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What is Commercial General Liability Insurance in India?


A Commercial General Liability (CGL) insurance policy is designed to protect businesses against any legal liability that involves paying compensation for damage or injuries incurred by a third party from your routine business operations. This unique policy offers financial protection to the companies against Public Liability and Product Liability claims. It is required for all the companies that involve manufacturing and developing of software and physical products for its clients and customers.


CGL also protects the policyholder against any monetary loss resulting from legal matters in case of death, bodily injuries, property damage, and personal injuries caused due to your business operations within your premises. For instance, it includes a Fell, Trip, or Slip claim filed by a client who sustained injuries on your business premises and by falling/ tripping/slipping.


It is important to keep your premises in good shape and manufacture good quality products that are safe to use and consume. The major concerns are the security and safety of premises and product reliability. The laws are nowadays stringent to maintain third-party interest and amendments are also being made in this regard that companies need to adhere to.


A general liability insurance policy offers compensation for claims arising due to bodily injuries, and property damages or for which your business is accountable.


This coverage is provided to the Owners of a company, or managing directors, operations heads, etc. who are involved in the business operations. It also covers sellers, manufacturers, and distributors.


CGL policy is extendible to both industrial activities like construction, manufacturing, and non-industrial activities like offices, multiplexes, and hotels.


Understanding Comprehensive Commercial General Liability Insurance


Comprehensive General Liability Insurance (CGL) is a combination of Product Liability and Public Liability. It provides full protection against third-party liabilities. Public liability covers third parties’ legal procedures for loss or damage incurred within the insured premises. Product liability offers protection against damages caused by the products that your company manufactures.


Basically, it is designed to recompense all the liabilities on behalf of the insured member. The insurance company shall pay off for third-party liabilities/ accidental death/ bodily injuries resulting due to:


  • • You can get compensation for an accident that took place in the insured premises or any other premises where you run your business operations


  • • It will also cover the operations, product, and premises hazards


  • • Medical expenses of the injured third-party as part of the public liability insurance cover


  • • You can opt for additional covers by paying an additional amount of premium



Why Should You Buy Comprehensive General Liability Insurance?


It is imperative to have to buy commercial general liability insurance for anyone whose:


  • • Business involves interaction with third-party sites


  • • Business involves person-to-person interaction with the vendors, clients, and customers


  • • Businesses that are based on contracts between two parties


  • • Businesses that represent  their client’s business in any form


Some of the Hazards That May Lead to Financial Liability on a Company are as follows:


1. Third-party Property Damage/Bodily Injuries


If any injury is caused to a third person due to falling, slipping, or getting electrocuted then you might be held responsible for the same. A Commercial General Liability (CGL) insurance policy will bear the cost of medical expenses on our behalf. And if the injuries lead to the death of a third person then compensation will be provided as per the court of law.



It also compensates for third-party property expenses such as replacement, repair, and renovation costs if any damage is caused to a third-party laptop, phone, or any other belongings ( apart from your employees).  It would also involve paying for the renovation of other building that is damaged due to an accidental fire on your premises.



2. Advertising Infringement


 A CGL policy will be of great help in case you indulge in intentional or unintentional copyright infringement of some other brand or product’s tagline or logo. This may include slander and libel for indirectly causing harm to a third party’s reputation. In such cases, the insurer shall compensate the settlement expenses, and legal expenses and will protect your business from closing down.


3. Product Quality Issues


It is always a priority for most manufacturers. And any claim is filed by a customer or client for the harm that is caused by using your product can land you in deep trouble. A CGL policy will protect your business from any such minor ignorance as well.


4. Invasion of Privacy


This involves intentional and unintentional invasion of a third party’s privacy. For instance, if a celebrity is using your product and you commit the mistake of endorsing it without permission then also you would need commercial general liability insurance coverage. For claims arising due to the invasion of privacy, the insurer shall help you out with the out-of-the-court and legal settlement costs.



