Saturday, December 25, 2010
Friday, December 24, 2010
Your End of Year Money Moves
Silicon Valley Blogger on 12/20/2010
December is a significant time for most of us, when we get to celebrate the holidays with cheer and maybe a touch of chaos. It’s also when we take stock of the past year and start thinking about our financial and personal goals for the following year.
The winter season sets the tone for reflection and contemplation. Most of us look back on the months behind us with a heart grateful for the wonderful things that have happened, as well as with a mind that’s been made aware of mistakes made, lessons learned and a hope and resolve that we’ll do better going forward. This form of reflection can help us tie up the loose ends of the past year and allow us to prepare for what’s ahead. Just as we clean out our attics, basements and closets, it may be time to take a look at our financial house and do a little cleaning before we ring in the New Year. Mint has taken a look around the financial blogosphere to put together some tips on how to do just that.
First up is Pick One, Just One. MoneyCrush has an honest observation about the act of making New Year’s resolutions: often, we just don’t end up fulfilling them. So her suggestion makes sense: Why don’t we pick just ONE major life change to pursue for 2011, and follow through with it? We may just be able to achieve one of our more important goals if we take her advice.
Then, when you’ve set your major goal for 2011, how about clearing the cobwebs in your mind? The Simple Dollar suggests: Out With The Old, In With The New: Do a Mind Sweep. Find out how to move any distracting concerns out of the way, then assess how to prioritize the important concerns. What are those things that are most important to you? Let’s determine how to organize our thinking so that we can become more effective and efficient.
Financial management is something that falls into our high priority bucket by the time the New Year rolls around. Kay Bell from Don’t Mess With Taxes writes about the crucial documents that you need to put in order, in her article, Year-end financial details, Dec. 2010. This may be somewhat of a chore to do each year, but as they say (and as you often hear), “Somebody’s gotta do it.”
To motivate you further to get your taxes in order, here are 10 Ways to Save on Taxes Now from Personal Dividends. For instance, think about boosting your retirement fund — this may allow you to experience extra tax benefits as well, which would improve your bottom line. So why not get motivated about increasing your retirement savings and kill two birds with one stone?
With the important things out of the way, how about a bit of fun? Mr. and Mrs. Not Made of Money recommend some great tips on What to Do With Your Christmas Bonus. There’s a lot you can do with your windfall, and this post seems to have covered all the bases.
It’s also a time of travel for many, with a lot of folks visiting their families and loved ones to celebrate the holidays. If you’re thinking of flying, make sure you check out these Smart Tips On Buying Discount Airline Tickets from The Digerati Life, which discusses some ways you can save on travel by reviewing your earned rewards and airline miles that you’ve accumulated throughout the year via your credit cards. Watch out for the tips on how to best use your cash back rewards, as it pertains to travel.
And before we go, Free Money Finance shares a great tip or two in his book review 16 Mindsets of the Cheapskates Next Door. This review gives an outline of the book, as well as FMF’s insights on certain topics. It’s time to do away with old bad habits and take on better habits that have worked to make cheapskates succeed in accumulating wealth. Wouldn’t you like to take a peek into the frugal mindset? If you’re looking to be more thrifty this 2011, then this may be a good book to absorb.
Indeed, it’s time to sweep out the clutter, break bad habits and work to improve our attitudes. Are you ready to welcome 2011 with a fresh enthusiasm about your finances?
December is a significant time for most of us, when we get to celebrate the holidays with cheer and maybe a touch of chaos. It’s also when we take stock of the past year and start thinking about our financial and personal goals for the following year.
The winter season sets the tone for reflection and contemplation. Most of us look back on the months behind us with a heart grateful for the wonderful things that have happened, as well as with a mind that’s been made aware of mistakes made, lessons learned and a hope and resolve that we’ll do better going forward. This form of reflection can help us tie up the loose ends of the past year and allow us to prepare for what’s ahead. Just as we clean out our attics, basements and closets, it may be time to take a look at our financial house and do a little cleaning before we ring in the New Year. Mint has taken a look around the financial blogosphere to put together some tips on how to do just that.
First up is Pick One, Just One. MoneyCrush has an honest observation about the act of making New Year’s resolutions: often, we just don’t end up fulfilling them. So her suggestion makes sense: Why don’t we pick just ONE major life change to pursue for 2011, and follow through with it? We may just be able to achieve one of our more important goals if we take her advice.
Then, when you’ve set your major goal for 2011, how about clearing the cobwebs in your mind? The Simple Dollar suggests: Out With The Old, In With The New: Do a Mind Sweep. Find out how to move any distracting concerns out of the way, then assess how to prioritize the important concerns. What are those things that are most important to you? Let’s determine how to organize our thinking so that we can become more effective and efficient.
Financial management is something that falls into our high priority bucket by the time the New Year rolls around. Kay Bell from Don’t Mess With Taxes writes about the crucial documents that you need to put in order, in her article, Year-end financial details, Dec. 2010. This may be somewhat of a chore to do each year, but as they say (and as you often hear), “Somebody’s gotta do it.”
To motivate you further to get your taxes in order, here are 10 Ways to Save on Taxes Now from Personal Dividends. For instance, think about boosting your retirement fund — this may allow you to experience extra tax benefits as well, which would improve your bottom line. So why not get motivated about increasing your retirement savings and kill two birds with one stone?
With the important things out of the way, how about a bit of fun? Mr. and Mrs. Not Made of Money recommend some great tips on What to Do With Your Christmas Bonus. There’s a lot you can do with your windfall, and this post seems to have covered all the bases.
It’s also a time of travel for many, with a lot of folks visiting their families and loved ones to celebrate the holidays. If you’re thinking of flying, make sure you check out these Smart Tips On Buying Discount Airline Tickets from The Digerati Life, which discusses some ways you can save on travel by reviewing your earned rewards and airline miles that you’ve accumulated throughout the year via your credit cards. Watch out for the tips on how to best use your cash back rewards, as it pertains to travel.
And before we go, Free Money Finance shares a great tip or two in his book review 16 Mindsets of the Cheapskates Next Door. This review gives an outline of the book, as well as FMF’s insights on certain topics. It’s time to do away with old bad habits and take on better habits that have worked to make cheapskates succeed in accumulating wealth. Wouldn’t you like to take a peek into the frugal mindset? If you’re looking to be more thrifty this 2011, then this may be a good book to absorb.
Indeed, it’s time to sweep out the clutter, break bad habits and work to improve our attitudes. Are you ready to welcome 2011 with a fresh enthusiasm about your finances?
Wednesday, December 22, 2010
Tuesday, December 21, 2010
Types of Unit-Linked Insurance Plans (ULIP)
By Ronald Kimmons, eHow Contributor
Unit-linked insurance plans (ULIP) are types of insurance that offer a coverage, such as life insurance, with a certain type of investment. However, the policyholder makes this investment, and therefore, the risk of investment is his. The insurance company offers investment options, but the policyowner decides which investment option to use. This can be more profitable than a traditional insurance policy, but it also has a higher risk.
ULIP Life Insurance Type I
ULIP Type I is a life insurance policy linked to an investment account, usually called savings. When you purchase a ULIP Type I, you get an assured death benefit combined with an investment instrument. The amount you pay every month is a mixture of your monthly premiums, which pay for the death benefit, as well as a portion of money that you desire to invest. However, upon death, ULIP Type I only pays for one of these two amounts. Should you pass away, the insurance company looks at the death benefit for your policy and the amount of money you've accrued from your investments and pays you whichever is more, keeping the lesser amount of the two. At the point at which your investments have accrued to the same level as your death benefit, you can ask your company to raise the amount of money allotted to your death benefit. However, you usually must agree to new medical exams to do this.
ULIP Life Insurance Type II
ULIP Type II also links life insurance to investments. However, in this case, your monthly premiums are higher than they are with Type I. The reason for this is that, upon death, ULIP Type II pays your beneficiary both amounts: your death benefit amount and the sum of your investments at that point. Outside of this, Type II works very similarly to Type I, in that you still choose the funds for investment and you take the risk of loss. Because the investment aspect of a ULIP comes at a high level of risk, you shouldn't abandon your policy early on, as this results in almost no return on your investments.
Pension ULIPs
A third type of ULIP is the pension ULIP. As with the other types of ULIP, this is insurance that links two types of benefits: life insurance and retirement income. The part of this insurance that relates to life coverage is similar to Types I and II: Upon death, the company pays your beneficiary the death benefit that you purchased. However, the investment part of this type of ULIP is designed for retirement purposes. If you live to retirement age, a pension ULIP gives the premiums and accrued interest back to you in full. The money you're investing is exclusively an investment for retirement, but it's also linked to high risks. You can lose part or all of your funds, depending on economic fluctuations. For this reason, it's important not to abandon these plans before retirement age.
Unit-linked insurance plans (ULIP) are types of insurance that offer a coverage, such as life insurance, with a certain type of investment. However, the policyholder makes this investment, and therefore, the risk of investment is his. The insurance company offers investment options, but the policyowner decides which investment option to use. This can be more profitable than a traditional insurance policy, but it also has a higher risk.
ULIP Life Insurance Type I
ULIP Type I is a life insurance policy linked to an investment account, usually called savings. When you purchase a ULIP Type I, you get an assured death benefit combined with an investment instrument. The amount you pay every month is a mixture of your monthly premiums, which pay for the death benefit, as well as a portion of money that you desire to invest. However, upon death, ULIP Type I only pays for one of these two amounts. Should you pass away, the insurance company looks at the death benefit for your policy and the amount of money you've accrued from your investments and pays you whichever is more, keeping the lesser amount of the two. At the point at which your investments have accrued to the same level as your death benefit, you can ask your company to raise the amount of money allotted to your death benefit. However, you usually must agree to new medical exams to do this.
