Monthly Archives: December 2022

Financial Resolutions for 2023 to control spending and save towards the future

As is the norm every year, it is yet again that time of year when I must draw up my new year resolutions. I start my list with the compulsory emphasis on my health and eating right with the right dose of regular exercise thrown in. Though the lure of making money has always been on everyone’s list, never before has it become more fashionable to talk and discuss finance and investments than in recent years.

My New Year resolution list too has this mandatory entry. On the basis of my mixed experiences on my ‘Do It Yourself’ solutions to financial security, I am super excited to draw up my list of New Financial Resolutions for 2023.

1. Responsible Investing: In the last few years, we have all heard about people discussing the best investment scheme that helped someone become wealthy. We have heard about quick fix solutions that would help us create wealth. Armed with knowledge gained from my best friend: ‘The internet’, I took to investing in the newer and fancier investment products that I understood very little but was certainly enchanted. Crypto currency, P2P lending, Futures & Options and many more; all came highly recommended as the shortest way to create wealth. They sure did come recommended but they also came with their inherent risk. As I lost money, I gained experience and lessons were learnt. In 2023 I resolve to be more responsible towards my money while investing.

2. Not all that Glitters is Gold: As everyone around me made money in the stock markets after the economy opened post Covid era, it felt natural to pull out from my other investments even at the cost of throwing my carefully planned asset allocation for a toss and joining the bandwagon. What followed was a slew of purchases based on ‘hot tips’ and NFO’s and IPO’s. The euphoria soon dissipated as these ‘hot tips’ got cold feet and many of the so-called ‘golden IPO’s” failed to make a dent on their listings. In 2023, I resolve to be more careful while I select my investments and not go by hot tips.

3. Winners take it All: While the indices in India made new heights, my stocks had a mind of their own as they continued to behave stubbornly like a belligerent child and refused to budge north. Call me a loyalist or someone who believes in long term relationships but I certainly had great faith in them (after all they had been purchased on hot tips by my more successful investor friend). My money remained blocked in these while I missed on valuable opportunities to use it to its full potential. In 2023, I resolve to sell my loser investments whose intrinsic value is unlikely to ever recover!

4. Bad news should not necessarily translate into staying away from stock markets: TheRussia-Ukraine war followed by high global inflation pushed many world economies to the brink of recession. As is usual in such circumstances, pessimism ruled the roost. Even while the world took steps to circumvent, the general consensus all of last year has been that we are heading for massive corrections. The Indian markets, however, seemed immune as they factored in these blips and continued their journey upwards. I booked profits and worse still stayed out of markets preferring the staid Fixed Deposits and sticking to cash. I kept waiting on the sidelines for the right time while the markets continued to make newer highs. In 2023, I resolve to not time the market but rather invest in a disciplined and staggered manner.

5. Future Perfect: “If you save after you spend you will be left with nothing to save at all.” So implied the Investment Guru; Mr. Warren Buffet. Post Covid, many of us took to random and luxurious purchases in the form of cars, laptops, eating out at fancy places and expensive vacations. This was a natural fall out of more than a year spent in captivity at home due to Covid restrictions. As spendings became more extravagant, our savings became thriftier. Each time I skipped a few investment months, my savings for the future got set back by a few years! In 2023, I resolve to be more in control of my spending and committed to save towards my future.

It is said that resolutions are made to be broken and possibly I will too! However, lessons learnt from mistakes serve as beacons for future prudence. Well begun is half done and I feel quite satisfied with my list of resolutions. As I put down my pen, I am confident that I have taken the first step towards smarter financial decisions! Have you?

Source: Financialexpress

Time Is Always Right For Goal-Based Investing

The author of The Chronicles of Narnia famously said, “You are never too old to set another goal or to dream a new dream.” And this is true for everyone, both old and young. All of us have goals in life, and they range from short-term to very long-term. For instance, you may want to purchase the latest iPhone in the market – that is a short-term goal you may wish to accomplish over the next month or so. You may also want to retire at 45 and travel the world for the next five years. Based on your current age, this could be a medium or long-term goal. Others may want to purchase a car, or start farming or learn a new hobby – there is no limitation on the number of goals or dreams you can have. However, there is one thing that every goal requires – adequate time and surplus funding to help realise it. Suppose you wish to purchase an iPhone next month, child wedding after 10 years or a retirement monthly cash flow 20 years down the line. What is the one thing in common here? You need money to make this happen. And, in your investment journey towards realising your goals, asset allocation can be your best friend.

