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4 reasons why you should not take Term insurance till 85 yrs! | Deeva Ventures Pvt Ltd

4 reasons why you should not take Term insurance till 85 yrs!

 

Got a term plan for your family? Or maybe you’re planning to take the term plan in a few days. 


If you are, good for you! One of the biggest questions, every person considering term insurance has, is – “Should I take the cover for the maximum period?”.


We provides coverage up to 85 years of age. or 20 25 30 35 40 years. I am confused about which policy term is better to get maximum benefits?


Just like him, hundreds of investors have asked me this question over and over again, and I tell them, “Just take it only until you reach 60 years of age.”


And they happily ignore my suggestion; as if I am crazy, suggesting this to them. The “Insurance only till 60 years” looks kooky to them – kind of a “wrong deal” and they want to get “maximum benefit” out of the term plan. 


“The chances of my family receiving the claim amount is higher when I am covered for long” is the common thought process of every person who is in the mad rush of buying the highest possible tenure.


Trust me, that’s flawed thinking and I will explain why today. More than a sermon, think of this article as a discussion, where I put some points in front of you and you reflect and ask yourself – “Does it make sense? or not?” and then make your own decision. So here are those 5 reasons– why you should not take Insurance till the age of 85 years or more


1. You don’t need it beyond your working life

You need to ask yourself the question – “Why am I taking Life Insurance?” and the answer is – “Because right now, I don’t have enough net worth, which will help my family if I am gone” or in other words – “Because my family is financially dependent on me.”


For a person who is not earning and does not bring money home, his death will cause family only emotional loss; not financial loss. Hence, logically you need to cover yourself through a life insurance product, only for the time you are working and others are financially dependent on you.


2. You will have “probably” have enough wealth by the time you retire anyway

Stretching the 1st point, if you are taking life insurance cover until you are 75-85 years, will you need it at that time? Do you feel that you will have any reason to have a cover of 1 crore that time (after 30-40 years)? I am sure (more confident than you), that you would have completed all your financial goals by that time, you will have your own home by that time and you will have done everything in your life by that time. 


Your focus area at that old age will be very different than what you focus on right now.


To understand this point, you have to stop for a moment and go into 2040-50; when you are retired and close to heaven’s door. 


Are your children financially dependent on your income – which does not exist? Is your spouse depend on your income? You must have already accumulated enough wealth by that time and you must be getting some income out of that. 


Your death has nothing to do with family cash flows at the time.


3. The premium factors in your tenure already

Most of the people who feel that they are smart enough to take a term plan till 85 years, forget that on the other side is a professional business running for decades now. 


They have hired people who are 10 times smarter, who design products (they are called Actuaries) that generate large profits for companies and not investors. Life Insurance is a “for-profit” business. They design things so that they earn profit. 


If a company allows you to make a plan that lasts until you turn 85, why have they done that? Why did they allow that to happen? The premiums they charge already factor in everything. You pay premiums to get that term plan, it does not come free!


4. The value of your sum assured is peanuts later

I hear it most of the time – “I am taking the term plan till 85 years so that even if I die, my family will get the money. So, the higher the tenure, the higher the chances of making money.” 


But they forget that by doing so, they are helping the insurance guys make a profit, but let’s say you die at 70 years. Celebrations! Your family will get that 1 crore, which at this moment sounds good, but will not be worth a lot that time.


Let me show you the mirror that lets you look into the future 


Let’s say you are a 30-year-old guy, and your monthly expenses are 40k per month. You say to yourself, “Let me take that term plan worth 1 crore so that in case, I die my family can get 1 crore which will provide them some good monthly income.”


It would be a very good number if you die early in your life! With each passing year that 1 crore will be worthless. If you die the next year of taking the term plan, the worth of that 1 crore is pretty much the same, 1 crore. 


But if you die after 10 yrs, that 1 crore will be worth 50 lacs in today’s world. So, getting 1 crore after 10 yrs is the same as getting 50 lacs right now. Are you getting my point? The money you get in the term plan is a constant number, not linked to inflation!


So, imagine you have taken the term plan till 85 years and you die at 70 (after 40 yrs of taking the term plan), 


what is the worth of that same 1 crore at that time? Hold your breath! It’ll not more than 6-7 lacs assuming an inflation of 7% and even if inflation for the next 40 yrs is a small 5%, it would not be worth 15 lacs today! So, when your family gets that 1 crore after 40 yrs, it’s kind of worthless. 