ULIP Life Insurance Type II
ULIP Type II also links life insurance to investments. However, in this case, your monthly premiums are higher than they are with Type I. The reason for this is that, upon death, ULIP Type II pays your beneficiary both amounts: your death benefit amount and the sum of your investments at that point. Outside of this, Type II works very similarly to Type I, in that you still choose the funds for investment and you take the risk of loss. Because the investment aspect of a ULIP comes at a high level of risk, you shouldn't abandon your policy early on, as this results in almost no return on your investments.
Pension ULIPs
A third type of ULIP is the pension ULIP. As with the other types of ULIP, this is insurance that links two types of benefits: life insurance and retirement income. The part of this insurance that relates to life coverage is similar to Types I and II: Upon death, the company pays your beneficiary the death benefit that you purchased. However, the investment part of this type of ULIP is designed for retirement purposes. If you live to retirement age, a pension ULIP gives the premiums and accrued interest back to you in full. The money you're investing is exclusively an investment for retirement, but it's also linked to high risks. You can lose part or all of your funds, depending on economic fluctuations. For this reason, it's important not to abandon these plans before retirement age.
Back to Basics: What You Will And Won’t See In Your Credit Reports
By John Ulzheimer on 12/20/2010
Credit reports are generally broken down into five to seven areas, depending on what credit report you’re looking at and whether it’s a “consumer” version or a “users” version. Here’s are the sections and what you’re likely to find in each:
Personal Identification Data
This is where you’re going to find your name, any variations of your name, current and former addresses, date of birth, social security number, and perhaps your current or previous employer.
Inquiries
This is a list of who pulled your credit reports and on what date. The “consumer” version of the credit report is going to have all of your inquiries. The “user” version is only going to have hard inquires. I wrote about inquiries here if you want to take a refresher course on the subject.
Collections
There is a separate section on a credit report for 3rd party collections. This is not the internal collection department at your bank or credit card issuer. This is when your creditors have either sold or consigned your delinquent debts to an outside company for collection efforts.
Trade
The trade section is going to make up the bulk of your credit report. This is where all of your accounts with lenders are going to show up. Some times they’re called “trade lines” as well.
Public Records
On some old credit report formats the Public Records’ section also houses 3rd party collections despite the fact that a collection is hardly a public record. In the newer consumer versions they are called out as their own unique item leaving the public record section to only house liens, judgments and bankruptcies.
Consumer Statement
You might not know this but you have the right to add a short statement to your credit reports. In most states this is limited to no more than 100 words so you’ll need to bust out your best Twitter or text messaging skills to fit an explanation of why you stopped paying on your credit cards.
So now that we know what you WILL see on your credit reports, let’s address what you probably won’t see on your credit reports.
Under most circumstances you won’t see…
Gym Memberships
These were reported at one time but only when they went delinquent. Do you remember when gyms would sign people up for 3-5 year contracts and if you decided you were buff enough and cancelled they’d try and hit you up for the full amount?
Public Utilities
You won’t normally see your gas, power, cable, or telephone service account on your credit reports while they’re in good standing. There are some exceptions. I’ve seen NICOR accounts on credit reports reporting month after month just like any other loan. NICOR is a gas provider in Illinois. Most of the time if you see these types of accounts on a credit report it’s because they’ve been sent to collections and the collector is reporting it.
Rental Payments
You’ll rarely, if ever, see your rental payments on your credit report because most landlords don’t have accounts with the credit reporting agencies and they are unable to report. Even if you are living in an apartment complex with hundreds or thousands of units it’s unlikely you’ll ever see the payments on your credit reports. Of course if you default on your lease they’ll turn it over to a collection agency and you’ll see that on your credit reports lickety split.
Insurance Payments
Almost all insurance companies will allow you to pay your insurance premium in installments. I’m quite certain most people would consider that a form of extending credit, and I’d agree with them. However, insurance companies do not report the installment payments to the credit reporting agencies. If you don’t pay them they’ll just cancel your coverage. And of course driving without insurance is illegal. Talk about the ultimate leverage over their borrowers!
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
Credit reports are generally broken down into five to seven areas, depending on what credit report you’re looking at and whether it’s a “consumer” version or a “users” version. Here’s are the sections and what you’re likely to find in each:
Personal Identification Data
This is where you’re going to find your name, any variations of your name, current and former addresses, date of birth, social security number, and perhaps your current or previous employer.
Inquiries
This is a list of who pulled your credit reports and on what date. The “consumer” version of the credit report is going to have all of your inquiries. The “user” version is only going to have hard inquires. I wrote about inquiries here if you want to take a refresher course on the subject.
Collections
There is a separate section on a credit report for 3rd party collections. This is not the internal collection department at your bank or credit card issuer. This is when your creditors have either sold or consigned your delinquent debts to an outside company for collection efforts.
Trade
The trade section is going to make up the bulk of your credit report. This is where all of your accounts with lenders are going to show up. Some times they’re called “trade lines” as well.
Public Records
On some old credit report formats the Public Records’ section also houses 3rd party collections despite the fact that a collection is hardly a public record. In the newer consumer versions they are called out as their own unique item leaving the public record section to only house liens, judgments and bankruptcies.
Consumer Statement
You might not know this but you have the right to add a short statement to your credit reports. In most states this is limited to no more than 100 words so you’ll need to bust out your best Twitter or text messaging skills to fit an explanation of why you stopped paying on your credit cards.
So now that we know what you WILL see on your credit reports, let’s address what you probably won’t see on your credit reports.
Under most circumstances you won’t see…
Gym Memberships
These were reported at one time but only when they went delinquent. Do you remember when gyms would sign people up for 3-5 year contracts and if you decided you were buff enough and cancelled they’d try and hit you up for the full amount?
Public Utilities
You won’t normally see your gas, power, cable, or telephone service account on your credit reports while they’re in good standing. There are some exceptions. I’ve seen NICOR accounts on credit reports reporting month after month just like any other loan. NICOR is a gas provider in Illinois. Most of the time if you see these types of accounts on a credit report it’s because they’ve been sent to collections and the collector is reporting it.
Rental Payments
You’ll rarely, if ever, see your rental payments on your credit report because most landlords don’t have accounts with the credit reporting agencies and they are unable to report. Even if you are living in an apartment complex with hundreds or thousands of units it’s unlikely you’ll ever see the payments on your credit reports. Of course if you default on your lease they’ll turn it over to a collection agency and you’ll see that on your credit reports lickety split.
Insurance Payments
Almost all insurance companies will allow you to pay your insurance premium in installments. I’m quite certain most people would consider that a form of extending credit, and I’d agree with them. However, insurance companies do not report the installment payments to the credit reporting agencies. If you don’t pay them they’ll just cancel your coverage. And of course driving without insurance is illegal. Talk about the ultimate leverage over their borrowers!
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
Would You Pay $4 Million for the World's Most Expensive Stove?
By Elina Shatkin, Mon., Dec. 20 2010 @ 7:00AM Comments (1) Categories: Kitchen tools
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Iron Dog
The Iron Dog 05 Huraxdax
Bloated with absurdly extravagant baubles, even the Neiman Marcus Christmas catalog pales in comparison to the Iron Dog 05 Huraxdax.
At $4 million, this gold-plated, wood-fired range is the world's most expensive stove. (Iron Dog also makes a cheaper version in silver for the profligate penny-pincher.)
Designed by sculptor Joseph Michael Neustifter, the Huraxdax is made to order and takes two-and-a-half months to fabricate. Not quite a last-minute stocking stuffer. Not a show pony either.
The Huraxdax stands two-and-a-half feet high, weighs 572 pounds and works at 82% efficiency. (We have no idea how that last statistic was quantified, but it sounds very official.) The gilded range heats up to 1,000-square feet of space, which also makes it the world's most expensive space heater.
Indeed, the Huraxdax is full of practical applications and "can be put to everyday use," according to the Iron Dog website. Perhaps for making pizza. We'd be wary of soiling Midas' stove, but if one can drop $4 mil on a stove, one can spring for a maid.
Stamped on the sides and back of the stove is the word "huraxdax." Our Bavarian is a tad rusty, but we want to believe the reported translation -- "decampment of joy" -- because that makes this the world's saddest and most poetic stove. Maybe your joy departs when you realize you've spent $4 million on a stove. (Don't ask how much the vegetable peeler costs.)
"Nothing is as free as art and the people who love it," the Iron Dog website declares. And nothing is as excessive as the Iron Dog 05 Huraxdax and the people who buy it.
Share30 132diggsdigg
Iron Dog
The Iron Dog 05 Huraxdax
Bloated with absurdly extravagant baubles, even the Neiman Marcus Christmas catalog pales in comparison to the Iron Dog 05 Huraxdax.
At $4 million, this gold-plated, wood-fired range is the world's most expensive stove. (Iron Dog also makes a cheaper version in silver for the profligate penny-pincher.)
Designed by sculptor Joseph Michael Neustifter, the Huraxdax is made to order and takes two-and-a-half months to fabricate. Not quite a last-minute stocking stuffer. Not a show pony either.
The Huraxdax stands two-and-a-half feet high, weighs 572 pounds and works at 82% efficiency. (We have no idea how that last statistic was quantified, but it sounds very official.) The gilded range heats up to 1,000-square feet of space, which also makes it the world's most expensive space heater.