Additional Coverage is also provided on Payment of Additional Premium:


Depending on your requirements you can opt for:


  • • Extension for the Act of God Perils


  • • Extension for Accidental and Sudden Pollution


  • • Lift, Escalator, and Elevator Liability Extension


  • • Transportation Liability cover


  • • Food and Beverages Liability Extension


  • • Fire Damage Cover


  • • Extension for Medical Expenses Cover


  • • Advertising and Personal Injury extension


  • • Limited Vendors Liability Cover


Why is it recommended to Have a Commercial General Liability Insurance Cover?



With CGL insurance, you can ensure seamless business operations and enjoy your peace of mind. And even a small disruption would mean a huge financial loss. So, here’s why you should have commercial general liability insurance coverage if you own a business:


  • • You don’t need to worry about third-party claims involving agitation, segregation, and discrimination


  • • The insurer pays off medical expenses for claims arising due to mental injuries, physical injuries, humiliation, and shock


  • • It would also reimburse advertising infringements such as trademark breaches etc.


You can easily buy commercial general liability insurance online. There are top insurance companies in India that offer CGL cover to a variety of business groups.



It is Quite Easy to Lodge Claim for Comprehensive General Liability Insurance Plans


So, the process is quick and hassle-free. All you need to do is furnish the required details, proofs, and documents along with a duly signed and filled claim form. The process may vary from one insurance provider to another and to check the details you can refer to your insurance company or refer to the policy documents.


Listed above are the features, benefits, and coverage under a commercial general liability insurance policy. But here’s a quick rundown of the limitations that follow:


Your claim would not be accepted under the following situations. However, this may also vary from one insurer to another:


  • • Any kind of deliberate attempt or intentional Injuries caused to a third party including clients, vendors, and customers are not covered


  • • Usually, compensation is not provided for damages resulting due to the pollution


  • • Contractual liabilities are not covered ( you can buy this as an add-on)


  • • Work and employee-related perils would not draw any compensation


  • • Claims lodged for war-related damages and injuries are not covered by any policy


  • • Criminal acts and dishonest claims would also not draw any compensation in a commercial general liability insurance policy


You must have understood by now that purchasing a general liability insurance policy is a smart and wise decision for all business owners. And before you zero down on a policy, it is suggested that you compare the plans first, do your preliminary research and get a policy that covers all the major concerns.


Source: Policy Bazaar

Chasing Returns vs. Wealth Creation

  • Creating Wealth from your investments is all about return maximization, right? Wrong! It may surprise you to know that your pernicious little habit of always trying to maximize portfolio returns may in fact be what is impeding your ability to generate long-term wealth. Here’s are four reasons why.

  • You’ll end up Churning & Burning
  • The most direct and visible side-effect of perennial return-chasing is excessive churn. You’ll forever be moving in and out of investments; chasing the next hot tip or trying to invest in the “next big thing”. Resultantly, you’ll never stay in an asset class long enough for its cycle to really play out to your advantage. Remember, financial markets seldom dance in tandem with economic cycles. By constantly re-jigging your portfolio with the flavour of the month or trying to trade the news, you’ll probably miss out on the best investment periods altogether. Over time, you’ll be left wondering why you worked so hard to earn lower than fixed-deposit returns!

  • Your Behaviour Gap will be as wide as the Grand Canyon

  • It’s a well know fact that return chasing encourages short-term thinking, which in turn triggers a host of biases that create a wide behavioural gap in your long-term returns. Ironically, the very act of chasing returns is what ends up reducing your long-term portfolio growth the most. Every time your investments slip into the red, the loss aversion bias gets you all riled up. When markets turn volatile, the action bias comes to the fore and forces you to “do something” with your portfolio. You keep starting and stopping your SIP’s instead of letting them flow passively. You’re forever trying to time the markets. As a result, you neither benefit from compounding nor rupee cost averaging, negating all chances of creating wealth from your investments.

  • You’ll usually end up catching the Bull by its Tail
  • It goes without saying that return-chasers are not forward looking. In fact, they invest for the future with their eyes fixed on the rear-view mirror – as dangerous an investment habit as any. As a result of this tendency, return chasers tend to be overtly enamoured by short term past returns, and end up investing into assets that have already gone up in price. When GILT funds rallied spectacularly in 2008, return chasers jump right in; only to earn a negative 10% return in the next year. When small and midcaps rallied in 2017, they lined up to invest in 2018 just before the spectacular fall. Gold just crossed Rs. 50,000? Bring it on, baby! Wealth Creation actually entails taking the exact opposite stance – that is, going against the grain and investing in an asset that is nearing the end of a bad cycle (ergo, often reflecting poor short to medium-term returns) basis their future outlook.