No one would be depending on that money anyway; it’s just a bonus on your children’s inheritance money!


Act like a real informed and smart investor

I have been seeing this madness for many months now and was constantly wondering why people are focusing so much on this small thing called “long tenure” in the term plan. 


I see investors abandoning one insurance company for another just because the other company is offering a term plan for 75 years.


You are allowing yourself to fall into a trap if you do this. If you have already taken the term plan for 85 years, do not worry … do not cancel it, just let it run its course. 


Stop paying premiums when you feel that your family can be taken care of, by the wealth you have generated. 


If you are planning to take a term plan right now, take it for as long as it takes you to retire, probably till 55 to 60 years, but not beyond that.


Would be happy to hear your thoughts and your views on this topic! You have taken the term plan for very high tenure.


Lessons from Bitcoin price fall and future of the cryptocurrency

The recent selloff in the most popular cryptocurrency -the Bitcoin, is a wake-up call for those investors smitten by astronomical returns provided by this unofficial unit.


The thrashing received so far highlights the importance of sovereign currencies and the need to understand the risk associated with cryptocurrency.


Although, it is desirable to expect volatility in a speculative risk asset, taking an informed decision based on the degree of uncertainty overrides the benefits on offer.


Uncertainty over its value shortly amid such high volatility limits the need for bitcoins and other cryptocurrencies as a medium of exchange.


Bitcoin, the largest cryptocurrency by market value, on Wednesday had plunged 30 percent to hit the $30,000 level, weighed down by China’s regulations on crypto trades and Tesla’s decision to suspend vehicle purchases using Bitcoins.


In the last 24 hours, Bitcoin touched an intraday high of nearly $40,000 and a low of $30,000. Bitcoin is still over 200 percent up from September 2020 and 27 percent so far this year.

This shows the huge amount of volatility that persists in the crypto market as against the traditional currency market.


“A nearly 40 percent dip in bitcoin price from its all-time high looks dramatic but is normal in many volatile markets, including crypto, especially after such a large rally,” said Avinash Shekhar, co-CEO of ZebPay.


Such corrections are mainly due to short-term traders taking profits, while long-term value investors might call these lower prices a buying opportunity.


“Technical analysts would call this a test of the support level around $40,000. Neither type of investor would say that tweets are the underlying cause. Investors should invest in education first.


Research the underlying value of Bitcoin, Ethereum, and other crypto-assets as you might look at a company’s information before buying stocks.


Use strategies like rupee cost averaging and SIPs to more confidently maneuver through volatility and take a long-term view,” Shekhar added.


Nithin Kamath, founder, and CEO at Zerodha said he has no exposure to cryptocurrencies, “But the rules for investing are the same: Reduce percentage exposure if the risk is high, and do not average down.”


According to Sumit Gupta, founder and CEO—CoinDCX, investments in cryptocurrencies too should be driven by financial situation and goals.


For those looking to diversify and grow their portfolio, Gupta believes that a long-term approach is warranted to benefit from the potential rewards of blockchain technology and its positive impact on cryptocurrency prices.


On the other hand, for immediate goals, he thinks that adopting a short-term approach with a clear risk-reward ratio is beneficial with quicker potential returns.


“Wisdom would point towards thorough research, entry near support levels for the said cryptocurrency and ensure to periodically review holdings while maintaining a strict stop loss based on risk appetite,” Gupta added.


Source:- CNBCTV18


Sovereign Gold Bond (SGB) Scheme 2021-2022

In India, gold has traditionally been used as an instrument of saving along with its use in jewelry for marriages and festive occasions.

 

Over the last few decades, gold coins and bricks are being used as a saving medium. In general most of the gold that is imported into the country was rarely put to use regularly.

 

To take advantage of this habit, the government came out with a novel scheme that would incentivize gold saving as well as prevent the
import of gold.

 

The government decided to launch a Sovereign Gold Bond scheme where instead of purchasing gold in physical form one can do so in electronic form, just like shares.