Indeed, the Huraxdax is full of practical applications and "can be put to everyday use," according to the Iron Dog website. Perhaps for making pizza. We'd be wary of soiling Midas' stove, but if one can drop $4 mil on a stove, one can spring for a maid.
Stamped on the sides and back of the stove is the word "huraxdax." Our Bavarian is a tad rusty, but we want to believe the reported translation -- "decampment of joy" -- because that makes this the world's saddest and most poetic stove. Maybe your joy departs when you realize you've spent $4 million on a stove. (Don't ask how much the vegetable peeler costs.)
"Nothing is as free as art and the people who love it," the Iron Dog website declares. And nothing is as excessive as the Iron Dog 05 Huraxdax and the people who buy it.
Friday, December 10, 2010
Oil Prices Headed Higher: What You Can Do to Prepare
By Carla Fried | Dec 6, 2010 | 3 Comments
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One of the few bright spots for consumer wallets during the recession was a steep drop in energy costs thanks to a global demand slump. Well, so much for that. With a recovery in full swing — at least in emerging markets — oil prices have been on a tear the past few months. The per-barrel price now sits at a two-year high of $90. That’s a 30 percent jump from the recession low, and analyst forecasts suggest we should now brace ourselves for oil rising to $110-$120 a barrel in 2012.
That potential 20 percent to 30 percent rise means we are going to be feeling plenty more pain at the gas pump. Air travel costs will also rise, and homeowners in the Northeast and Midwest who heat their homes with oil are facing a double-digit rise in keeping their homes warm.
Blame It on the Recovery
The good news is we’re not looking at a return to the $4-a-gallon prices we saw in mid-2008 anytime soon. But with the global recovery in motion, energy demand has followed, especially in emerging markets that are recovering a lot faster than we are. One recent forecast said global demand for 2010 will be about 30 percent higher than originally thought and is expected to continue rising in 2011 and beyond. With OPEC not likely to increase production anytime soon, the upshot is a continuing climb in oil prices.
There’s also the Bernanke factor as well: oil across the globe is priced in U.S. dollars, and any weakening in the value of the U.S. dollar relative to foreign currencies sends the price of oil higher. To the surprise of many, the dollar has held up better than anticipated as the Federal Reserve embarked on its second round of quantitative easing (QE2), but as the Federal Reserve Chairman told 60 Minutes this past weekend, the Fed will not rule out even more easing in the coming months. If that triggers dollar weakness, oil prices will climb even more.
Here are some tips on how to cope with the surge in energy prices:
1. Gas
Typically about 60 percent to 70 percent of the cost of a gallon of gas is tied to what’s going on with the price of crude oil. So no surprise, the cost of a gallon of gas has already risen more than 15 percent this year, with about half the jump coming in just the past three months:
Source: Gasbuddy.com
I realize this may not help you handle your current cash flow, but it is worth remembering that today’s prices are still way lower than what we were dealing with in the recent past. Here’s a three-year chart from gasbuddy.com:
Okay, enough with the perspective. The more pressing issue is that the Department of Energy expects gas prices to rise another 7.4 percent in 2011 to an average of $2.97 for a gallon of regular. And if oil prices do hit $110 to $120 a barrel in 2012, that could translate to a 20 percent or so rise in the price of a gallon of gas from its current level. To squeeze even better mileage out of your current cars, check out 9 Smart Ways to Save on Gas and Six Myths About Gas Mileage.
And if you’re in the market for a new car, maybe it’s time to think seriously about cars that deliver the highest fuel efficiency, including the new Chevy Volt and Nissan Leaf electric-only models. Unlike gas prices, the cost of residential electricity is not expected to budge much from its current level. The Energy Department expects a 1.3 percent rise in 2011.
2. Home Heating
If your home is heated with natural gas or propane, you’re sitting pretty, as the cost of those fuel sources aren’t expected to rise. But households that rely on home heating oil are going to feel the pinch of the run-up in crude prices. According to Department of Energy, home heating oil prices will be 10.4 percent higher this winter, and with a forecast for bone-rattling cold in some areas, we’ll need to use more heat, pushing total household spending on heat this winter 12.6 percent higher. The regional breakdown for home heating oil this winter:
Northeast: Heating oil price up 10 percent. Total spending on heat up 14.5 percent to an average of $2,225 per household.
Midwest: Price up 13.5 percent. Total spending up 11.2 percent to an average of $1,630 per household.
West: Price up 10 percent. Total spending up 8.6 percent to an average of $1,403 per household.
South: Price up 10.4 percent, but the expectation for warmer weather will give southerners a price break, with a 3.3 percent decline in total spending to an average per household of $1,628
If you haven’t yet converted to a high-efficiency heating system, and a Snuggie doesn’t fit your fashion sense, maybe those price forecasts are enough to get you motivated. Also, if you hustle to get a new high-efficiency furnace installed in the next few weeks, you could qualify for a federal tax credit of as much as $1,500 that expires at the end of this year. And if you’re looking to buy a home anytime soon, energy costs are a good reason to steer clear of McMansions; the smaller the home, the lower the utility costs.
3. Air Travel
Higher crude oil prices will also impact the price at the jet-fuel pump. The Department of Energy forecasts a 10 percent rise in jet fuel prices in 2011 which it says could trigger a 5 percent or so rise in ticket prices. Let’s just hope that’s not another excuse to raise checked-bag fees as well. If you’re planning a big get-away in 2011, booking sooner than later seems to be the best way to lock in your cost now ahead of rising energy prices.
ShareEmailDiggFacebookTwitterGoogleDeliciousStumbleUponNewsvineLinkedInMy YahooTechnoratiRedditPrintRecommend0facebook twitter digg buzz
One of the few bright spots for consumer wallets during the recession was a steep drop in energy costs thanks to a global demand slump. Well, so much for that. With a recovery in full swing — at least in emerging markets — oil prices have been on a tear the past few months. The per-barrel price now sits at a two-year high of $90. That’s a 30 percent jump from the recession low, and analyst forecasts suggest we should now brace ourselves for oil rising to $110-$120 a barrel in 2012.
That potential 20 percent to 30 percent rise means we are going to be feeling plenty more pain at the gas pump. Air travel costs will also rise, and homeowners in the Northeast and Midwest who heat their homes with oil are facing a double-digit rise in keeping their homes warm.
Blame It on the Recovery
The good news is we’re not looking at a return to the $4-a-gallon prices we saw in mid-2008 anytime soon. But with the global recovery in motion, energy demand has followed, especially in emerging markets that are recovering a lot faster than we are. One recent forecast said global demand for 2010 will be about 30 percent higher than originally thought and is expected to continue rising in 2011 and beyond. With OPEC not likely to increase production anytime soon, the upshot is a continuing climb in oil prices.
There’s also the Bernanke factor as well: oil across the globe is priced in U.S. dollars, and any weakening in the value of the U.S. dollar relative to foreign currencies sends the price of oil higher. To the surprise of many, the dollar has held up better than anticipated as the Federal Reserve embarked on its second round of quantitative easing (QE2), but as the Federal Reserve Chairman told 60 Minutes this past weekend, the Fed will not rule out even more easing in the coming months. If that triggers dollar weakness, oil prices will climb even more.
Here are some tips on how to cope with the surge in energy prices:
1. Gas
Typically about 60 percent to 70 percent of the cost of a gallon of gas is tied to what’s going on with the price of crude oil. So no surprise, the cost of a gallon of gas has already risen more than 15 percent this year, with about half the jump coming in just the past three months:
Source: Gasbuddy.com
I realize this may not help you handle your current cash flow, but it is worth remembering that today’s prices are still way lower than what we were dealing with in the recent past. Here’s a three-year chart from gasbuddy.com:
Okay, enough with the perspective. The more pressing issue is that the Department of Energy expects gas prices to rise another 7.4 percent in 2011 to an average of $2.97 for a gallon of regular. And if oil prices do hit $110 to $120 a barrel in 2012, that could translate to a 20 percent or so rise in the price of a gallon of gas from its current level. To squeeze even better mileage out of your current cars, check out 9 Smart Ways to Save on Gas and Six Myths About Gas Mileage.
And if you’re in the market for a new car, maybe it’s time to think seriously about cars that deliver the highest fuel efficiency, including the new Chevy Volt and Nissan Leaf electric-only models. Unlike gas prices, the cost of residential electricity is not expected to budge much from its current level. The Energy Department expects a 1.3 percent rise in 2011.
2. Home Heating
If your home is heated with natural gas or propane, you’re sitting pretty, as the cost of those fuel sources aren’t expected to rise. But households that rely on home heating oil are going to feel the pinch of the run-up in crude prices. According to Department of Energy, home heating oil prices will be 10.4 percent higher this winter, and with a forecast for bone-rattling cold in some areas, we’ll need to use more heat, pushing total household spending on heat this winter 12.6 percent higher. The regional breakdown for home heating oil this winter:
Northeast: Heating oil price up 10 percent. Total spending on heat up 14.5 percent to an average of $2,225 per household.
Midwest: Price up 13.5 percent. Total spending up 11.2 percent to an average of $1,630 per household.
West: Price up 10 percent. Total spending up 8.6 percent to an average of $1,403 per household.
South: Price up 10.4 percent, but the expectation for warmer weather will give southerners a price break, with a 3.3 percent decline in total spending to an average per household of $1,628
If you haven’t yet converted to a high-efficiency heating system, and a Snuggie doesn’t fit your fashion sense, maybe those price forecasts are enough to get you motivated. Also, if you hustle to get a new high-efficiency furnace installed in the next few weeks, you could qualify for a federal tax credit of as much as $1,500 that expires at the end of this year. And if you’re looking to buy a home anytime soon, energy costs are a good reason to steer clear of McMansions; the smaller the home, the lower the utility costs.