Setting your goals

Whichever phase of your life you may be in, you need to have a clear understanding of your goals, as well as the time frame you wish to achieve them in as per the time frame, the goals are classified as important or urgent. if you wish to purchase a house 10 years down the line, just thinking about the goal will not lead to its fruition. You also need to figure out how to accomplish that goal. You may plan to take a home loan, but you still have to put up a certain amount of corpus to qualify for the loan. This is where goal setting comes into play.

Asset allocation to the rescue

Asset allocation involves the practice of diversifying your portfolio in an attempt to secure the highest possible returns, at the lowest possible risk. Based on your investor profile, and the time frame for achieving your goals, you can allocate your corpus to a variety of assets. Suppose you wish to have a corpus of 1.50 crore (current value 75 lakh) rupees to purchase a house after 10 years. You can start working towards this goal by creating an investment portfolio featuring a mix of equity, debt, and other assets, in line with your risk appetite.

If you are young and do not mind facing higher risk in the quest for higher returns, you can allocate a larger portion of your portfolio to equities, and leave a small portion in the comparatively safer debt category. Alternatively, if you are saving and investing for a short-term goal, it is better to stick to debt funds, since these keep your money safe while offering stable returns. An important aspect to remember here is that, the closer you get to your goals, lower should be your portfolio risk. This is because the equity market is known for its volatility, and you may end up facing major losses in an unfavourable situation. With the goal nearby, you may not have enough time to recoup your losses. For instance, if you are 25 years old, and want to create a corpus of one crore over the next 10 years, you can allocate a larger part of your portfolio to equities. As you near the completion of the goal, you can shift your corpus from equity to debt funds or from more aggressive equity lesser aggressive equity , to keep it secure. This routine rebalancing is the key for Financial freedom journey as there can be change of goals with amount with time frame.

Selecting the optimal schemes

Based on your goals, and the time frame, you can choose from a wide variety of schemes, including equity, debt and hybrid funds. To zero in on the scheme most suitable for your needs, you must assess your personal attributes, risk appetite, return expectation and the time frame for realising the goal. As a means to make it easier for the investor, there are solution based schemes like multi-asset or balanced advantage category scheme that an investor can opt for. Here, the fund manager, depending on the relative attractiveness of the various asset classes, the fund manager will do the needful in terms of rebalancing. As a result, an investor need not worry about rebalancing.

To conclude, investors can make use of a variety of mutual funds to meet their financial goals. In this journey, with optimal asset allocation, you can ensure that nothing ever comes in the way of achieving your goals.

Source: Outlookmoney

Importance of declaration in marine insurance

Marine insurance is a type of insurance that protects against losses and damages associated with the maritime industry. This includes insuring ships, cargo, and other assets against risks such as accidents, theft, piracy, and natural disasters.

In India, the marine insurance market is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI has issued guidelines on the types of insurance products that can be offered in the market, and also monitors compliance with these guidelines to ensure the integrity of the market.

Marine insurance policies in India can be divided into two main categories: hull insurance and cargo insurance.

Hull insurance provides coverage for the vessel itself, including its machinery, equipment, and any other property on board. This type of insurance is typically required by law and is necessary to protect the vessel and its owners against financial losses due to accidents, damage, or other unforeseen events.

Cargo insurance, on the other hand, provides coverage for the goods being transported by the vessel. This type of insurance protects the insured party against losses or damages to the cargo due to accidents, natural disasters, or other unforeseen events.

This is basically an open policy of 12 months duration and such policies are issued to Concerns having estimated annual turnover of Rs 2 crores or above. All transits upto the sum insured are covered without any exception and total value of goods in transit are required to be declared atleast once in a quarter in the form of a certified statement. Period of insurance for this policy is one year.

This Insurance covers

All Risks subject to Inland Transit ( Rail or Road) Clause –A

Inland transit ( Rail or Road) Clause (B) ( Basic Cover)

The policy may be extended to cover SRCC, subject to payment of additional premium.

The policy is not assignable or transferable. However where the interest in respect of goods in transit has passed on to the consignee, claims, if any, may be settled with such consignee, if so requested by the assured.

The sum insured under the policy shall be on the basis previous year’s annual turnover. In case of fresh proposal, the sum insured shall represent a fair estimate of annual dispatches. If the estimated annual turnover during the year is found to be inadequate due to increase in the Assured’s turnover, not envisaged at the inception of the policy, an increase in the Sum insured may be allowed on payment of the difference in premium involved. Such midterm increase should not be more than twice during the currency of the policy. Midterm increase in Sum insured may be allowed twice only during the currency of the policy. Final premium will be adjusted (downward only) on the basis of actual turnover of goods covered.