How to become a millionaire

How to become a millionaire

A millionaire was being interviewed by a TV hostess.

"What do you think is your secret of becoming a millionaire?"

"My wife"

"Wow! She must be a great lady! By the way what were you doing before your marriage?'

"I was a billionaire."

Which Insurance Company is good?

Every one of us who buy an Insurance policy does so with the hope that his family is financially supported in case of his sudden death. The very basic intention to buy insurance policy is to protect our family.

But what if the Insurance Company rejects the claim made by your family? You paid the premium regularly to the insurance Company through out your life and the insurance company made a handful of profit but now denies paying insurance claim to your family? Off course there may be some errors (intentional & unintentional) from policy holder in some cases but many times Insurance Co play the trick and deny the claim to family.

So, Care should be taken by investors before selecting the Insurance Company. Investors should analyze the past Claim settlement ratio (Number of claims settled compared to number of claims made) of insurance companies which is available on IRDA website.

The below table shows percentage of claims settled compared to number of claims made in 2009 to 2010 :

LIC is the best and ranks first as it has settled 96 % of the claims made.

Insurance Company name	Claim Settelment ratio in %
LIC	96.54
HDFC STD LIFE	91.14
ICICI PRU	90.17
ING VYSYA	89.3
BIRLA SUNLIFE	89.09
RELIANCE LIFE	89.07
BAJAJ ALLIANCE	88.19
AVIVA	87.11
KOTAK	86.97
SBI LIFE	83.27
METLIFE	82.54
TATA AIG	78.17
BHARTI AXA	77.8
MAX NEWYORK LIFE	65.51
SAHARA LIFE	63.06
STAR UNION DAI -ICHI	58.33
INDIA FIRST LIFE	53.85
IDBI FEDERAL	49.52
AEGON RELIGARE	48
DLF REAMERICA	40
SRIRAM	39.54
FUTURE GENERALI	38.85
CANARA HSBC	38.71

Bottom Line: Do not buy cheap or low cost (low premium) insurance schemes suggested by the agents or Relationship managers. Check the credibility of the Insurance Companies before buying insurance schemes.

HOW TO SELECT & BUY BEST LIFE INSURANCE POLICY

How do you select a best insurance policy?  Follow these Simple rules:

1)      Always buy basic simple Insurance plans. Pure term insurance is right fit.

2)      Never mix insurance and Investments, it means avoid ULIP schemes.

3)      Buy policy online; avoid buying through agents / relationship managers.

4)      You have the option to pay premium monthly , assign to ECS or Credit card

There is Good news to people out there who are looking out to buy insurance policy for risk coverage / Tax benefits.

LOW COST INSURANCE SCHEMES – BUY  ONLINE

Some insurance companies have launched Online insurance which is dead cheaper compared when compared to schemes purchased through agents / relationship managers.

I have prepared a table which compares the online schemes and schemes sold by agents with below details:

Example: (only for example)

Investor name: Mr.Ram

Age – 28 years

Policy type: Term Insurance – Pure risk coverage

Sum Assured – 25 lakhs to be given to his family in case of his death

Policy term – 25 years

SCHEMES SOLD ONLINE		SCHEMES SOLD BY AGENTS
KOTAK E TERM POLICY For 25 lakhs	ICICI i PROTECT E PLAN For 25 lakhs	LIC JEEVAN AMULYA For 25 lakhs	BIRLA SUNLIFE TERM PLAN For 25 lakhs
Premium  Rs 3281 Per annum (You can divide & pay this amount monthly)	Premium  Rs 3425 Per annum	Premium  Rs 6625 Per annum	Premium  Rs 7032 Per annum

The above table shows that you can save around 50 % money by buying Insurance online.

Why are Online Term Plans cheaper than conventional term plans?

Due to absence of agents / distributor from the picture, no commission needs to be paid and that results in direct savings which is passed on to the customer in the form of lower premiums

Cheers

Vikram AG

Investments & Financial Frauds – 10 points you must follow to avoid getting fooled.

