Recently, i was going through some of the emerging trends related to Term Insurance Policy. As i highlighted in my earlier posts on insurance, In India, it's a big challenge to sell term insurance policy. The key reason is people buy insurance only for investment purpose. These people give excuses to avoid Insurance. There is a 2nd set of people who are financially aware and understand the importance of insurance. They basically buy term insurance policy to financially protect their family in case of an unfortunate event. Based on interaction with readers of this blog, i came to know five ... Read More
CIBIL Score is not Affected by these 5 Factors
CIBIL Score is the most important score of your life. It is more imp than your graduation score :). There are a lot of misconceptions around CIBIL Score. The banks and financial institutions have created psychological fear among borrowers. Let me clarify that through this post, i am not advocating to default on payments. The objective of this post to clarify some misconceptions around CIBIL Score. As a good citizen, you should make all your payments on time. At the same time, you should not lose your sleep over misconceptions around CIBIL Score. As i keep mentioning that there is no proper ... Read More
Threshold Rebalancing – Hegde your RISK
Threshold Rebalancing is one of the most effective techniques to hedge risk. In layman terms, it is portfolio rebalancing. The key reason retail investors don't make money in India is that they don't rebalance the portfolio. There are two ways to rebalance the portfolio i.e. calendar rebalancing and threshold rebalancing. The concept of calendar rebalancing is similar to value investing. On the other hand, threshold rebalancing is linked to deviation from fixed target. Let me share a simple example. For simplicity purpose, i assume that my asset allocation is divided only between Equity and ... Read More
Asset Allocation – What to do now?
Asset Allocation is the biggest headache for any investor. The financial planners suggest a model asset allocation. There is a famous saying that one size does not fit all. The concept of model asset allocation is vague and farce. It does not take into account all the factors that influence investment risk. A bad mix of asset allocation may destroy your wealth at a faster rate. An asset allocation mix of the investors of the same age and income level can be entirely different. In past, i have observed extreme portfolio allocations. The risk-free investors are heavily invested in traditional ... Read More
Financial Distress – 5 Early Signs
Financial Distress, In layman terms, is the situation in which an individual may find it difficult to manage his/her personal finances. Financial Distress is not necessary linked only to borrowers. Even a debt free person can be in a Financial Distress. Another way to explain is when your expenses exceed your income then it implies that you are in a Financial Distress. Here expenses mean monthly outflow. It is an undesirable situation for any individual or a family. In my opinion, Financial Distress is not sudden phenomena. It gives timely and necessary warning in advance to fix the financial ... Read More
Investment Risk – 5 Imp Factors
Investment Risk is the risk grade of an investor. In other words, Investment Risk means how much risk i can take as an investor. An investor doesn't take it seriously and just throw a ball in the air. In day to day interaction there only Three types of risk i.e. High, Medium, and Low. At the time of investment if i tell my investment adviser that i can take high risk, he will suggest me direct equity exposure and few mid and small cap mutual funds. In the case of Medium Risk, suggestion will be Large Cap or Mid Cap mutual funds. Whereas, in a case of low risk, the options are FD, Debt mutual ... Read More