3. Air Travel
Higher crude oil prices will also impact the price at the jet-fuel pump. The Department of Energy forecasts a 10 percent rise in jet fuel prices in 2011 which it says could trigger a 5 percent or so rise in ticket prices. Let’s just hope that’s not another excuse to raise checked-bag fees as well. If you’re planning a big get-away in 2011, booking sooner than later seems to be the best way to lock in your cost now ahead of rising energy prices.
New Year’s Resolutions: 7 for Your Money
New Year’s Resolutions: 7 for Your Money
By Farnoosh Torabi | Dec 6, 2010 | 1 Comment
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Americans apparently have a bit more confidence in their own financial health (as if we couldn’t tell by the shopping stampede on Black Friday).
The evidence: A new survey by TD Ameritrade finds that 27% of us are less likely to make New Year’s resolutions about our personal finances this year than last year, saying health and relaxing are more important. Rather than “save more money” - a common goal for 2010 and 2009 - Americans now say they feel confident enough to return to a more balanced take on life, to focus on their families, career and health, in addition to their finances.
While that sounds good, it’s still important to save. And we don’t have to sacrifice our health or happiness to do so. Here are seven money resolutions that can improve your mind, spirit and bank account.
1. Be More Charitable
Studies show charitable giving fell in 2010. Whether donating to charity or treating your friend to a cupcake, giving is not only thoughtful but can make you happy. A survey of more than 600 volunteers by researchers at Harvard Business School and The University of British Columbia concluded that spending just $5 a day on someone else would make you more happy than spending that money on yourself. Not to sound selfish, but how does this help our bottom lines? Well, there’s always the tax deduction! Give to a legitimate charity and pay less to Uncle Sam on April 15.
2. Find a Money Buddy
It’s key to have a partner in your financial life who can knock some sense into you when you feel the impulse to spend or when you are ignoring your bills. It might be your best friend, sibling, or parent. Relay your goals to this person so that he or she can help remind you of them when your judgment gets cloudy. Turn to them for advice. We often assume that our financial strife is unique – the sooner you begin networking and discussing your problems with others, the sooner you’ll realize that others have been in your shoes and have persevered.
3. Stick to Cash
While it’s important to maintain good credit and using our credit cards responsibly helps to achieve that, keep in mind that credit card users tend to spend more money than if they used cash. A recent Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. (Another study found that people who paid cash at the grocery store were healthier than their plastic-wielding counterparts.) And McDonald’s found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.
The other reason I insist on using cash is because it keeps us honest with our money. We make better choices because we are forced to think twice or three times about our purchases, especially if we have to break big bills like a $50 bill. Bye-bye, impulse purchases!
4. Create a Money Zone
This is all about staying organized and clear of financial clutter. Find a space in your home - it could be a table in your kitchen, sunroom, bedroom, wherever - and design this space so that you actually want to go there to set goals, pay your bills and deal with budgeting. Surround your “money zone” with images of your goals, family and inspirations - all the reasons you should stay motivated. Have folders for all your monthly statements. Have a safety box for secure papers like insurance certificates, your deed, etc. And have smaller boxes for business expense receipts and warranties.
5. Establish a Rule of Thumb
As humans, we like rules of thumb because they’re handy. They help when we have trouble making decisions. We have diet rules of thumb - “no sweets during the week” or “no midnight snacking” - and they help us stay on track. Some good money rules could be: “I won’t buy anything over $100 without consulting with my spouse or partner” or “No more open tabs at the bar!”
6. Automate
Save and pay your bills automatically. You’ll sleep better at night knowing you did. It’s less painful than taking money out of your paycheck yourself and depositing it in a savings account or handing it to your utility company. According to a recent survey by the Consumer Federation of America and the Financial Services Roundtable, 83% Americans say the most effective way to build personal savings is to automatically transfer funds from your paycheck to a savings account. Research also finds that people with the highest level of well-being had a high level of financial security. Many of them automated their payments so they didn’t feel the sting of the pain of payments.
7. Turn a Passion or Pastime into a Paycheck
Who doesn’t want to make more money in the New Year? One of the best ways to do that is to identify a skill or hobby that you’re passionate about and turn that into a revenue stream - teaching a foreign language, designing web sites, making jewelry. When you work a job you love, it won’t feel like work
By Farnoosh Torabi | Dec 6, 2010 | 1 Comment
ShareEmailDiggFacebookTwitterGoogleDeliciousStumbleUponNewsvineLinkedInMy YahooTechnoratiRedditPrintRecommend0facebook twitter digg buzz
Americans apparently have a bit more confidence in their own financial health (as if we couldn’t tell by the shopping stampede on Black Friday).
The evidence: A new survey by TD Ameritrade finds that 27% of us are less likely to make New Year’s resolutions about our personal finances this year than last year, saying health and relaxing are more important. Rather than “save more money” - a common goal for 2010 and 2009 - Americans now say they feel confident enough to return to a more balanced take on life, to focus on their families, career and health, in addition to their finances.
While that sounds good, it’s still important to save. And we don’t have to sacrifice our health or happiness to do so. Here are seven money resolutions that can improve your mind, spirit and bank account.
1. Be More Charitable
Studies show charitable giving fell in 2010. Whether donating to charity or treating your friend to a cupcake, giving is not only thoughtful but can make you happy. A survey of more than 600 volunteers by researchers at Harvard Business School and The University of British Columbia concluded that spending just $5 a day on someone else would make you more happy than spending that money on yourself. Not to sound selfish, but how does this help our bottom lines? Well, there’s always the tax deduction! Give to a legitimate charity and pay less to Uncle Sam on April 15.
2. Find a Money Buddy
It’s key to have a partner in your financial life who can knock some sense into you when you feel the impulse to spend or when you are ignoring your bills. It might be your best friend, sibling, or parent. Relay your goals to this person so that he or she can help remind you of them when your judgment gets cloudy. Turn to them for advice. We often assume that our financial strife is unique – the sooner you begin networking and discussing your problems with others, the sooner you’ll realize that others have been in your shoes and have persevered.
3. Stick to Cash
While it’s important to maintain good credit and using our credit cards responsibly helps to achieve that, keep in mind that credit card users tend to spend more money than if they used cash. A recent Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. (Another study found that people who paid cash at the grocery store were healthier than their plastic-wielding counterparts.) And McDonald’s found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.
The other reason I insist on using cash is because it keeps us honest with our money. We make better choices because we are forced to think twice or three times about our purchases, especially if we have to break big bills like a $50 bill. Bye-bye, impulse purchases!
4. Create a Money Zone
This is all about staying organized and clear of financial clutter. Find a space in your home - it could be a table in your kitchen, sunroom, bedroom, wherever - and design this space so that you actually want to go there to set goals, pay your bills and deal with budgeting. Surround your “money zone” with images of your goals, family and inspirations - all the reasons you should stay motivated. Have folders for all your monthly statements. Have a safety box for secure papers like insurance certificates, your deed, etc. And have smaller boxes for business expense receipts and warranties.
5. Establish a Rule of Thumb
As humans, we like rules of thumb because they’re handy. They help when we have trouble making decisions. We have diet rules of thumb - “no sweets during the week” or “no midnight snacking” - and they help us stay on track. Some good money rules could be: “I won’t buy anything over $100 without consulting with my spouse or partner” or “No more open tabs at the bar!”
6. Automate
Save and pay your bills automatically. You’ll sleep better at night knowing you did. It’s less painful than taking money out of your paycheck yourself and depositing it in a savings account or handing it to your utility company. According to a recent survey by the Consumer Federation of America and the Financial Services Roundtable, 83% Americans say the most effective way to build personal savings is to automatically transfer funds from your paycheck to a savings account. Research also finds that people with the highest level of well-being had a high level of financial security. Many of them automated their payments so they didn’t feel the sting of the pain of payments.
7. Turn a Passion or Pastime into a Paycheck
Who doesn’t want to make more money in the New Year? One of the best ways to do that is to identify a skill or hobby that you’re passionate about and turn that into a revenue stream - teaching a foreign language, designing web sites, making jewelry. When you work a job you love, it won’t feel like work
Monday, November 29, 2010
Why disability insurance is as important as life insurance:
Why disability insurance is as important as life insurance: From the WMG Desk
Kavitha Menon | kavitha@ppfas.com
Disability, partial or complete, due to accident or illness, makes it impossible for a person to continue earning as he or she did before the unfortunate accident or illness. In financial planning lingo, both death and disability mean loss of income. This loss of income needs to be covered using insurance.
While most do have life cover, we cannot be completely assured of our families' financial safety without a complete disability cover.
How much disability cover do we need? A cover equivalent to life cover is needed. The product should give a lumpsum amount, equivalent to sum assured, should one be unable to work productively in case of a physical or mental disability. Surprisingly there seems to be a huge lacuna in the product offerings from insurance companies in this space. Not only is there a lacuna there is also a lot of confusion on what such a product would offer. Disability insurance is not the same as accident cover. An accident cover protects against loss of life on death by accident and certain specific disabilities. Many diseases like Parkinson's or Alzheimer's can leave you incapable of a productive life without any loss of limb or eyes (as covered in many policies) and hence any disability that reduces or stops earning ability should be covered. Reading the product inclusions and brochure should give one a clear idea of the product offerings.