Investments & Financial Frauds – 10 points you must follow to avoid getting fooled.

We all deal with many relationship mangers and sales executives for our investment needs which are generally based on mutual trust. But how do you know that your Relationship manager is truthful and never misuses your money.  

Follow the below 10 points to be on safer side:

1)      Always make it a point that your bank account and your investment (trading and Demat account) are not managed by same bank or same relationship manager.

 

Example: If your bank account is with ICICI, open your investment (trading and Demat account) with kotak Securities. (Just example)

2)      Never Sign blank documents, Cheques (cheques should always be crossed) etc even if your relationship manager says he will fill it up on his own. At least glance the document before signing. 

3)      Always ask for hard copy of the statements. Develop a habit of glancing it.

4)      Be very care full if you have to sign Power of Attorney (PoA). PoA is the permission given in advance (in writing) by you to your stock broker to do certain transactions on your behalf. It’s very dangerous if you do not understand it clearly.

5)      Regularly check your bank account, investment (trading and Demat account), even if you have not done any transactions.

6)      Be practical, greed is the main reason for getting cheated. Never listen to any one who offers to give you more profit or more than reasonable returns on your investments.

7)      As you do with the doctors, always go for second opinion about the scheme in which you are investing.

8)      Always ask for a photo copy of the applications filled by you. Keep it safe, it really helps.

9)      For a change, instead of calling your relationship manager every time, try getting your account details from another person in the bank / broker office.

10)  Never share your financial details like Pan Number, login id / password, bank account numbers, trading account numbers to anyone whom you do not know.

Five Eternal Rules of Investment for year 2011

The below article is from Guest author Mr.Sunil Kumar. He works with a leading bank in Wealth management vertical and is passionate about investments and Stock markets.  

Five Eternal Rules of Investment

Five things that you must remember while investing in 2011I will write about five things that you must remember while investing in 2011, but in keeping with the spirit of the times, I intend to do so in an eco-friendly, that is, recyclable way. Everything I tell you was just as relevant in 2010 or 2009, and will be just as relevant in 2012 and beyond. So here goes.

1. Don’t try to time the market. There’s something irresistibly obvious about the idea of trying to time the movement of stocks. After all, isn’t the old adage, ‘buy low, sell high’? This must be the most misunderstood advice that investors receive. It seemingly implies — in fact, it practically requires — investors to try and anticipate the highs and lows, and time their investments accordingly. It would be better if this was changed to ‘buy continuously, sell whenever you actually need the money’. In an economy that is generally trending upwards but which has volatile markets, this offers the best combination of high returns with low effort.

2. Figure out whether you are a trader or an investor, and stick to it. Investors and traders superficially appear to be the same thing, but the purpose and method is different. Investors put away their savings in investments, and look upon this as a way of getting something extra from their savings. Traders, on the other hand, are people who trade in investments. They expect investments to be their actual income. Investors are likely to salt away the money and use it only when they need it, but traders buy and sell based on their expectation of how the markets are doing. But as the equity markets do better, more and more investors try their hand at trading, convinced that this activity is just a variation of what they do anyway. It isn’t, and they discover it the hard way.

3. Don’t chase past performance. The worst way to invest is to mechanically choose the investment that has been doing well in the immediate past without understanding the reasons. There is a saying that every complex problem in the world has a solution that is simple, easy to understand, and wrong. Doing ‘investment research’ by extrapolating the past into the future is an example of such a solution. Sure, there are many trends that will continue into the future, but many others won’t. Unfortunately, it is tempting to assume otherwise. In fact, given reversion to the mean, investments that have done better than their peers in the recent past are more likely to do worse in the immediate future. Investors ignore this at their own peril.

