Don’t mix insurance with investment plans’

I have seen people getting confused with the term insurance and investment. These people expect something in return on the maturity from the insurance company. This so because these people hardly understand the importance of insurance and investment. In many cases insurance agent also make the person fool by using the situation in his favour by selling insurance to a person interested in investment.

What is insurance?
Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance policy.

Concept of Insurance / How Insurance Works?
Concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums.

What is investment?
Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in the form of interest, income, or appreciation of the value of the instrument. Investment is related to saving or deferring consumption.

Now the question is which insurance is better and why?
As per my view Term Insurance is better. Term Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount at regular intervals or in lump sums. If he outlive the term of the policy, he will get nothing.

Now understand the whole scenario with the help of an example.

Rajesh age is 28yrs at present. He has planned for LIC money back policy. If he gets insurance of 10,00,000 for 20yrs, then he has to pay hefty premium of 62,260 for 20yrs. Which mean his total investment would come around 62,260*20 = 12, 45,200 nearly. He will get 2, 00,000 back every 5yrs and remaining amount with bonus will be paid at the end of the period.

If he plan to get term insurance of 10,00,000 for 20yrs , then he has to pay only nearly 2890 every yr over period of 20yrs which mean in total he will pay 2890*20=57,800. No doubt he will lose this amount if he outlives the policy. But if he dies his dependent will get coverage of 10, 00,000.

So the difference of amount invested in two option is 1245200-57800=1187400. With the term insurance he has the option to invest the remaining amount i.e. 1187400 into some good mutual funds over a period 20yrs.Even if he get the average return 20% his amount will much more (nearly 1 crore).

So, it is clear that one should opt for term insurance and make the investment where there is high return. In this way if anything happens to the person then dependent will have the 10, 00,000 and also the amount which he invested along with the return.

This will assure him of comfortable life for himself and his family whether he lives or anything happens to him.

Which is better option , buying a house or to live on rent?

We all need house, now choice has to make by us that whether we want to stay on rent or want to purchase. Both the option has their unique set of cost attached. So we have to evaluate the option accordingly.

These days the difference between the EMI and rental is the minimum. Moreover real estate price are stable these days. We can expect further rise in real estate but no decline for coming few years. If an individual stay on rent, he could be paying good amount of money which in short get wasted. On other hand if one choose to buy a house by taking loan then after stipulated period he will own a house. Own house is an asset and serve as security for old age and also good investment.

Sometimes people resort to wait and watch situation but if real estate price start increasing, about what the chances are high, those people won’t able to purchase a house as it will get much costlier which their pocket may not afford.

So, purchasing one’s own accommodation makes sense in these times.

10 simple steps to cut down your spending

Many times we wonder to see our neighbor or relatives who have low income but afford the entire necessary item which people with high income find difficult to plan. Reason could be that those people may have found better way to cut on expenses and are able to save much more to buy the things they strongly desire.

My husband has just started learning how to drive from a local driving school. During conversation with him, he found that he has 2 LIG flats in vicinity where we cannot afford even one and not only this, he also own 2 Janta flats and 3-4 taxis. Still he is running a small driving school and teaches people driving. He has managed everything he has today from his own savings. Despite of this, he is still living in janta flats so that he can manage to save more money for his kids and rented the LIG flats.

Here are 10 simple steps to cut down spending

 Always visit different places to compare prices for any bulk purchase.

 Avoid taking children when planning to shop groceries item as they would fill the shopping cart with unwanted stuff.

 Avoid purchasing items just because some offer is going.

 Never buy a toy or game just because your child is through temper in the middle of market area.

 Avoid going out daily for meals. Better option is to cook food at home and create dinning out experience right from the comfort of your home. Try to cut down your entertainment allowance.

 Plan your goals and try to invest with help of professional. This will ensure that a part of earning will get saved every month.

 Keep watch on every spending by keeping watch on expences.This will help you to cut down useless expenses which are not at all that important.

 Do not borrow to spend .Better option is to use debit card.

 Save electricity by using it to limit it is required. Switch off fans/lights and other appliances if it is not required.

 Review your phone bill every month to find out unnecessary calls which can be avoided.

Gist is that, decide some monthly budget. Celebrate or go out for a surprise party with kids if there is money left at the end of the month. That gives this exercise a positive spin.