  • You’ll probably be flying blind
  • In his inimitably comical style, the record-breaking Baseball star Yogi Berra once said: “If you don’t know where you are going, you might end up someplace else”. This rings especially true for return chasers, as they seldom invest with a solid Financial Plan in place. Without the tether of future Financial Goals to keep them in check, return chasers usually take investment decisions in an indisciplined and ad hoc manner, without a cool and rational mind. They tend to be mercurial and erratic, and their investments may not even be aligned correctly to their time horizons. As a result, they rarely create wealth from their investments – and often wind up an embittered lot, having had poor initial experiences with volatile growth assets that actually afford them a shot at generating long term growth.

Source: Finedge

Why you should diversify your portfolio

  • Diversification is a time-tested technique to reduce risk in investments. One would have heard the phrase “Don’t put all of your eggs in one basket.” In the financial world, that maxim is the quintessence of diversification. In simpler terms, diversification is the act of spreading the investments across a range of asset baskets to reduce investment risks.
  • Diversification not only reduces the overall risks but also tries to maximize returns over long time. This is because all assets behave differently over differently tenures. By having elements of different investment classes in the portfolio — be it Equity, Fixed Income, Real Estate, Gold, or other Commodities, a diversified portfolio tends to earn above-average long-term returns.

  • The need to diversify a portfolio is accentuated by a variety of reasons – and not limited to the economic environment and the macro or micro business factors. Portfolio diversification is a methodical process. Thus, a mindless diversification serves no purpose. The net effect of diversification should result in steady performance and smoother returns – never moving up or down too quickly – the reduced volatility putting investors at ease.

  • Main asset classes
  • The main asset classes in diversification include Equity, Fixed Income, Real estate and Alternative Investments.

  • A smart approach for individual investors is to diversify using Mutual funds. Mutual funds are high quality investment options which are highly transparent and cost-efficient alternatives. Given the wide availability of options in Mutual fund space one can entirely build one’s portfolio only by using MF’s.

  • Different assets such as bonds and stocks, generally tend to have a negative correlation. Hence, a combination of asset classes is ideal for diversification benefits. A diversified portfolio across both the areas is better as unpleasant movements in one is likely to be offset by results in another.

  • While investments in Fixed Income could tend to reduce a portfolio’s overall returns, it could also lessen the overall risk profile and volatility. One can also venture into having some exposures into Gold as it provides a good hedge against USD depreciation.

  • Different sectors
  • Secondly, it is vital to diversify the portfolio into different sectors. This will minimize the exposure to a single economic shock and improve their flexibility to rebalance the portfolio. Diversification by industry and size is also useful for an investor looking to limit their exposure to a certain industry. It could be cyclical (financial services, real estate), defensive (healthcare, utilities) or sensitive (energy, industrials).

  • You will never yield the benefits of diversification by stuffing the portfolio with concentrated exposures in companies from one industry or market. Investments in different markets across the globe reduces the risks of unpredictable natural disasters or an adverse change in the political environment in a particular market severely impacting the portfolio.

  • It is important to note that the more uncorrelated the investments, the better it is. That way, they weather the market differently. The companies within an industry have similar risks, so a portfolio needs a broad swath of industries. To reduce company-specific risk, portfolios should vary by industry, size, and geography.

  • Diversification may help an investor manage risk and reduce the volatility of an asset’s price movements. Remember though, that no matter how diversified your portfolio is, the risk can never be eliminated completely. In an uncertain environment, volatile market and shortened economic cycles, it is essential to have your portfolio invested across different asset classes. Most importantly, it is recommended to take professional help in creating a portfolio. The investment professional can guide on how to systematically diversify the portfolio and look at long-term returns and mitigating the risks – both in the short-term and the long-term. The professional help can guide you to determine what level of risk is acceptable to you, and tailor your portfolio to meet that tolerance.
  • Ultimately, what matters is whether you want liquidity, or if you are willing to wait it out in the long term. This will affect how your investments should be structured. Also, the risk tolerance, the investment goals and financial means of every investor is different. That plays a huge role in dictating the investments mix. Lastly, evidence-based strategies using logic and knowledge rather than emotion usually do well.

