Comparison of any equity linked investments with Term deposits returns.

I was approached by the sales person for equity linked insurance plan with his specialized marketing skills he made me to believe that the returns would be much higher than the bank deposits where the money would lay idle. But considering the fact that the insurance scheme can be tax saver tool under section 80c I was pleased to put the money in one of the insurance plan.

The plan was to cover a sum of amount 50,000 in case of possible mishap. A premium of 10000 for 3 years which is the lock-in period.

I was also informed that i can retrieve the money after the lock in period. Now my major question is when should I retrieve the money or what could be maximum return or what is guideline to judge if the fund has achieved the desired return.

Of course considering the tax benefits and risk coverage even though i was not too much interested in gaining major benefits but a comparison with term deposit returns will give us a definite picture when or where to gain a good return from the investment.

The below is illustration of Future values of similar investment with compound calculation.
Year Deposit(1year) Deposit(2year) Deposit(3year) Total Return Interest Gained
1 10800 10800
2 11664 10800 22464
3 12597.12 11664 10800 35061.12 5061.12
4 13604.89 12597.12 11664 37866.01 7866.01
5 14693.28 13604.89 12597.12 40895.29 10895.29
6 15868.74 14693.28 13604.89 44166.91 14166.91
7 17138.24 15868.74 14693.28 47700.27 17700.27
8 18509.3 17138.24 15868.74 51516.29 21516.29
9 19990.05 18509.3 17138.24 55637.59 25637.59
10 21589.25 19990.05 18509.3 60088.6 30088.6

So, check out for the returns if the margin looks good and the market performance satisfactory go ahead and reap the benefits(keeping in mind the tax at source).

Happy harvesting!!

With regards
Kannan. G

5 Tips to keep in mind while taking up the performance appraisal.

Always have an open mind.
It is normal to judge people and, to have an intuition about them which may not always be correct. So before going to the appraisal discussion with the manager we normally tend to feel that he will not accept to our rating and he will give all the credit to a particular person or might be biased by regional, caste, creed feeling. Such perceptions normally tends to influence the person not to put forth his valiant effort and achievements, also this will assist any biased manager to go ahead and fulfill his unjust nepotism.

So we should always go for a appraisal discussion with an open mind considering the manager as a new person to whom we have explain all the efforts done to achieve the job objective.


Consolidate the list of achievement for the year.
Before taking up the discussion we should recollect the mail proof for the deliverables achieved. Major mistake will happen when we try to judge our effort ourselves because the solution provide could not be complicated one but the situation in which it was delivered or the impact which was averted because of the just in time decision should be highlighted . So let the achievement be big or small, just list down all the achievements before accepting to have a discussion with the manager.

Never accept for an appraisal discussion without preparation.
Casual calls by the manager over the telephone could surprise us when he sits there with our appraisal form. At that situation we will have to accept the hasty decision which ever the manager imposes on us. So show your state as not prepared for such discussion and fix up the meeting on a later date.

Best practice is to mutually accept the job objective before taking up the project.
Every one would have faced a situation where the appraiser will comment that this is what expected and you have achieved it for an effort which should be acknowledged with better rating. To avoid such situation the best practice is to decide on the expectation mutually before taking up the project and having a copy of it during the appraisal discussion.

Fill the appraisal form completely and never leave any item for granted.
The grave mistake done by every person while filling up the appraisal form is that thinking that the manager will remember the efforts and sacrifice done by an individual during the project. So jot down each effort and related importance such that any intentional negligence by the manager can be avoided. So never depend on manager’s memory.

Happy appraisal!!!

with regards
kannan G

Equity linked Insurance schemes

Equity linked Insurance schemes

Gone are day where the insurance scheme are black box which could be known only to the advisors or the insurance company.

Thanks to the Current market trend and opening up to the global competitions insurance has become available in the most simplified form.

With help of internet we can browse for the most competitive insurance providers and avail the best suitable solution of our need.

With the current technology break through one can even assess our returns from the investment on a day to day basis.

Web technology has assisted the above we can login into the insurance portal to check for the current status of the investments and opt to gain the best possible returns.

Almost all insurance company provide us equity linked schemes which ties up our policy premium into an market based units which is referred as NAV (net asset value).

Each unit is associated with an equivalent amount which can be redeemed after the lock in period.

Normally we were advised by our agents that we will get an amount on the maturity plus a bonus amount which was always a secret amount which is left to our imagination.

But the current technology allows us to watch our investments and choose the investment mode to minimize the impact of the market changes.

Distribution of the funds in different investment mode is based on the age of the policy holder and risk profile one can subjected to,

The below lists the different funds and associated risk profile.


Fund option Investment stratergy Risk Age
Liquid fund 100% in bank deposits and short term money market low >60
Bond fund 20% money market 80% govt. bonds Moderate 40-60
Equity
growth fund 20% bank deposit 80% equities Very high 30-40
Mid cap
fund 20% bank deposit and 80% equities (50%in madcap) Very high 20-30

The age specification is not any rigid rule but just an approach to mitigate the risk associated with the investment options.

One of the main question in each of the investors mind will the which insurer or the plan to opt for, Careful analysis should be done before investing the hard earned money.