 

Date of Issue

 

The date of issuances shall be as per the details given in the calendar below:

 

Tranche                         Date of Subscription                           Date of Issuance

2021-22 Series VII      October 25 – 29, 2021                          November 02, 2021

2021-22 Series VIII     November 29- December 03, 2021   December 07, 2021

2021-22 Series IX       January 10-14, 2022                            January 18, 2022

2021-22 Series X        February 28- March 04, 2022             March 08, 2022

 

What is the Gold Bond Scheme?

Sovereign Gold Bonds, hereafter referred to as SGB, are government securities denominated in grams of gold. The Bond is issued by the Reserve Bank of India on behalf of the Government of India.

 

Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. These bonds act as a proxy for holding physical gold.

 

Why are SGB called Bonds?

SGB’s are just like any other bonds as the bearer of the
the instrument is entitled to interest payment.

 

The Bonds bear interest at the rate of 2.50 percent per annum on the amount of initial investment.

 

This interest will be credited semi-annually to the investor’s bank account and the last final interest will be payable on maturity along with the principal. The tenure of each SGB is for eight years.

 

At what price are the SGBs sold?

The nominal value of SGB will be fixed based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Ltd, for the last 3 business days of the week preceding the subscription period.

 

The price of gold for the relevant tranche will be published on the RBI website two days before the issue opens.

 

What are the advantages of SGB over physical gold?

 

  • The risks and costs of storage are eliminated.
  •  
  • The SGB offers a superior alternative to holding gold in physical form.
  •  
  • The bonds are held in the RBI or Demat form books, eliminating the risk of loss of scrip, etc.
  •  
  • SGB is free from issues like making charges and purity in the case of gold in jewelry form.
  •  
  • These bonds carry a sovereign guarantee since they are issued by the government.
  • The SGB can be used as collateral.
  •  
  • The buyer gets paid interest on the money invested, which is not possible when holding physical gold.
  •  

Who all are eligible to invest in SGB?

A resident Indian as defined under the Foreign Exchange Management Act (FEMA), 1999 is eligible to invest in SGB.

 

The set of eligible investors include individuals, HUFs, Trusts, Universities, and charitable institutions.

 

Joint holding and minors are also eligible to invest in SGB. If an individual investor changes his residential status from resident Indian to non-resident he may continue to hold SGB till early redemption/maturity.

 

What are the tax implications of investing in SGBs on both – interest and capital gains?

Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961. 

The capital gains tax arising on redemption of SGB to an individual has been exempted.


The indexation benefits will be provided to long terms capital gains arising to any person on transfer of SGB.

 

Is there a minimum and maximum limit of investment for SGB?

Yes, the SGB is issued in denominations of one gram of gold and multiples thereof.

 

The minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government.

 

Each member of the family can buy 4 kg of SGB in her or her name. In the case of joint holding, the limit applies to the first applicant.

 

Is premature redemption allowed?

While the tenor of the bond is 8 years, early redemption or encashment is allowed after the fifth year from the date of issue on coupon payment dates.

 

The proceeds will be credited to the customer’s bank account provided at the time of applying for the SGB. The SGB investor also has the option of selling the bonds prematurely anytime on stock exchanges.

 

Such sales would attract capital gains tax at the same rate as for physical gold.


Systematic Investment Plan (SIP) | Deeva Ventures Pvt Ltd

Systematic Investment Plan (SIP)

Everyone wants their money to grow to accomplish their financial goals but the risk of losing the hard-earned money has confined people in a “let it be” zone. Money won’t grow sitting idle in your account.


Don’t worry, there is a way to invest your money with low risk and high returns. Confused? It is none other than a Systematic Investment Plan (SIP) in mutual funds.


As a beginner, you need to invest your money in a scheme with low risk and high returns. And SIP in Mutual Funds is the one that can provide you with such comfort.


What is a Systematic Investment Plan (SIP)?

It is a method of investing in mutual funds. A particular amount of money (minimum Rs. 500) is invested every month to mutual funds for the period you want to invest. It involves very low risk and due to this reason, in little time, it has become the top preference of newbie investors.


Reasons to invest through SIP:

Diversified Investments- Investing through SIP in mutual funds offers you an advantage to invest in different assets. It reduces the risk and gives you higher returns. As a newbie, you don’t want to lose money in the first go.


Therefore, Investing in SIP does not only give you risk-free returns but also provides a diversified portfolio.


Compounding Effect:

 SIP in mutual funds is much more profitable due to the compounding effect. Compounding effect means the returns on reinvestment. The returns you get from your investment, those returns are reinvested and this way, you get returns more than you estimated.