  • As mentioned earlier, diversification does not work the same way with every asset class across every industry in every market. Still, it is an important tool to improve risk-adjusted returns over the long haul.

Source: Financial express

All That You Need To Know About Commercial Insurance

  • Commercial insurance or business insurance is a type of insurance that covers risks related to any business. There are various kinds of insurance policies available in the market to help different businesses get financial coverage for various business risks. It could be insurance for a shop, mall, factory, warehouse or a vehicle.
  • What is Commercial Insurance?
  • Commercial insurance offers protection to businesses from any unforeseen issues. Some of the most common insurance policies are shopkeepers’ insurance, warehouse insurance, transit insurance, product and public liability insurance, employee liability insurance, marine insurance, property insurance and many more. These policies provide a safety net to business owners in case of any problem.
  • Types of Commercial Insurance
  • Let us look at some of the types of commercial insurance available in India that can help minimise and handle various risks related to businesses.
  • 1. Shopkeepers’ Insurance: Shopkeepers’ insurance policy is an ideal choice for retail shopkeepers dealing in grocery, apparels, small restaurants, sweet shop, etc. The comprehensive policy covers all the risks and contingencies faced by small or mid-sized shop owners. It covers the losses related to following issues:
  • • Fire & Allied Perils
  • • Burglary and housebreaking
  • • Machinery breakdown
  • • Personal accident
  • 2. Transit Insurance: When valuable business goods are transported from one location to another, for example, from supplier’s factory to the retail outlet, you should consider transit insurance to cover any loss due to damage or loss of the consignment. The responsibility of taking the transit insurance policy must be determined in the sales contract, and the insurance must be taken well before goods leave the supplier’s premises. Transit insurance only applies to the goods transported over land. Following are the goods which are covered under transit insurance:
  • • Packaging material
  • • Manufactured goods
  • • Raw materials
  • 3. Commercial Vehicle Insurance: Vehicle owners who are in the business of transporting passengers or goods must take commercial vehicle insurance that covers the commercial vehicle against various types of external damage. Some of the important features of commercial vehicle insurance are:
  • • Death or bodily injury caused by the use of the vehicle
  • • Any damage to the property because of the use of the vehicle
  • 4. Liability Insurance: This policy offers protection to businesses and individuals from risk that they may be held legally and liable for, especially in the case of hospitals and business owners. For example, a factory owner may face a liability claim from the employees who gets electrocuted inside the factory. The employee liability insurance may help in such a situation and handle the treatment costs along with legal costs, if any arise.
  • 5. Warehouse Insurance: Businesses in which majority of the functions are dependent and happens in multiple warehouses may consider buying a warehouse insurance. It covers natural calamity, fire and similar unforeseen situations. Moreover, you can get the compensation against human-made hazards like theft and burglary.
  • 6. Marine Insurance: When goods are shipped to international destinations through the sea, it undergoes several changeovers. It travels by rail, road, water and perhaps airways as well. It also changes many hands before it reaches the final destination. The shipowners take Hull and Machinery insurance to protect the ship’s basic structure and machinery. The cargo owners take marine cargo insurance to protect the consignment under transit. The marine policy may cover specific time-frame or the voyage or both. Make sure to strike the correct balance between adequate coverage and reasonable insurance premium to avail optimum coverage for your cargo.
  • 7. Office Package Insurance: This type of insurance protects one’s office and everything under the roof, including the infrastructure. It offers protection to the office premises, in case of any damage due to fire, theft, burglary, earthquake, etc. It also provides personal accident coverage. One should understand all the points that are included and excluded in the policy. For instance, the policy does not cover any problem arising due to illegal activity or war-like situation.
  • Coverage under Commercial Insurance
  • Various types of commercial insurance offer coverage for various cases and situations. Let us understand some types of coverage provided by various insurance companies.

