|
|
 |
 |
LIC is
all set to launch its new policy ‘Bima Bachat’
on the 14th November 2005. This policy is similar to
Bima Gold wherein the survival benefit is payable every
3 years. The only difference is that it is a ‘single
premium money back type plan policy.’ The single
premium that is paid under this
policy will be paid back to the policyholder along with
loyalty additions, if any. This payment will be done at
the time of maturity. If the policyholder survives till
the term of the policy, he will receive 15% of the total
sum assured every 3 years. There are no riders available
under this policy.
Once the policy reaches its paid up value, the policyholder
can avail of loan benefits. The Corporation would determine
the rate of interest from time to time. At present the
rate of interest is 9% p.a. It also offers ‘cooling
off period’ wherein the policyholder can return
the policy within 15 days if he/she is not satisfied with
the terms and conditions. The minimum age of entry is
15 years and the maximum age of entry is 66 years.The
maximum age at maturity is 75 years. The policy is available
for a term of 9, 12 and 15 years respectively.
|
|
|
How to time your investment
How beneficial is it to invest in stocks
How to survive in a volatile market |
How to time your investment:
It is quite difficult though not impossible to time
the market and take investment decisions. For this,
you may have to depend on your investment consultants
or even you can take the decisions on your own.
High returns is the reason why people indulge in
high risks because fixed deposits in banks would
not earn them this return. It is a safe option for
some who do not want to invest in stock market.
Investing in stocks is no less than a game where
you don’t know what will happen next. There
is no place to assume or expect a performance of
a stock. It feels rewarded when the Sensex rises
and you see your returns getting doubled or even
multiplied. But you don’t know for long the
market is going to last offering you high returns.
If it is doing well today, suddenly the next day
you find your high spirits dampened by the abrupt
downfall of the market.
What you can do in such a situation is look into
the market if there is really any momentum that
will propel it again. So, if you find that the market
is fading, more or less your stock may also suffer.
In such a situation it is best to bail out. This
may or may not really sound convincing. But if you
find that the prices of the stocks are going to
fall further more, that is the best you can do than
leaving the shares untouched and bear more losses.
For example, if you know you are making a loss of
Rs 2, it is better to withdraw than to make a loss
of Rs 10 in the next few days.
Now, if you see signs that the market is starting
to perk up and you feel its worth holding on a bit
then you can hold on to your stock. So if the market
turns higher, yours will rise with it.
The decision made may either be right or wrong.
Struggle in the market comes as a package with investment
in stocks. The maximum you can do is to use your
best judgment. You never know you might be better
off in judging than your investment consultant.
It's all a part of the trading market; so don't
let it throw you.
|
|
Firstly,
you should ensure that there are no penny stocks
in your portfolio. Undoubtedly, penny stocks promises
a high return of 20-40% within a short span. But
it also involves risks and you may have to face
it when you least expect it. In a situation where
the market is low, it is advisable to avoid penny
stocks and it should be discarded. If the investor
is solely interested in pure speculation then the
investment in these stocks may remain untouched
because the individual’ s interest lies solely
in making short-term profits.
The second step would be to know upto what level
you could bear losses. If you have scattered your
investment, then the brunt of the losses may not
be severe. For instance if Mr. Seth has invested
a sum of Rs 2 lakh in equities and now if the market
falls by 50%, he would make a loss of Rs 1 lakh.
If he had split the net investment equally in equity
and debt, the loss would have been Rs 50, 000 leaving
him with a sum of Rs 1, 50,000. Such a step would
help to stabilize the overall portfolio. And it
will also minimize your losses to an extent.
The third step would be to know your risk tolerance.
For a stock may do nothing for a long time but as
momentum builds up, it will move sharply thereafter.
You may not reap any profits for a long time then
suddenly you witness a change and you find that
the market is doing well. So you can either make
huge profits or losses depending on the performance
of the stock.
Fourthly, knowing the liquidity of a stock is very
important in taking investment decisions. If there
are very few stocks available in the market, buying
and selling may well impact the stock price in an
adverse manner. So if a stock price is moving up
or down on high trading volume it is more likely
that there is very little volume supporting the
price move.
By keeping these few basic points in mind, investors
can spare themselves a whole lot of grief, even
in a volatile equity market. |
| |
How
beneficial is it to invest in stocks?
Investment in stocks can be viewed as wealth building
vehicle. When you buy a stock you become a partial
owner of the company. Now when you invest in the
selected company you are rewarded with high returns
depending on the performance of the stock. On an
average the stocks grow at 10% a year and when the
investment is wisely done into different stocks,
you wouldn’t be depressed at the end of the
term. Moreover you are helping the economy of the
country to grow when you purchase the shares of
a particular company when it comes up with Initial
Public Offering.
A serious study of stocks and investment will help
you go long way
|
|
|
| |
How
to survive in a volatile market:
Earning Season is always volatile to stock prices. Just before
Diwali the Sensex fell to a level of 7800 from 8800. And now
again the present level of Sensex is 8075.
There are ways to reduce the volatility of your portfolio. One
way is to invest in the company with a modest expectation. There
might be different description of P/E to different individuals
but lets take it as 10. When a share price gets punched, the
company with modest expectation doesn’t get much affected
because the P/E of 10 already incorporates a 0% EPS growth.
Even if EPS stays constant for the next ten years, company with
P/E of 10 will return its shareholder roughly 10% a year.
Another way to survive in a volatility market is to go for a
company that has predictable cash flow and dividend payment.
The companies that pay dividends eliminate some uncertainty.
For example, a stock has a 4% dividend yield and it misses expectation
for the quarter. The stock might topple, pushing the dividend
yield up to 4.2 or 4.5 %. By then, a lot of value investors
will be interested in owning the stock and the drop in stock
price will be less acute. Besides this, picking up a company
with cash rich balance sheet is also a good decision. |
| |
 |
What is
a Monthly Reducing balance
A monthly reducing is where your housing finance company
deducts the EMI you have paid for a given period from
the principal amount and charges interest on the balance
amount from the next month. Lets say you have taken a
loan for Rs 1 lakh at an interest rate of 12 percent.
The EMI works out to Rs 1000 and you pay it on 5th of
that month. If your finance company follows a monthly
reducing balance your reduced balance will take effect
from the next month meaning that for the remaining days
of the previous month you continue to pay interest at
that rate. The EMI for the monthly reducing system is
effectively lesser than the Yearly reducing system of
calculating the Interest.
What is a Yearly
Reducing balance?
In a Yearly reducing balance the principal is reduced
at the end of the year, thus you continue to pay interest
on a certain portion of the principle which you have actually
paid back to the lender.
What is foreclosure?
Foreclosure is to prepay your housing loan before the
end of its tenure. Since foreclosure is not encouraged
by housing finance companies as their cash flow workings
go away, a penalty of around 2 percent is generally charged.
|
What do you
mean by part payment of home loans?
Having taken a sizable loan for purchase of a house, your
topmost priority would be paying it off at the earliest.
While you have been paying up the monthly EMIs in time,
you can also save up a substantial amount over a period
of time and pay your housing company that much. Such part-payments
are no doubt accepted by most of the housing finance companies
but only if you pay up around a minimum of Rs 50,000 at
a time say some companies. Note that certain companies
may charge you for part payment.
More continued in next edition |
|
| |
|
|
|