Almost all covers in the market are offered as riders with medical or life insurance. Yet the riders grossly undermine the extent of the insurance required. This is because in, most life insurance policies the premium on disability insurance cannot exceed 30 % of basic life cover premium. Thus if a 32 year old were to take a 20 lakh policy that cost Rs. 4000, he probably will not be able to buy disability cover for more than say 7 lakh, the premium of which is around Rs.1000. That would mean that you would be buying only a third of your actual requirement of disability cover.
For those looking for disability cover, buying riders with life covers along with a continuation of premium payment rider is the best bet. This combination will ensure protection in case of disability and, continuation of life cover without the need of paying further premiums in case of disability.
Like all other insurance covers,the term of a disability insurance policy should only last till such time that your savings/assets adequately cover your financial goals. Once you have accumulated sufficient corpus for goals you can discontinue disability insurance. Also one must aim to replace medical/disability and critical illness covers with adequate savings in the long run. What this means is that a 5 lakhs savings allocated towards medical bills is better than a 5 lakh medical cover. The reason for this is that the cost of premiums will rise with not just inflation but also with your age while the cover itself will rapidly lose value due to inflation. That is a double whammy you can avoid by savings towards a medical fund.
From the WMG Desk
Kavitha Menon | kavitha@ppfas.com
Kavitha Menon | kavitha@ppfas.com
Disability, partial or complete, due to accident or illness, makes it impossible for a person to continue earning as he or she did before the unfortunate accident or illness. In financial planning lingo, both death and disability mean loss of income. This loss of income needs to be covered using insurance.
While most do have life cover, we cannot be completely assured of our families' financial safety without a complete disability cover.
How much disability cover do we need? A cover equivalent to life cover is needed. The product should give a lumpsum amount, equivalent to sum assured, should one be unable to work productively in case of a physical or mental disability. Surprisingly there seems to be a huge lacuna in the product offerings from insurance companies in this space. Not only is there a lacuna there is also a lot of confusion on what such a product would offer. Disability insurance is not the same as accident cover. An accident cover protects against loss of life on death by accident and certain specific disabilities. Many diseases like Parkinson's or Alzheimer's can leave you incapable of a productive life without any loss of limb or eyes (as covered in many policies) and hence any disability that reduces or stops earning ability should be covered. Reading the product inclusions and brochure should give one a clear idea of the product offerings.
Almost all covers in the market are offered as riders with medical or life insurance. Yet the riders grossly undermine the extent of the insurance required. This is because in, most life insurance policies the premium on disability insurance cannot exceed 30 % of basic life cover premium. Thus if a 32 year old were to take a 20 lakh policy that cost Rs. 4000, he probably will not be able to buy disability cover for more than say 7 lakh, the premium of which is around Rs.1000. That would mean that you would be buying only a third of your actual requirement of disability cover.
For those looking for disability cover, buying riders with life covers along with a continuation of premium payment rider is the best bet. This combination will ensure protection in case of disability and, continuation of life cover without the need of paying further premiums in case of disability.
Like all other insurance covers,the term of a disability insurance policy should only last till such time that your savings/assets adequately cover your financial goals. Once you have accumulated sufficient corpus for goals you can discontinue disability insurance. Also one must aim to replace medical/disability and critical illness covers with adequate savings in the long run. What this means is that a 5 lakhs savings allocated towards medical bills is better than a 5 lakh medical cover. The reason for this is that the cost of premiums will rise with not just inflation but also with your age while the cover itself will rapidly lose value due to inflation. That is a double whammy you can avoid by savings towards a medical fund.
From the WMG Desk
Kavitha Menon | kavitha@ppfas.com
Tuesday, September 21, 2010
Where has rationality gone?
Parag Parikh: Where has rationality gone?
Parag Parikh / September 21, 2010, 0:20 IST
The stock markets are heated and the indices are rising. Last Monday, we saw a jump of over 400 points in the Bombay Stock Exchange’s (BSE’s) Sensitive Index, or Sensex, and 127 points in the Nifty. Next day, newspapers talked about the big bull market in the offing, and credited the rise to the latest Index of Industrial Production figures, robust increase in automobile sales and fresh inflows of foreign institutional investor (FII) money. So called experts, fund managers and analysts predicted the markets would keep rising, and the Sensex could even touch 25,000 in the near future.
Availability heuristic is at play. All available information on the economy and stock markets is positive. There is optimism everywhere, and investors are overconfident of their knowledge and abilities.
I did some number crunching and the revelations were startling. On the same Monday, declines outnumbered advances on BSE (1,498:1,492). If there was so much noise about the new bull run, why did we have a roughly 50:50 ratio of advances and declines?
Here is another glaring insight. For the 13 days ended September 13, the Nifty rose 5.26 per cent and the National Stock Exchange cash market volume rose by only 18 per cent, while the comparable volume in the derivatives segment rose a staggering 62 per cent.
Yes, India really stands apart from rest of the world when we measure the various economic indicators and the gross domestic product growth. But to conclude that these realities are reflected in the markets is a grave mistake. The stock markets still lack depth.
There was a time when the stock markets of a country were a barometer for its economic health. Unfortunately, in present times, the stock markets are more susceptible to greed and fear than earlier, and thanks to such financial innovations in the form of futures and options, we have unbridled speculation.
Prior to liberalisation, speculators were mostly individuals. Now, we have FIIs and mutual funds with deep pockets (other people’s money), and a vast array of financial derivative products at their disposal. The current volatility is the result of them playing heavily in the futures and options market. The above startling figures confirm the markets are controlled by punters and speculators in the guise of investors.
Why is it so easy to manipulate our markets? When we look at the markets, we look at the index movement. The Sensex and Nifty comprise 30 and 50 stocks, respectively. Is it appropriate to have such a small sample size to judge the markets’ health, when we have over 6,000 listed stocks? Moreover, bigger the market capitalisation, more is its weight in the index. So, it becomes very easy for speculators to dominate trading in both Sensex and Nifty, and control the markets.
So what does one do? I am in no way suggesting that one should sell all their stocks and sit on cash. Stocks are still the best investment opportunities today, as they are the best hedge against inflation. Ride your winners and sell your losers. Such bullish crazy times can continue for an extended period. Enjoy the bull run without participating in it. As it is, the stocks you already own are rising. Do not chase any fancy of the markets, especially overpriced initial public offerings.
The writer is chairman, Financial Advisory Services. Veiws expressed are his own.
Parag Parikh / September 21, 2010, 0:20 IST
The stock markets are heated and the indices are rising. Last Monday, we saw a jump of over 400 points in the Bombay Stock Exchange’s (BSE’s) Sensitive Index, or Sensex, and 127 points in the Nifty. Next day, newspapers talked about the big bull market in the offing, and credited the rise to the latest Index of Industrial Production figures, robust increase in automobile sales and fresh inflows of foreign institutional investor (FII) money. So called experts, fund managers and analysts predicted the markets would keep rising, and the Sensex could even touch 25,000 in the near future.
Availability heuristic is at play. All available information on the economy and stock markets is positive. There is optimism everywhere, and investors are overconfident of their knowledge and abilities.
I did some number crunching and the revelations were startling. On the same Monday, declines outnumbered advances on BSE (1,498:1,492). If there was so much noise about the new bull run, why did we have a roughly 50:50 ratio of advances and declines?
Here is another glaring insight. For the 13 days ended September 13, the Nifty rose 5.26 per cent and the National Stock Exchange cash market volume rose by only 18 per cent, while the comparable volume in the derivatives segment rose a staggering 62 per cent.
Yes, India really stands apart from rest of the world when we measure the various economic indicators and the gross domestic product growth. But to conclude that these realities are reflected in the markets is a grave mistake. The stock markets still lack depth.
There was a time when the stock markets of a country were a barometer for its economic health. Unfortunately, in present times, the stock markets are more susceptible to greed and fear than earlier, and thanks to such financial innovations in the form of futures and options, we have unbridled speculation.
Prior to liberalisation, speculators were mostly individuals. Now, we have FIIs and mutual funds with deep pockets (other people’s money), and a vast array of financial derivative products at their disposal. The current volatility is the result of them playing heavily in the futures and options market. The above startling figures confirm the markets are controlled by punters and speculators in the guise of investors.
Why is it so easy to manipulate our markets? When we look at the markets, we look at the index movement. The Sensex and Nifty comprise 30 and 50 stocks, respectively. Is it appropriate to have such a small sample size to judge the markets’ health, when we have over 6,000 listed stocks? Moreover, bigger the market capitalisation, more is its weight in the index. So, it becomes very easy for speculators to dominate trading in both Sensex and Nifty, and control the markets.
So what does one do? I am in no way suggesting that one should sell all their stocks and sit on cash. Stocks are still the best investment opportunities today, as they are the best hedge against inflation. Ride your winners and sell your losers. Such bullish crazy times can continue for an extended period. Enjoy the bull run without participating in it. As it is, the stocks you already own are rising. Do not chase any fancy of the markets, especially overpriced initial public offerings.
The writer is chairman, Financial Advisory Services. Veiws expressed are his own.
Wednesday, August 11, 2010
Retirement Planning- Check List
What aspects are to be considered in retirement planning?
Step 1:- Your Goals, Your frame of Mind
- First of all be ready to think big and long into the future
- Be with the person whom you are going to spend your life with
- Discuss out yours and your partners future life plans
- Get your priorities right
- Understand what you feel like doing in life at this very moment
- Keep in mind that though you think life is uncertain and things will change with time but think what you want to achieve in future as of now
- Changes to your plan can be incorporated in the future
Step 2:- Documents
Be ready with your financial documents which people assume to be a lot of hassle.
