Biggest Financial Mistake

 

Depending on Corporate Health Insurance is a biggest financial mistake ?

After Globalization  many company give corporate health insurance Cover to his Employee which motivate employees and fill secure against any Medical expenses. Though it is free and save personal fund but some time  depending only on your corporate health insurance to cover your whole family will be The biggest financial mistake you could make.

A corporate cover is basically insurance extended by the employer & offers multiple of benefits.

1. As an employee, you don't shell out money from your own pocket for hospitalization.

2. You can even bring your family under the ambit of your policy, like your spouse and children.

3. To top that off there are no waiting periods, so you and your family members are covered from day one .

But solely depending on such insurance is fraught with danger.

1. When you leave the company or make a forced exit from a firm, you also lose that precious health  cover. And that means both you and your family are left unprotected.

2. Employers don't extend the insurance benefits after retirement, at which point you're probably in your 60s, and instead of sipping a margarita in the Maldives, you're busy looking for insurance.

3. Now, many insurers do offer the facility to port to a retail policy once you exit your job. But that's    often incumbent on your medicals. If you have a disease or a heart condition, insurers won't afford    you this option. In fact, you may have to go without a health insurance plan.

So it might be advisable to buy separate insurance for you & your loved ones even if you have a corporate cover. 

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Terminologies You Must Know Before Invest in Bonds

 Bonds 

In India investment in  Bonds are considered to be last option in genral invistor because of some of the terminologies associated with this investment is too complex. But actually they are just simple.  A new bond investor may get confused by some of the terms associated with a bond investment. We bring you a brief list of the most important bond terms that you should understand and evaluate while making your investment decision. 

1. Coupon 

A coupon payment is the amount of annual interest that will be paid to the bondholder on an annual basis. The coupon payment per bond unit is: Coupon Payment = Face Value of Bond X Coupon Rate of the Bond in % This amount will be paid as per a pre-defined schedule – monthly, quarterly, bi-annually, or annually until the date of maturity. 

2. Face Value 

Face value is the designated value per unit of a bond when the bond is issued by the bond issuer. In the Indian bond market, the face value for most of the bonds is Rs.1000. 

3. Market Value 

The market value of a bond is the value at which the bond is currently being bought and sold in the market. This happens after the bond has been issued at the face value. The market value of a bond can be either at a premium or at a discount to the face value. The value depends on the overall economic conditions, bond issuer industry state, and the bond issuer’s business condition. 

4. Bond Issuer 

The bond issuer is the bond issuing company or the borrower who sells bonds with the promise of regular interest payments and return of the principal amount on maturity. The bondholder is the lender who lends money to the bond issuer in exchange of a bond. 

5. Payment Frequency 

The payment frequency or payment schedule of bonds is the dates on which the interest is paid to bondholders by bond issuing companies. The payment frequency can vary from monthly, quarterly, bi-annually to annually. Some payment dates can be customized by the bondholder. 

6. Maturity 

The bond issuing company agrees to pay back the principal amount of the bond to the bondholder on a pre-defined date. This is called the bond maturity date. Once the principal amount is returned, the bondholder stops receiving the interest payments as well. 

7. Yield to Maturity (YTM) 

Yield to maturity is the effective returns that an investor gets by investing in a bond and then holding it till maturity. Simply put, the yield, measured in %, is the interest rate at which an investor invests money in the bond to generate the cash flows from the bond till it matures. Example: Say, an investor invests Rs 950 (market value) in a bond. The various parameters of the bond are: Face Value per unit = Rs 1000 ; Coupon Rate = 10% ; Payment Schedule = 5 years on 31st April. The payments that the investor will receive are : Rs 100 on 31st April every year till the next five years. On maturity in the 5th year, the investor gets back the face value = Rs 1000. Then his effective returns or yield to maturity will be 11.352 % approximately. The effective annual returns help in making a realistic comparison of different rates of returns of bonds. For example, if a bond receives a quarterly payment of interest, then due to compounding the effective annual returns will be higher than the actual interest returns. 

8. Rating 

A bond rating is a grade given to a bond depending on its creditworthiness. The ratings can vary from AAA to AA to A and further down. AAA is considered the highest rating and bonds with this rating are generally considered the safest. Any bond that has credit ratings of BBB and above are labeled as investment-grade bonds or safe bonds in India. This rating is given to the company (bond issuer) by rating agencies on the basis of various financial factors of the bond issuer. Some of the most commonly considered factors are the issuer’s previous financial strength or ability to repay the principal and interest on time. Conclusion While bonds are a very simple investment option, having a better understanding of the financial terms associated with them will make you more confident about your investment decisions.

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GOLD IS NOW IN YOUR DEMAT ACCOUNT

Most retail investors in India have gold in one of two forms, gold Jewellery sitting in a bank locker, or a fund tracking gold prices. Another alternative, the Electronic Gold Receipts (EGRs), offer  the best of both worlds. You buy and sell real physical gold, held in regulated vault, on a stock exchange just lie stocks. If you have a demat account, you have all the tools you need to get started.

EGRs are not something imported from overseas, they are a
home-grown market reform. The government of India has
formally notified EGRs as ‘securities’ under the Securities
Contracts (Regulation) Act, 1956 and SEBI has developed a full
regulatory framework around EGRs covering vault managers,
depositories, stock exchanges and clearing corporations.

Trading takes place from Monday to Friday on recognized stock
‘exchanges and settled on a T+1 rolling basis, similar to equity
shares. This is not some sort of a fintech experiment. “it is a
‘government-backed instrument that aims to make ownership of
gold more transparent, more accessible and more useful for the
‘average investor.

India imports roughly 700-800 tones of gold every year: its
households together own an estimated 25,000 tones of
privately held gold, much of it lying idle in lockers. One
rationale for EGR is to bring some of that gold into an
‘organized, efficient market and to give the retail investor a
better deal.

HOW IT WORKS, SIMPLY PUT

The process is easier than it sounds. The physical gold imported
refined by the accredited domestic refineries is deposited with
a SEBI-registered vault manager. The gold must conform to the
LBMA Good Delivery Standard or the India Good Delivery
‘Standard. Once the above quality checks are done, an Electronic
Gold Receipt is created and credited to the demat account of the
depositor.

From then on the EGR can be bought, sold or held on a stock
‘exchange, and redeemed for physical gold whenever the
investor wishes. Withdrawal is built into the system. If you want
your gold back, you place a request through the depository
interface, select your preferred vault location and collection point
Processes the delivery typically on the same working day.  

The framework also allows   inter-operability between vault
‘managers, meaning you can deposit gold at one location
and withdraw from a different vault, adding flexibility for investor across cities

For retail Investor the practical benefits are immediate

Purity has always been a  concern when buying gold in India.                                                                  Under the EGR framework, only gold meeting prescribed international or domestic delivery standards enters the system eliminating ‘uncertainty at the point of entry.

Vault managers are required  to carry comprehensive insurance against theft, fire, burglary, fraud and other risks, conduct fortnightly physical verification of stored gold, and maintain daily reconciliation of
physical holdings against ‘electronic records.

Grievance redressal timelines  ‘are specified: weight-related complaints must be resolved within one working day, and most other complaints within seven working days. The pricing shift is equally
significant. When gold trades ‘as on EGR on an exchange, it trades at  single transparent market price with a daily price ‘band of 10% from the previous closing price.  

‘The making charges, location   premiums and negotiation dynamics of physical gold transactions largely disappear. ‘Two buyers in different cities, purchasing EGRs at the same moment, pay the same price for the same quality of gold.

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