 2 lives - Higher of Rs.7,500/- p.a. and 6 times the HCB of Pl and 3 times the HCB of other insured.
On more than 2 lives- Higher of Rs.10,000/- p.a. and 6 times the HCB of Pl and 3 times the HCB of each of the other insured.
Min. Entry Age Pl and Spouse - 18 years LBD Dependent Children -3 month completed.
Max. Entry Age Pl and insured Spouse -55 years NBD Insured Dependent Children -17 years NBD
Max. cover ceasing age Pl and insured Spouse -65 years
Insured Dependent Children -25 years
Max. cover ceasing age Pl and insured Spouse -65 years
Insured Dependent Children -25 years
Policy Term 65 years NBD of Pl minus age at entry of Pl
Mode of Payment Yly, Hly, Mly (ECS Only
Day of grace 30 days for yly /hly modes and 15 days for ECS
WHO IS ELIGIBILE
*Cover can be taken for self (Principal Insured ), Spouse, Dependent children (no limit of numbers)
*Any eligible existing spouse / children if not covered initially, cannot be covered in future.
*Any subsequent spouse (on marriage / remarriage ) or children (on birth / adoption) can be covered within one year from policy anniversary.
HOSPITAL CASH BENEFITS:
* Depending on the cover opted, HCB is payable if insured is hospitalized due to Accidental body injury or sickness
*Daily Hospital Cash Benefits at selected rate which increases by 5% at each Policy Anniversary up to a maximum of 1.5 times of Initial Daily Benefits (IDB). IDB must be in multiples of Rs 50/-
*In case of ICU, the Benefit is TWO times of the daily Hospital Cash Benefit.
*If stay in hospital exceeds a continuous period of 48 hours, then payment will be made for any continuous period of 24 hours or a continuous part thereof, which exceeds 4 hours (after having completed 48 hours).
Max annual Benefit Period
18 days in 1st Year Max. 60 days per year thereafter, inclusive of stay in ICU Max. No. of days in ICU is restricted to 9 days in 1st Year and 30 days thereafter.
Max. Benefits
Period
365 days 365 days 365 days
90 days upto age 5
MAJOR SURGICAL BENEFITS:
Principal Insured Insured Spouse Insured Children
Sum Assured 200 times of IDB of HCB of Pl 200 times of IDB of
HCB of Insured Spouse 200 times of IDB of HCB of each Child
Min. age for cover 18 yrs lbd 18 yrs lbd 18 yrs lbd
Max. age for cover 65 yrs nbd 65 yrs nbd 25 yrs nbd
Max. Annual benefit 100% of Sum Assured
100% of Sum
Assured
100% of Sum
Assured
Max. Life time
benefit
3 times the Sum Assured 3 times the Sum Assured 3 times the Sum Assured
Major Surgical Benefit as a Percentage of Sum Assured a few examples:
Open Heart Surgery 100% Lung Transplantation 100%
Implantation of Pacemaker 60% Open surgery for peptic ulcer 60%
Angioplasty (stent) 40% Replacement of Hip/ knee joint 60%
Bone marrow transplantation 60% Partial resection of liver 60%
Surgery to remove Tumor (Brain) 100% Partial excision of Thyroid/ Adrenal 40%
Renal Transplantation 100% Eye Surgery for corneal /retinal repair 40%
Nephrectomy due to medical advice 60%
WAITING PERIOD
* A waiting period of 180 days from the date of cover commencement in respect of each insured during which no HCB/MSB shall be payable.
* A child included in the policy will be automatically covered for MSB from policy anniversary on which the age lbd is 18 years without any waiting period.
* A waiting period of 90 days from the date of Revival/Reinstatement in respect of each insured during which no HCB/MSB shall be payable.
* There shall be NO waiting period for HCB/MSB in case of Accidental Bodily Injury.
Tuesday, September 16, 2008
LIC's Health Plus Plan (Unit linked health insurance plan)
LIC has come out with an Unit Linked Health Insurance plan. It's similar to your regular ULIP plan where you get risk cover of your life, In this plan you get risk cover of your health.
In this times when the health cost are always rising and getting unaffordable it becomes prudent to have a mediclaim policy or a health cover. This policy is different then your regular Mediclaim policy.
LIC's Health Plus is a very good add on policy, as it provides MAJOR SURGERY benefit of Rs.4 Lakh for a yearly premium of Rs. 12000. This policy can be continued till the age of 65 years.
Unlike most mediclaim were your premiums are gone. In this policy major part of your premium is invested and hence you can look forward for large kitty when you turn 65.
I would say if LIC would have done away with few of the charges it would have been a much better product.
Charges:
1) Admin Charge : Rs 75 per month for first year then onward Rs 25 per month
2) Fund Management Charges : 1.25% per annum
Its worth taking a look at this policy.
In this times when the health cost are always rising and getting unaffordable it becomes prudent to have a mediclaim policy or a health cover. This policy is different then your regular Mediclaim policy.
LIC's Health Plus is a very good add on policy, as it provides MAJOR SURGERY benefit of Rs.4 Lakh for a yearly premium of Rs. 12000. This policy can be continued till the age of 65 years.
Unlike most mediclaim were your premiums are gone. In this policy major part of your premium is invested and hence you can look forward for large kitty when you turn 65.
I would say if LIC would have done away with few of the charges it would have been a much better product.
Charges:
1) Admin Charge : Rs 75 per month for first year then onward Rs 25 per month
2) Fund Management Charges : 1.25% per annum
Its worth taking a look at this policy.
Monday, September 1, 2008
Top performing ELSS Fund in the month of August 2008
Following are the Top performing ELSS funds in the month of August. For the period between 1/8/2008 till 31/08/2008.
1) HDFC Long Term Advangtage - 5.9%
2) HDFC Tax Saver - 5.0%
3) Principal Personal Tax Saver - 4.4%
1) HDFC Long Term Advangtage - 5.9%
2) HDFC Tax Saver - 5.0%
3) Principal Personal Tax Saver - 4.4%
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