Here is a list of documents needed which can be used as a check list to see what all forms a part of your requirement
- All your bank statements
- Last 3 years Income Tax returns
- Latest salary slip, business balance sheet and Profit and loss statement (If any)
- Other forms of income from Rental Property, Pension Income, Business Income, Agricultural income, Royalty Income (If Any)
- List of your Monthly expenses broken down into;
- Household
- Food
- Transportation
- Healthcare
- Travel & Holiday
- Education
- Loan EMI's
- Lifestyle
- Miscellaneous
- A list of your assets with approximate valuation on a pessimistic side which would include your
- Employee Provident Fund
- Public Provident Fund
- Stocks
- Mutual funds
- Cash and bank accounts
- Pension accounts
- Annuity account
- Insurance products
- Gratuity accounts
- Personal assets
- Real assets
- Any loans given by you to others
- A list of your liabilities with latest statements including your
- Auto loans
- Credit card loan
- Student loan
- Personal loan
- Home loan
- Business loan
- A list of all your insurance policy details with the latest valuation and surrender/cash value
Step 3:- Choose your financial planner by seeing his
- Knowledge
- Experience
- Execution abilities
- Avenues of services offered
- Sources of income for the planner
- The client to planner ratio
Step 4:- Maintain the trust once formed- If you feel that the person is trust worthy enough to provide with all your personal financial details
then disclose the information to him
- Once the relation has started then trust his ability to guide you and manage your personal finances.
- To decide if a person is well qualified or no see if he is a CFP Certified or a CFP candidate.
Following this checklist will help you in the initial step of starting a relationship with a financial planner and moving up with your retirement plan.
Step 1:- Your Goals, Your frame of Mind
- First of all be ready to think big and long into the future
- Be with the person whom you are going to spend your life with
- Discuss out yours and your partners future life plans
- Get your priorities right
- Understand what you feel like doing in life at this very moment
- Keep in mind that though you think life is uncertain and things will change with time but think what you want to achieve in future as of now
- Changes to your plan can be incorporated in the future
Step 2:- Documents
Be ready with your financial documents which people assume to be a lot of hassle.
Here is a list of documents needed which can be used as a check list to see what all forms a part of your requirement
- All your bank statements
- Last 3 years Income Tax returns
- Latest salary slip, business balance sheet and Profit and loss statement (If any)
- Other forms of income from Rental Property, Pension Income, Business Income, Agricultural income, Royalty Income (If Any)
- List of your Monthly expenses broken down into;
- Household
- Food
- Transportation
- Healthcare
- Travel & Holiday
- Education
- Loan EMI's
- Lifestyle
- Miscellaneous
- A list of your assets with approximate valuation on a pessimistic side which would include your
- Employee Provident Fund
- Public Provident Fund
- Stocks
- Mutual funds
- Cash and bank accounts
- Pension accounts
- Annuity account
- Insurance products
- Gratuity accounts
- Personal assets
- Real assets
- Any loans given by you to others
- A list of your liabilities with latest statements including your
- Auto loans
- Credit card loan
- Student loan
- Personal loan
- Home loan
- Business loan
- A list of all your insurance policy details with the latest valuation and surrender/cash value
Step 3:- Choose your financial planner by seeing his
- Knowledge
- Experience
- Execution abilities
- Avenues of services offered
- Sources of income for the planner
- The client to planner ratio
Step 4:- Maintain the trust once formed- If you feel that the person is trust worthy enough to provide with all your personal financial details
then disclose the information to him
- Once the relation has started then trust his ability to guide you and manage your personal finances.
- To decide if a person is well qualified or no see if he is a CFP Certified or a CFP candidate.
Following this checklist will help you in the initial step of starting a relationship with a financial planner and moving up with your retirement plan.
Thursday, April 22, 2010
Why ULIP is a Bad Investment
The so-called turf-war on ULIPs that SEBI and IRDA have been fighting has now taken on a life of its own. In reality, just about the least important thing is who regulates ULIPs, while the most important thing-or rather, the only important thing-is that investors understand what they are getting into and make the choices that are best for them. I find that there's a great deal of misinformation floating around about ULIPs and why exactly are so investment advisors so critical of them. ULIP proponents generally give a set of reasons which in their opinion invalidate criticism of ULIPs.
I'd like to briefly describe why I think these arguments are not valid.
Argument: ULIP expenses have been lowered by IRDA. ULIP expenses are now down to just 3 per cent for ULIPs of up to 10 years and 2.25 per cent for longer ones. Mutual funds, by comparison, have a higher fund management charges.
Reality: The way IRDA has framed the rules, 2.25 or 3 per cent is effectively the average over the entire lifetime of a ULIP. The charges are heavily front-loaded. During the first year, these charges are as high as 40 to 70 per cent. If the customer cannot continue with a policy for any reason, then his real expenses are far higher. And as it happens, a huge proportion of policies lapse during the earlier years. The front-loading has no logic, except to enrich insurers and agents. And fund management charges being lower than mutual funds is a not a full comparison. In mutual funds, total expenses are capped at 2.25 per cent for equity funds and less for other funds. These are not comparable to the fund management charges of ULIPs because ULIP customers also pay premium allocation charges, policy administration charges, mortality charges, and for guaranteed ULIPs, guarantee charges. Comparing fund management charges alone is a joke.
Argument: ULIPs have led to a massive rise in insurance penetration in India.
Reality: Insurance means insurance, in the sense when the insured person dies, his family gets money to pay for food, rent and education. In a country with as little social security as ours, the growth of insurance has to mean the growth in the reach and quantum of risk cover for lives. To call a non-insurance, market risk-bearing product such as ULIP insurance and then present it as evidence of the growth of insurance is simply dishonest.
Argument: The insurance industry provides a huge amount of employment. 30 lakh people have found work through insurance.
Reality: If ULIPs were a sound financial product than this would be wonderful news. Since they are not (see above reasons), this issue is a complete red herring. It is not the responsibility of ULIP customers to provide agents employment by giving away vast proportion of their premiums as commission. If crores of people's money has to be mis-invested to provide employment for lakhs of people, then it's better for those lakhs to find some other, more productive employment.
Argument: ULIP fund flows are important for the stock market and for infrastructure development.
Reality: The same as the employment argument. It is not the responsibility of ULIP customers to buy expensive and non-transparent investment products so that the stock markets can be boosted. Wouldn't it be possible to create infrastructure if ULIPs could be made more investor friendly.
I find the last two points to be particularly dishonest. They somehow imply that if ULIPs were made more investor-friendly, then lakhs of people would immediately become unemployed and money would stop flowing into development. However, ULIP critics like myself have nothing against the concept of ULIPs. If ULIP cost is brought down and made non-front-loaded; and if transparency is enhanced to the level of other asset classes, then they would be a very good product. The fact that the ULIP's enforce gradual SIP-style investments could actually make them a superior product.
By Dhirendra Kumar
I'd like to briefly describe why I think these arguments are not valid.
Argument: ULIP expenses have been lowered by IRDA. ULIP expenses are now down to just 3 per cent for ULIPs of up to 10 years and 2.25 per cent for longer ones. Mutual funds, by comparison, have a higher fund management charges.
Reality: The way IRDA has framed the rules, 2.25 or 3 per cent is effectively the average over the entire lifetime of a ULIP. The charges are heavily front-loaded. During the first year, these charges are as high as 40 to 70 per cent. If the customer cannot continue with a policy for any reason, then his real expenses are far higher. And as it happens, a huge proportion of policies lapse during the earlier years. The front-loading has no logic, except to enrich insurers and agents. And fund management charges being lower than mutual funds is a not a full comparison. In mutual funds, total expenses are capped at 2.25 per cent for equity funds and less for other funds. These are not comparable to the fund management charges of ULIPs because ULIP customers also pay premium allocation charges, policy administration charges, mortality charges, and for guaranteed ULIPs, guarantee charges. Comparing fund management charges alone is a joke.
Argument: ULIPs have led to a massive rise in insurance penetration in India.
Reality: Insurance means insurance, in the sense when the insured person dies, his family gets money to pay for food, rent and education. In a country with as little social security as ours, the growth of insurance has to mean the growth in the reach and quantum of risk cover for lives. To call a non-insurance, market risk-bearing product such as ULIP insurance and then present it as evidence of the growth of insurance is simply dishonest.
Argument: The insurance industry provides a huge amount of employment. 30 lakh people have found work through insurance.
Reality: If ULIPs were a sound financial product than this would be wonderful news. Since they are not (see above reasons), this issue is a complete red herring. It is not the responsibility of ULIP customers to provide agents employment by giving away vast proportion of their premiums as commission. If crores of people's money has to be mis-invested to provide employment for lakhs of people, then it's better for those lakhs to find some other, more productive employment.
Argument: ULIP fund flows are important for the stock market and for infrastructure development.
Reality: The same as the employment argument. It is not the responsibility of ULIP customers to buy expensive and non-transparent investment products so that the stock markets can be boosted. Wouldn't it be possible to create infrastructure if ULIPs could be made more investor friendly.
I find the last two points to be particularly dishonest. They somehow imply that if ULIPs were made more investor-friendly, then lakhs of people would immediately become unemployed and money would stop flowing into development. However, ULIP critics like myself have nothing against the concept of ULIPs. If ULIP cost is brought down and made non-front-loaded; and if transparency is enhanced to the level of other asset classes, then they would be a very good product. The fact that the ULIP's enforce gradual SIP-style investments could actually make them a superior product.