4. Have overall financial goals that your investments will serve. It is difficult to figure out which way to turn unless you know what your final destination is. A goal is something like ‘make a down payment for a bigger house in three years’, or ‘chuck my job and start a business in five years’. It could even be something like ‘make as much money as possible very quickly’. Each of these will lead you to choose very different investments. There are few investments that are appropriate for everyone in all situations. But most of the time, we follow a sort of a hunter-gatherer approach to choosing investments. We tend to reach out and grab whatever looks tempting at the moment. This approach results in investments that may not serve an investor’s purpose, even if they work out as expected.

5. Don’t trust anyone, especially the bigger outfits. Most financial advice is not trustworthy if it is being given by someone who earns from the resulting transaction. I know this sounds like a sweeping generalization, but it’s largely true. There are exceptions, but mostly at the smaller end — the big institutionalized advice-givers optimize their advice for their own profitability. This is an inevitable result of their business model, so don’t fret about it. In personal finance, there is no substitute for educating yourself enough to be able to take your own decisions. If you depend on the seller’s advice, then you are basically going to be taken to the cleaners. This is not going to change, so better find your own way around it.

STOCK MARKET JOKES

Sometimes we take finance and investing too seriously. Remember to step back and laugh once in awhile. The following jokes offer a lighter, more humorous view of the world

1) My broker and I are working on a retirement plan. Unfortunately, it's his!  

2) A long term investment is a short term investment that failed.

3) A market analyst is an expert who will know tomorrow why the things he predicted yesterday didn't happen today!

4) Q: Why did God create stock analysts?
    A: In order to make weather forecasters look good.

5) Stock markets went down today on the fears of a sharp fall.

Five Thumb rules for your Money

1)      How much (or what percentage of total investment) should I invest in equities?

100 minus your age = investment in Equities

Example: Your age is 28. So 100 – 28 = 72 % of your investments can be in Equity, balance Debt investment.  

2)      How much of my monthly take home salary should I save?

   

             Minimum of 15 to 20 % of your Monthly take home should be saved.

3)      How much loan I can take?

Maximum 10 % of your monthly take home should be your monthly loan installment.

4)      How much emergency cash should I have?

Minimum of 4 to 6 months expenses should be kept aside as emergency fund.

5)      How much Insurance Coverage should I have?

     Minimum of 5 to 10 times of your annual salary

Thanks & Regards
Vikram AG

10 Golden rules for Successful Trading in Stock Market

10 Golden rules for Successful Trading in Stock Market

1. Bet high enough to make meaningful profits when you win. 

2. Bet low enough so you are OK financially and psychologically when you lose. 

3.  If rule (1) and (2) don't overlap, don't trade.

4. Don't go adding a bunch of rules that don't work, Stop trading to avoid losses . 

Just so you have ten rules.

Courtesy : ED Seykota

Cheers

Vikram AG

WELCOME TO STOCK MARKET - A SMALL STORY TO LAUGH AT

Once upon a time in a village, a man appeared and announced to the
villagers that he would buy monkeys for Rs10. The villagers seeing that
there were many monkeys around, went out to the forest and started catching
them. The man bought thousands at Rs10 and as supply started to diminish,
the villagers stopped their effort. He further announced that he would now
buy at Rs20. This renewed the efforts of the villagers and they started
catching monkeys again. Soon the supply diminished even further and people
started going back to their farms. The offer rate increased to Rs25 and the
supply of monkeys became so little that it was an effort to even see a
monkey let alone catch it.

The man now announced that he would buy monkeys at Rs50! However, since he
had to go to the city on some business, his assistant would now buy on
behalf of him. In the absence of the man, the assistant told the villagers.
Look at all these monkeys in the big cage that the man has collected. I
will sell them to you at Rs35 and when the man returns from the city, you
can sell it to him for Rs50." The villagers squeezed up with all their
savings to buy the monkeys. Then they never saw the man nor his assistant,
only monkeys everywhere!! !! ONLY MONKEYS !!!!!