Before choosing a plan care should be taken in finding out the charges associated with the insurance provider.

All the charges will be applied monthly by cancelling the units allocated with our investments.

Fund management charges will be applied and will be associated with the risk profile of the investment. Higher the risk higher will be the charges.

Below is illustration of the policy holder who has paid 2 premiums and associated units for each premium are based on the that days unit value and his current unit holding after the charges which eats up his allocated units.
Premium Premium Invested Unit price at Allocated Charges mortality + year Amount Amount the time of units service ess
allocation
1 10,000 3000 21.3 140.7 -4 units
2 10,000 9800 28.2 347.5

TOTAL 488.2
After Mortality + service tax charges
Charges applied monthly for the first
Year the current Units will be 484.6

Switching charges will be applied only if the cross the free switch numbers.

Allocation charges is the one where the investor will have the option to choose but normally the insurance agent may not reveal as his commission is associated with the allocation charges. So investor should check for the different option available before signing the application.

One of the insurers provides a plan in two modes

Plan -1
Year allocation charges
1 30% 70%
2 98% 2%
3 99% 1%
Plan -2
Year allocation charges
1 60% 40%
2 80% 20%
3 99% 1%

Also, we have to inquire the basic minimum amount which, we have to commit for the plan rest of the amount can be given as top up which does not attract the allocation charges but depends on the insurer.

The basic risk associated with any unit linked plan is the returns are always not assured
So consider the amount of premium invested and other money guaranty plans provided by the market admitted company.

Benefits will be much discussed in each of the insurers brochure.

happy investing !!!

With regards
Kannan.g

“Nothing ventured, nothing gained”

“Nothing ventured, nothing gained”

Hi it is about your dream of having a consult. Buss.

Have u ever had a thought about how to do it rather than doing the traditional way.
The normal process of doing the abnormal thing or abnormal process of doing a normal
thing will always help in reaching heights.
Let it be the mail service or the chatting device which we enjoy as part of technology
Era all are bi products of the above.

What makes an ambani so different from the rest of the billions indians what makes
The gandhi so important that the few thousands of the politicians around the globe.
Success could be an ultimate identity which separates the common man with a prodigy
We know every one is strives to reach the vital moments in his life.

Have u every wondered what was lacking with you as a buss. Man What made you the person
whom u want to be and what not. What if gandhi did not want to risk his life by opposing
The apartheid white domination Why did mandela took the risk of living a life in jail.
or some our IIT and IIM graduates Do not want settle with the irresistible offer from
the corporate giants

Could be a dream like that of yours for some it is dream of freedom for some it is a dream
of success. But for all it involved a lot of innovation, risk and new approach.

What way can u justify of starting a buss. Because a friend of yours will be quiting his
current commitments? Why again the customary setup of a table, phone and a receptionist

Revolution did not stop when the wheels started to roll then why do u want to did stick up
with the same old method.

Do you know that any solid chains strength depends on the weakest link. Like that find the
week link which ties u up with the traditional approach Break away and cut loose the core
approach of laying any plan think twice Why do u want rather than what u want which could
help to shape your View.

Let me take up the consul. Idea what is core requirement to start thinking of having to
start this buss. Find the out the any five reasons which could justify the need to start one
at the same time Find out any one reason for why not add weight age to come to conclusion.

People want every thing to be automatic and why not you buss. Idea liaise with The present trend

What is the demand how will the demand emerge have u done any research or spent some time
in collecting one.

What is that you want to be known to your kids and coming generation, always have a fore sight
in deciding want you want.

I have shared my thoughts in hoping to ignite yours

All, the very best.

Bye
Kannan G

Like to share a lighter moments in my previous org.

Even though we did not have a proper cubicle, each person was provided a good system and a comfortable chair with a decent Distance between each of them.
But one of our male colleague claimed his system monitor was not working unless he placed it along with his female colleague who sits next to him.

Every new persons who sees these two people would have come to a conclusion that they are in love seeing Their System kept so close.
Being a friend to this colleague, some even tried to tell him it looks odd and asked him to place this system Properly but all their effort ended in vain as he claimed the same that his monitor his not working.
One fine morning, the company’s director had an unusual stroll into our floor and as usual as any new person These two made him to raise his eye brow.
As a curious person called up my colleague and asked him to move his system and he was about to turn around To chat with a senior person my colleague started his conversation saying his monitor will not work if he moves it away from his female colleague.
Every one in the floor was shocked by my colleague’s reaction and even the director was taken aback for a few moments.
Some were feeling sorry for him some were having a mixed feeling.
Furious director called up the head of the system eng., of our company and asked him to move the monitor
The whole crowd which gathered around my colleague was having really tensed moments
But to all surprise the monitor did not work properly when they moved my collegue monitor away from His female friends monitor.
Every one got sigh of relief and even the director was shocked and advised the eng. to look into the problem And left the place with a bit of embarrassment

My colleague was standing there with a big smile covering his face which slowly spread among others.
Came to know later the problem was with the electric cable behind the monitor. Luck guy got to Thanks the cable otherwise would have been a life long embarrassing moment for him.

With regards
Kannan G