By Dhirendra Kumar
Sell Insurance Not Investment
Like many investment analysts, I firmly believe that in their current form, ULIPs are harmful for investors' financial health. However, I also believe that ULIPs are also bad for the insurance industry. Over a short-term, ULIPs provide insurance companies and their agents with a wonderful flow of revenues. However, more fundamentally, this product class has converted this industry into a subterfuge, whose financial well-being actively depends on NOT providing the very service that they claim to be providing. It's not just that selling investment products is lucrative for insurers. It's that providing as little life cover as possible is actually beneficial for them.
Here's why. For every rupee of life cover that is underwritten by an insurance company, it has to have a certain amount of capital that its promoters have to invest in the business. Like many other financial businesses, regulations enforce a certain capital adequacy that has to be maintained. This capital is the biggest constraint in growing the insurance business.
The exact capital required depends on many factors and is different for different products. However, it's much higher for offering life cover and for guaranteed products than for market-linked products. This means that when an insurance company's sales and marketing machinery has convinced you to put in X amount of money in its company's products, then it is in the economic interest of the insurance company to ensure that as little as possible of that money goes towards life cover and as much as possible towards market-linked investments.
And that's the explanation for the bulk of the 'mis-selling' that customers report. Some of those who complain assume that the agent is the one who is misguiding them. However, this is not true. Agents' behaviour and preferences are driven by insurance companies' guidance and by the commissions paid on various products. Insurance companies don't want to sell real insurance. Instead, they want to sell investment products. They just dress up these investment products as insurance by adding a small percentage of insurance. The business logic of what the insurance companies are doing is inexorable. If the same machinery is allowed to sell life cover and market-linked investments, then it will always sell as little life cover as it can get away with. And that's the real issue that is getting obscured because of the way the current controversy has evolved.
Which regulator regulates ULIPs is the least important problem that faces insurance customers today. What really matters is that in a country with practically no social security, insurance is a critical need for crores of Indians. Insurance that actually is insurance, as in the money that a family gets for food and rent and education when the breadwinner dies. What you are getting instead is an industry designed-by regulations-to actually de-emphasise life cover. And by the simple expedient of calling investments insurance, you get statistics that paint a fake picture of how well-insured the ordinary Indian is.
:- By Mr. Dhirendra Kumar ,CEO Value Research Online
Here's why. For every rupee of life cover that is underwritten by an insurance company, it has to have a certain amount of capital that its promoters have to invest in the business. Like many other financial businesses, regulations enforce a certain capital adequacy that has to be maintained. This capital is the biggest constraint in growing the insurance business.
The exact capital required depends on many factors and is different for different products. However, it's much higher for offering life cover and for guaranteed products than for market-linked products. This means that when an insurance company's sales and marketing machinery has convinced you to put in X amount of money in its company's products, then it is in the economic interest of the insurance company to ensure that as little as possible of that money goes towards life cover and as much as possible towards market-linked investments.
And that's the explanation for the bulk of the 'mis-selling' that customers report. Some of those who complain assume that the agent is the one who is misguiding them. However, this is not true. Agents' behaviour and preferences are driven by insurance companies' guidance and by the commissions paid on various products. Insurance companies don't want to sell real insurance. Instead, they want to sell investment products. They just dress up these investment products as insurance by adding a small percentage of insurance. The business logic of what the insurance companies are doing is inexorable. If the same machinery is allowed to sell life cover and market-linked investments, then it will always sell as little life cover as it can get away with. And that's the real issue that is getting obscured because of the way the current controversy has evolved.
Which regulator regulates ULIPs is the least important problem that faces insurance customers today. What really matters is that in a country with practically no social security, insurance is a critical need for crores of Indians. Insurance that actually is insurance, as in the money that a family gets for food and rent and education when the breadwinner dies. What you are getting instead is an industry designed-by regulations-to actually de-emphasise life cover. And by the simple expedient of calling investments insurance, you get statistics that paint a fake picture of how well-insured the ordinary Indian is.
:- By Mr. Dhirendra Kumar ,CEO Value Research Online
Wednesday, April 21, 2010
Do I need Life Insurance? how much?
Life Insurance is the way to protect your dependents of a financial loss in your absence. So if you have no dependents, do you need insurance?
Life insurance is to save your dependents from paying for your liabilities in your absence. So if you have no liabilities so you need insurance?
The answer to these questions is a 'No'. You only need life insurance if you have dependents or if you have any liabilities. Your dependents can be your parents, grand parents, children, grand children or anyone else if they are dependent on your income for their expenses.
Your life insurance cover should be an amount, when invested in the safest way should yield a return that can help your family to pay all of its expenses which you would have provided for. So your insurance should firstly cover the amount that gives your dependents their monthly income
Life insurance should also cover any liabilities on you. This will ensure that in case of any sudden incident happening to you, your liabilities can be paid off and your family will not have to face this burden in your absence .
So in short your insurance sum assured should cover the follows:-
1)A sum that provides for the household monthly expenses for life in present value terms, adjusted for inflation
2)It should cover all your liabilities
3)It should make up for the expenses needed to fulfill your future goals in it present value terms
So if you are a bachelor/spinster and your parents are not dependent on you financially. and you don't have any other dependents, nor do you have any liabilities, then you need no Life Insurance. In the same way if you are retired and have no liabilities, and no more goals ot be achieved for your dependents and your dependents are completely financial independent then you too need no insurance at all.
Life insurance is to save your dependents from paying for your liabilities in your absence. So if you have no liabilities so you need insurance?
The answer to these questions is a 'No'. You only need life insurance if you have dependents or if you have any liabilities. Your dependents can be your parents, grand parents, children, grand children or anyone else if they are dependent on your income for their expenses.
Your life insurance cover should be an amount, when invested in the safest way should yield a return that can help your family to pay all of its expenses which you would have provided for. So your insurance should firstly cover the amount that gives your dependents their monthly income
Life insurance should also cover any liabilities on you. This will ensure that in case of any sudden incident happening to you, your liabilities can be paid off and your family will not have to face this burden in your absence .
So in short your insurance sum assured should cover the follows:-
1)A sum that provides for the household monthly expenses for life in present value terms, adjusted for inflation
2)It should cover all your liabilities
3)It should make up for the expenses needed to fulfill your future goals in it present value terms
So if you are a bachelor/spinster and your parents are not dependent on you financially. and you don't have any other dependents, nor do you have any liabilities, then you need no Life Insurance. In the same way if you are retired and have no liabilities, and no more goals ot be achieved for your dependents and your dependents are completely financial independent then you too need no insurance at all.
Life Insurance of Rs. 30 lakh costs Rs.5160/- in term insurnace and Rs. 190000/- in Endownment...!! which one will you go for?
Life Insurers give you a lot of options and fancy names for insurance like endowment. whole life, term, ULIP's etc but the fact is that only one form/type of insurance covers your need and is effective on your pockets too. and that is 'Term Insurance'
Term Insurance is a pure form of insurance wherein you are not linking insurance(risk cover) and investments together. People over the past with their so called advisor cum insurance agents have put a lot of money in insurance plans expecting a good return at the end. The way its portrayed by the agent is the numerical value of returns and not the percentage terms which should actually be the case, as Rs.100 today is only equal to Rs. 466 after 20 years @ 8% Per annum, So if your insurance gives you even 4 times your money that is Rs. 400 then too you are at a loss.
Insurance linked investments are basically of two types.
1) Debt investments:- Endowment, Whole life, most Moneyback policies,
2) Equity market Linked:- ULIP's and unit linked pension plans
Historically debt linked insurance products don't give more than 6.5% return over the term of the insurance contract and the problem with ULIP;s are that they are very costly as the agent gets upto 40% of your premiums as commissions and the management expense is also very high.
So if you want to separate investments from your risk cover then you should only protect yourself by a term insurance policy
Example:- To compare the two types of insurances
A Term policy for a 30 year old male for a cover of Rs. 30,00,000/- for a period of 25 years will cost around Rs. 5160/- pa where as an Endowment worth this will cost him around Rs. 190000/-pa
There is a cost Saving of Rs. 184840/- Pa which can be saved and invested as per your investment risk profile and asset allocation rather putting it for 25 years at around the average growth rate of 6.5%
This is why only Term Insurance should be bought and make investment into better yielding products as per your risk profile and time horizon.
No agent will ever tell you this as his commission income will be reduced drastically.
Term Insurance is a pure form of insurance wherein you are not linking insurance(risk cover) and investments together. People over the past with their so called advisor cum insurance agents have put a lot of money in insurance plans expecting a good return at the end. The way its portrayed by the agent is the numerical value of returns and not the percentage terms which should actually be the case, as Rs.100 today is only equal to Rs. 466 after 20 years @ 8% Per annum, So if your insurance gives you even 4 times your money that is Rs. 400 then too you are at a loss.
Insurance linked investments are basically of two types.
1) Debt investments:- Endowment, Whole life, most Moneyback policies,
2) Equity market Linked:- ULIP's and unit linked pension plans
Historically debt linked insurance products don't give more than 6.5% return over the term of the insurance contract and the problem with ULIP;s are that they are very costly as the agent gets upto 40% of your premiums as commissions and the management expense is also very high.
So if you want to separate investments from your risk cover then you should only protect yourself by a term insurance policy
Example:- To compare the two types of insurances
A Term policy for a 30 year old male for a cover of Rs. 30,00,000/- for a period of 25 years will cost around Rs. 5160/- pa where as an Endowment worth this will cost him around Rs. 190000/-pa
There is a cost Saving of Rs. 184840/- Pa which can be saved and invested as per your investment risk profile and asset allocation rather putting it for 25 years at around the average growth rate of 6.5%
This is why only Term Insurance should be bought and make investment into better yielding products as per your risk profile and time horizon.