WELCOME TO STOCK MARKET

5 Simple and Easy steps in selecting a good Mutual Fund Scheme

Hi,

We all spend lot of time figuring out to find good Mutual Funds which can give us good profits . In market we have Thousands of schemes floating and every Mutual Fund company says their scheme is best. How do you decide which one is Good. Read on.......

To make it simple , I will not explain the concepts used below :



1) Sharpe Ratio -  Should be as higher as possible. Higher the better.Generally expressed in numbers like 1, 1.3 etc . Should be more than one .

2) Standard Deviation - Medium to low is better. Generally expressed in percentage.

3) R -Squared - Should be more than 0.75 . Generally expressed as a range from 0 to 1

4)  Beta : Depends on what kind of investor you are: It is expressed in numbers like 1, 1.5 , 2 etc

 a) High risk taking investor  : High beta may suit you
 b) Low risk taker : Low beta may suit you.

5)  Alpha :  Higher is better. Should be more than Beta. Expressed in numbers.




With the above data, also check how the scheme has performed in terms of returns in the past.

Data relating to above concepts is available readily for all the schemes on various websites like valueresearchonline.com , mutualfundsindia.com etc etc

Before investing just check if the scheme which you wanted to invest matches the above parameters.

Thank you

Dealing with your Relationship Manager / Financial Advisor / Insurance agent

Hi,

In this article I will discuss on how you should deal with your Relationship manager or any sales person before you invest or buy any financial product.

1) First things first, always go by reference for selecting a Sales person for your investments. Never approach Company directly asking them to help you in investing.


2) Your investment advisor and sales person should never be same. Example you can take advice from your auditor or your friend, lets say your auditor advises you to invest in a mutual fund scheme of HDFC Mutual Fund (example). Now you directly approach HDFC and buy the particular product your Chartered Accountant or friend has advised. This is Important because in most of the cases the sales person makes you to buy the product on which he can earn maximum commission or incentives.


3) Clearly ask the sales person as to how much Commission or margin he or his company will get if you buy a product from him. For sure most of them will try to confuse you in terms of different Percentages and slabs. Stop them and ask exactly how much in terms of amount and not percentages. 


4) Always understand that each sales person selling investment products will have around 5 to 10 times of his salary as monthly revenue target. It means chances are he will push you a product with high margin to achieve his sales target.


In my next article, I shall explain 5 simple and easy really easy steps in selecting a good Mutual fund scheme.


Thanks & Regards
Vikram

FREE TIPS ON STOCKS - IS IT REALLY FREE ????

They say there is no FREE lunch on Wall street but brokers are always ready to give FREE advise on stocks . They call it Tips !!!!!

Very recently I got a call from one of the Stock broker who was very pleasing over the phone wanting me to open a Demat & trading account. Immediately when I said "Not interseted" he started to lure me with offers. One among them was FREE TIPS ON STOCKS.

He wanted me to test the Research ideas for ten days and open a account only if I was happy with the tips . Looks very intersting isn't it ??

So how does it all work, do you think they are very confident of there research ??? Not really.

It works like this:

Step 1)  Example around 10000 mobile numbers will be selected to send free tips. Two sets of 5000 each will be created.

step2)  For First set a research tip say "Buy ABC LTD at Rs 150, target 155"

Step 3) For second set the tip will be modified saying "sell ABC LTD at Rs150 ,target 145"

Step 4) So only three things can happen in market on any day , Mkts may go up or down or stay flat.

Step5) If mkts go up, people in first set will be impressed on the tip , and if mkts go down people in the second set are happy.

Step 6) So out of 10000 people who received Free tips through Sms , atleast 1 or 2 percent are happy and are tempted to open an account and trade , only to loose there money finally.

So never take any free tips from any brokers seriously.

If Stock brokers are (as they claim) very good in making money in the market for you, why cannot they do with there own money and become rich.


Cheers
Vikram