Rupee Cost Averaging:

 This factor plays a big role in fetching maximum returns. Due to fixed regular investment, it averages the amount of one unit.


When the market goes up, you buy less; when the market goes down, you buy more. It is also one of the things intelligent investors do and Guess what? You don’t even have to engage with daily market updates. It all happens itself.


Conclusion:

Risk follows investment; they said. Lower risk can give you higher returns; they never said.


Investing in SIP is easy. You don’t need to take daily market updates to invest. Start your SIP once and enjoy stress-free high returns.


Loan Against Security | Deeva Ventures Pvt Ltd

Loan Against Security

 One cannot predict when monetary crises may arise and it is advised to invest in different types of financial portfolios. There are numerous avenues from where one can raise capital and its selection has to be based on need and urgency. 


Here is an option to avail quick loan that requires less processing time and offers faster dispersal of capital.


In a scenario, where the requirement is of small capital and on an immediate basis, one can avail quick loans against shares, debentures, and bonds. 


A number of banks and NBFCs grant advances against the security of shares, debentures, or bonds to individuals subject to the fulfillment of prescribed conditions.


Loans against shares and debentures can be given to individuals:


  • For meeting contingencies and needs of personal nature.

  • For subscribing to rights or new issue of shares/debentures against the security of existing shares/debentures.


Loan Amount Offered:

The loan amount against the security of shares, debentures, and bonds does not exceed the limit of Rs 10 lakh per individual if the securities are held in physical form. 


However, an individual can avail of a loan of up to Rs 20 lakh if the securities are held in dematerialized/ Demat form.


For subscribing to IPOs, loans given to individuals do not exceed Rs 10 lakh. 


Banks may extend finance to employees for purchasing shares of their own companies under ESOP to the extent of 90% of the purchase price of the shares or Rs 20 lakh, whichever is lower.


Bank’s Loan Policy:


Banks maintain a minimum margin of 50% of the market value of equity shares/ convertible debentures held in physical form. In the case of shares/ convertible debentures held in dematerialized form, a minimum margin of 25% is maintained.


The aforementioned are minimum margin stipulations and there is a possibility that banks may stipulate higher margins for shares whether held in physical form or dematerialized form. 


In addition, the margin requirements for advances against preference shares / non-convertible debentures and bonds are determined by the banks themselves.


As per RBI guidelines, each bank formulates the approval of their Board of Directors regarding Loan Policy for grant of advances to individuals against shares/debentures/bonds. 


Banks obtain a declaration from the borrower indicating the extent of loans availed of by him/her from other banks as input for credit evaluation.


Banks avail the facility of Pledge of the dematerialized 


shares/debentures in the depository system, whereby the securities pledged by the borrower get blocked in favor of the lending bank. 


The loan limit depends on the valuation of the security, applicable margin, and ability to service and repay the loan. 


A loan is normally given in the form of an overdraft facility against the pledge of the securities. Interest has to be paid for the amount and period for which the overdraft facility is utilized.


Furthermore, a declaration is obtained from the borrower indicating the details of the loans/advances availed against shares and other securities, from any other bank, in order to ensure compliance with the ceilings prescribed for the purpose.


Advantages Of Loan Against Securities:


  • Ideal for short-term funding.

  • Enables instant liquidity against shares without selling them.

  • Takes care of all investment as well as personal needs.

  • The tenure of the loan against security is one year, but it can be easily renewed.

  • The rate of interest ranges from 12 – 15%. The rate varies from bank to bank.

  • The processing fee is charged at ~2% of the loan amount.

  • The loan amount depends on the security the borrower is offering.

  • The no charges for prepayment of the loan.

  • The loan has to be repaid within the fixed period. If the borrower fails to make the payment, the lender can file a case for recovery and the balance amount has to be repaid within 3 years from the date of sanction of the loan.

Who Cannot Avail It?

  • To Trusts and Endowments against the security of shares and debentures.

  • For speculative purposes, inter-corporate investments and acquiring a controlling interest in companies.

  • Against the equity shares of the banking company to its directors.

Banks will not extend advances to their employees/ Employee Trusts set up by them for the purpose of purchasing the banks’ own shares under ESOP/ IPO or from the secondary market.


This prohibition will apply irrespective of whether the advances are unsecured or secured.