Saturday, November 14, 2009

WHY NOMINATION ALONE ISNT ENOUGH IN YOUR INSURANCE POLICY

Have you ever wondered who is the legal beneficiary of the insurance claim money? Most people feel that the insurance money will be passed on to their husband /wife and kids as the case may be . However, this is only partially true. As per law, every individual who is related /financially dependent to the insured person has legal claim over the insurance claim money. Lot of people nominate their wife/husband as their nominee in the insurance policy and then they believe that in case of their unfortunate death, the claim money will be passed on to their spouse.
This also is only partially true. Nomination only means that the nominee has the right to claim the money only and not use it . The money is then supposed to be passed on to all other legal claimants of the money. So, in case you want your insurance money to go to a specific person only , then just nominating that person in your policy document is not enough. You also need to prepare a will making it amply clear that the money received from the insurance policy is to be passed on to such specific person. This will also needs to be registered /probated to make it legally binding.
Hence, if you haven't done this, may be its good time to consult your lawyer and prepare a will. Because , the very reason why you pay insurance premiums over donkey years is to ensure that the money is available to your near and dear ones when it is required the most. A "will" will help you ensure that.

Sunday, November 1, 2009

4 Golden principles of equity investments

If you want to invest in equities, there are only four things you need to remember.
1. Choose the right company
Look for superior and profitable growth. The company should earn at least 20% return on its shareholders’ capital.

Ideally a long-term investment perspective (more than five years) allows you to participate in the company’s growth. At the short end (3-6 months), share performance is driven more by market sentiment and less by company fundamentals. In the long run, the relevance of the right price diminishes.
2. Be disciplined
Stock investing is a long, learning experience. You will make mistakes, but also learn from them. Here is what you can do to ensure a smooth ride.
--Diversify your investments. Do not put more than 10 per cent of your corpus in one stock, even if it’s a gem. On the other hand, don’t have too many – they become difficult to monitor. For a passive long long-term investor, 15-20 is a healthy number.
--Research and analyze your company's performance through quarterly results, annual reports and news articles.
--Get a good broker and understand settlement systems
--Ignore hot tips. If hot tips really worked, we'd all be millionaires.
--Resist the temptation to buy more. Each purchase is a new investment decision. Buy only as many shares of one company, as fits your overall allocation plan.

3. Monitor and review
Regularly monitor and review your investments. Keep in touch with quarterly results announcements and update the prices on your portfolio worksheet at least once a week. This is more important during volatile times when there can be great opportunities for value picking!
Also, review the reasons you earlier identified for buying a stock and check whether they are still valid or there have been significant changes in your earlier assumptions and expectations. And use an annual review process to review your exposure to equity shares within your overall asset allocation and rebalance, if necessary

4. Learn from your mistakes
When reviewing, do identify and learn from your mistakes. Nothing beats first-hand experience. Let these experiences register as `pearls of wisdom' and help you emerge a smarter equity investor.