No agent will ever tell you this as his commission income will be reduced drastically.
IRDA’s short sighted approach helps insurance agents mis-sell…
I would today like to talk about a flaw and a loophole which is existent in the IRDA regulatory framework. The IRDA attempts to protect the investors and purchasers of insurance products, for which it has placed specific limits on the rate of return shown in illustrations used in client presentations.
Just to protect the investors from over claimed returns expectations in the ULIP products, there is a provision that all illustrations should show return expectations of 6 percent and 10 per cent only. Although, this serves the purpose of keeping the returns expectations for ULIP plans under limits, but as this same regulation is used in the traditional policies’ illustrations- therefore, it by showing 10% return in a traditional policy overstates the returns attainable by any debt product consistently over the products tenure.
As normally people think that traditional endowment plans are able to give the guaranteed returns, a high return estimate of 10 % can be highly misleading and can spoil the financial planning of investors over his/her life span.
I would like to urge to IRDA to change this regulation and keep lower limits than 10% for illustrations of traditional plans and propose that the illustrations be made with two returns percent scenarios of 5% and 8%.
This will reduce the extent of miss-selling prevalent in high numbers as insurance agents sell traditional policies as guaranteed products with return percentage of 10% p.a. for periods over 30 years which is not at all guaranteed.
Just to protect the investors from over claimed returns expectations in the ULIP products, there is a provision that all illustrations should show return expectations of 6 percent and 10 per cent only. Although, this serves the purpose of keeping the returns expectations for ULIP plans under limits, but as this same regulation is used in the traditional policies’ illustrations- therefore, it by showing 10% return in a traditional policy overstates the returns attainable by any debt product consistently over the products tenure.
As normally people think that traditional endowment plans are able to give the guaranteed returns, a high return estimate of 10 % can be highly misleading and can spoil the financial planning of investors over his/her life span.
I would like to urge to IRDA to change this regulation and keep lower limits than 10% for illustrations of traditional plans and propose that the illustrations be made with two returns percent scenarios of 5% and 8%.
This will reduce the extent of miss-selling prevalent in high numbers as insurance agents sell traditional policies as guaranteed products with return percentage of 10% p.a. for periods over 30 years which is not at all guaranteed.
How to end the problems of black money and its links to terrorism
The ever imminent problems which the country of India faces are money laundering, corruption, black money which leads to the main problem of terrorism. When we say that there is terrorism is affecting the country’s security and hence leading to an environment not worthy of investing in the country leading to FII taking out the existing money from our country and not putting in money if they were planning about doing it.
The very simple way of solving this problem is by stopping the printing of notes with high denomination. Like in the UK there is no note above 50 Pounds and very rarely will you find a $100 note in the USA. This is something very important in stopping the fake currency scandal which in turn will stop all the other problems on its own.
There should be no notes of value greater than Rs. 100 so that like in many developed countries. And take out all the notes of higher denominations out of circulation. This will make it very difficult for corrupt parties to carry black money from one place to another unlike now due to the large Rs. 1000 notes they can carry a large amount in a very small briefcase unnoticeable by officials, but if the same amounts were to be carried in Rs. 100 or Rs. 50 notes then the loads and size of the parcel will be more than 10 to 15 times the original load making it very difficult to transport the bribe amounts.
The next topic about black money, only because of the high denominations people are able to hide a large amount of their black money in their house floorings and walls so if these notes are to be canceled and new low value notes to be brought in then they will not be able to use it or even hide it as they will have to get the notes changed and In the process the black money can come in broad day light and the offenders can be punished and at the same time the government should only take back the notes which are in their serial order lists so that all the notes that are not in the records can be tagged as fake currency and be burnt
The next stage is of discussing about the printers of fake currency, they are able to do so as they get a very high margin and value out of printing a high valued currency bills and getting profits many times over their cost and also worth the risk that they take in doing the illegal act of printing and transporting the notes inside our country. So if these notes are only of Rs. 50 then it will not be feasible to take so much risk and hurdles involved in printing these fake currencies. So the printing will also stop
So now finally coming to the main problem of terrorism, the main way in which they are able to buy the weapons is through the way of fake currencies. Because they are very closely linked to the people who are directly associated with printing fake currencies and once they have injected these fakes into the main monetary system it is really difficult to get it out as it spreads very swiftly.
So finally we can understand and link all these elements and conclude that a simple solution of getting these high denomination currency bills out of circulation will be of enormous help and benefit towards solving all these problems of money laundering, black money, fake currency bills and last but not the least terrorism
I would like you to spread this word which will work out to be the best means of improving our country’s economic development and security issues. I would like to thank ‘Yogi Ramdeo Maharaj’ for this in genuine idea.
The very simple way of solving this problem is by stopping the printing of notes with high denomination. Like in the UK there is no note above 50 Pounds and very rarely will you find a $100 note in the USA. This is something very important in stopping the fake currency scandal which in turn will stop all the other problems on its own.
There should be no notes of value greater than Rs. 100 so that like in many developed countries. And take out all the notes of higher denominations out of circulation. This will make it very difficult for corrupt parties to carry black money from one place to another unlike now due to the large Rs. 1000 notes they can carry a large amount in a very small briefcase unnoticeable by officials, but if the same amounts were to be carried in Rs. 100 or Rs. 50 notes then the loads and size of the parcel will be more than 10 to 15 times the original load making it very difficult to transport the bribe amounts.
The next topic about black money, only because of the high denominations people are able to hide a large amount of their black money in their house floorings and walls so if these notes are to be canceled and new low value notes to be brought in then they will not be able to use it or even hide it as they will have to get the notes changed and In the process the black money can come in broad day light and the offenders can be punished and at the same time the government should only take back the notes which are in their serial order lists so that all the notes that are not in the records can be tagged as fake currency and be burnt
The next stage is of discussing about the printers of fake currency, they are able to do so as they get a very high margin and value out of printing a high valued currency bills and getting profits many times over their cost and also worth the risk that they take in doing the illegal act of printing and transporting the notes inside our country. So if these notes are only of Rs. 50 then it will not be feasible to take so much risk and hurdles involved in printing these fake currencies. So the printing will also stop
So now finally coming to the main problem of terrorism, the main way in which they are able to buy the weapons is through the way of fake currencies. Because they are very closely linked to the people who are directly associated with printing fake currencies and once they have injected these fakes into the main monetary system it is really difficult to get it out as it spreads very swiftly.
So finally we can understand and link all these elements and conclude that a simple solution of getting these high denomination currency bills out of circulation will be of enormous help and benefit towards solving all these problems of money laundering, black money, fake currency bills and last but not the least terrorism
I would like you to spread this word which will work out to be the best means of improving our country’s economic development and security issues. I would like to thank ‘Yogi Ramdeo Maharaj’ for this in genuine idea.
Emotional Atyachar:- The new sales point
With a deep concern on the standard of advertisements being shown by financial institutions like banks and insurance companies it feels like they have no actual products or services to be sold left that can be publicized about in the adverts, but the superficial claims on their personal relations and stuff, like icici states that chhotti baatein hamesha chhoti nahin hoti and they show a women who discusses her sons reasoning for hours even after office hours, this is something that no one is ever gonna do for any client but yet they want to make a claim about how they would want it to be rather than how it is.
so these over claiming of adverts should be taken into consideration and not be linked to actual performance ability of the service provider, so with these forms of ads it only one thing for the buyer that u be aware as the companies are only trying to play with the clients emotions and nothing else as an actual service offering
so these over claiming of adverts should be taken into consideration and not be linked to actual performance ability of the service provider, so with these forms of ads it only one thing for the buyer that u be aware as the companies are only trying to play with the clients emotions and nothing else as an actual service offering
Personal Financial Planning- Need of the hour
Ever wondered if you have a single source to manage, execute and account for all your personal financial planning needs like retirement planning. insurance planning, taxation planning, investment planning, loans, mortgage and cash flow management. It would make lives considerably easy cause you wont have to run behind ten different people to get a hold of all your personal finance documents and account statements. With a financial planner your financial management will be easy swift and all in one place.
The biggest advantage of a financial planner is that he will not be a salesman trying to sell products to you with the main intention of filling his pockets with the commissions of the products he sells to you. His main goal and motive is to keep you financially safe and secure and help you achieve your goals.
Many agents and salesmen in India pronounce themselves as a financial planner but the differentiating factor is that if a person is an agent or a representative of any company then he will not be in a position to give you unbiased advise as his aim will be to tell you some story and sell his companies' products to you. To be an unbiased advisor the person must be able to provide a comparison of various available product options.
Financial planners charge fees from their clients for the advise given just like a doctor, lawyer or an architect. The advise is genuine and based on the clients needs, budget and after a detailed analysis of several available options.
The biggest advantage of a financial planner is that he will not be a salesman trying to sell products to you with the main intention of filling his pockets with the commissions of the products he sells to you. His main goal and motive is to keep you financially safe and secure and help you achieve your goals.
Many agents and salesmen in India pronounce themselves as a financial planner but the differentiating factor is that if a person is an agent or a representative of any company then he will not be in a position to give you unbiased advise as his aim will be to tell you some story and sell his companies' products to you. To be an unbiased advisor the person must be able to provide a comparison of various available product options.
Financial planners charge fees from their clients for the advise given just like a doctor, lawyer or an architect. The advise is genuine and based on the clients needs, budget and after a detailed analysis of several available options.
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