Is it easy to earn money online?

Many of us may have seen many promising sites and ads ensuring easy money by working online. There are lots of article one can find on net but most of them do not work at all.

All this really seems interesting to everyone as everyone us wants to make money as fast as we can. Owners of the site are the only who get benefited from these sites and article. These are only marketing strategy nothing else and by fooling people they earn money.

Is it means all information on net about earning online is useless?
No, there are many ways through which one can earn money online but it’s not easy as easy it sounds. That requires lots of time, great effort and most important lots of patience. If one own website or blog, in that case one can earn by placing ads on their website or blog. For this one can try for Google ad sense, adbrite, info links and many others. Again this requires effort, initially it will be difficult to earn but yes once the traffic start building earning will increase. Website owner can also earn by promoting and selling their own product.

Keep in mind there is no ways to make quick money. Companies pay for surfing site, reading emails etc. It’s obvious any one get attracted toward those sites and companies. But earning from these sites are not easy .It totally waste of time and efforts.

It’s better to use mind before going for useless sites.

Earn money from your blog

Blog has become a great medium to express our thoughts, ideas, information about any matter. To start a blog one can sign up for free either squidoo or a blogger or a wordpress.

Good written topics and well written articles can connect you with millions of readers around the world. Once you feel enough traffic is coming to your blog, you can think of earning from your blogs.

Advertisements- You can place ads of advertiser and charge for the same. For this you sign up for free Adsense, ClickBank, AdBrite, AdGenta, BidVertiser, and Kontera.

Membership-You can charge membership fees for your blog from visitors to sign in.

But it is not easy, in order to earn from blog one has to put lot of effort to attract traffic as very few from visitors clicks the ads on the blogs.

Earn while Learning (India Study Channel)

Few days back while searching some site I came to know about India Study Channel.com. I visited that site and found it good, especially for students. Most of all information which a student usually look for, are there. Even there is earning opportunity also available for students. They can earn revenue through various sections of this site by contributing content like previous years question papers, submitting educational news etc. In most sections of this site, one can earn by submitting a specific post.

http://www.indiastudychannel.com

My analysis on Thermax India-(Multi bagger stocks)

About the company.
Thermax is a global solution provider in energy and environment engineering. It offers products and services in heating, cooling, waste heat recovery, captive power, water treatment and recycling, waste management and performance chemicals.
With a dedicated sales & service network spread over South East Asia, Middle East, Africa, Russia, India, UK and the US, Thermax ensures innovative solutions and reliable support for client's business improvement

Result
Thermax announced results for the first quarter of 2009-10 with a net profit of Rs. 46.5 crore, compared to Rs. 63.7 crore in the corresponding quarter of last year. Total income for the quarter was Rs. 547.9 crore compared to Rs. 727.2 crore last year. The subdued numbers in the quarter are a reflection of the tough market conditions

Some of the funds invested in it:
SBI Magnum Tax gain Scheme
HDFC Tax Saver
SBI Magnum Global Fund

Why to invest?
Order balance, aggregated to Rs. 3230 crore at the quarter end compared to Rs. 2649 crore as at June 2008, showing an increase of 22 %.
The company has embarked on a comprehensive initiative to streamline processes, eliminate waste and reduce costs to protect its margins.
The stock potential seems to remain good and could be hold with long term view

It’s wholly my view that this will turn into multibagger stock
Think and make your own analysis before investing.

Lesson from past experience

Today everybody wants to make money as fast one can. As all of us want to posses everything, that’s why everyone of us has started looking for various different alternatives to earn more & more money to fulfill our endless desire and demands of our dependents.

There are many ways; one of them is share market. Most of the people have feeling that they can make lots of money from the share market and without making any study they just jumped into it, in end most of them incur loss.

From my past experience, I feel day trading or short term trading are good for those who are masters in this. It’s better to invest partly in the market on every dip rather in lumpsum. This will average the cost price of the share and in long term it will give good return.

Before thinking of investing in the market, one should make analysis of stocks and other factors like fundamental of the company, global scenario, political picture and others.

A long term investors always be in profit as in long term good company always grow otherwise.
So, pls think, study or consult before investing and try to invest in multibagger stocks which are capable of generating good return in 2-3 yrs of time.

I am not the expert or guru of share market but just shared my experience and view which I had in last 2 yrs.