    • Home insurance covers the house and the content inside the structure
    • Group health insurance covers medical expenses during hospitalisation
    • Liability insurance covers costs of lawsuits and other damage to person or property due to your business, profession or vehicle
    • Transit insurance offers coverage for loss or damage to any cargo during transportation

The above mentioned list is not limited to these points. The complete list is available on the official website of various insurance companies


Claim Process


In case of any unforeseen damage, you need to immediately inform the insurance company about the eventuality through its 24/7 insurance helpline. You should be aware of the claim process and follow it properly in order to avoid any claim rejections. However, the claim process and the documents required vary for different insurance companies and plans. Here is a basic understanding of how to go about the claim process.

• Inform the insurance company, if you need to make the claim

  • • Provide the details like policy number and other documents, including duly filled in claim form
  • • Provide the witnesses, proofs, FIR copy, medical reports, etc., as per the requirement of the type of your insurance plan
  • • On receiving the documents, a surveyor from the insurance company will verify all the details
  • • If accepted, the claim is processed within the stipulated time, else it might be rejected

  • Exclusions under Commercial Insurance

While offering coverage, insurance companies do not include all cases and situations. The damage and loss that are not covered by the insurance firms are called exclusions. There are different sets of exclusions for different insurance types and plans. The list mentioned here does not include all the exclusions. To know them in detail, please visit the official website of that particular insurance provider.
• For any insurance policy, any regular wear and tear or wilful negligence is not covered
• Any loss due to war or war like perils is not covered
Companies Offering Commercial Insurance Plans in India
With more awareness, an increasing number of people are now considering buying various types of commercial insurance for their business needs and requirements. Some of the companies selling different types are:
• New India Assurance
• Bajaj Allianz
• Bharti AXA
• United India Insurance
• ICICI Lombard
Important Aspects
Not all insurance companies provide all kinds of insurance policies and the coverage varies from company to company. According to your need, make sure to examine all terms and conditions of the insurance policy that suits your specific business needs. Some of the points to be considered are:
• Make sure not to underestimate the valuation of the property under insurance. You may save a few hundred rupees but may land up in huge losses in case of an unfortunate event
• Make a complete declaration of the nature of your business, your perceived risk and probable causes of loses. The insurance company may reject your claim, if significant information is not disclosed or misrepresented while taking the policy
• Avoid exaggerated or false claims, as it can result in denial of the insurance. The serious misleading claims are considered fraud, and the insurance company may file police complaints against such an act
Advantages of Commercial Insurance
To safeguard your business and property from any unseen circumstances and to handle the associated financial risks, it makes sense to opt for commercial insurance. Some of the advantages are:
• If you are running a company or owning an office, you would need insurance to protect your premises and employees. For this, you can select the appropriate type of commercial insurance for yourself. This protects you from all possible financial risks
• In case your business deals with commercial vehicles, you cannot ignore commercial vehicle insurance. This gives you a chance to manage the heavy costs incurred in case of any accident or eventualities
• In case your profession or business happens to deal with clients or third party, a liability insurance under commercial insurance is a must in order to manage the losses and any costs for legal issues

Source: Paisabazaar

Is it a good time to invest in equity?

  • We don’t invest thoughtfully in equity because we try to follow the mantra “buy low, sell high” and fail to do it. It is seen that when markets hit rock bottom, most investors focus on exiting their investments to preserve their capital rather than trying to take advantage of lower prices and deploying additional capital. Or they do not think long term and put off their investment.
  • The common reasons investors give when they wish to avoid or postpone their investment are…
  • “It’s too late!”
  • Or “It’s not a good time.”
  • Or “Why should I invest now?”
  • Or “When should I invest in Mutual funds?”
  • Or “What is the best time to invest in mutual funds?”
  • If you too are giving these reasons when it comes to investing, then you are making a big mistake. Remember, you should not delay investing; start your investment journey right away! The best time to start your investment journey, if you haven’t already started, is ‘Today’!
  • Here are a few tips to help you begin your investment journey.

1. Do Not Delay, It Can Cost You 
When we stall or avoid investing, we are simply delaying or completely evading successful wealth creation. Delay in investing reduces the power of compounding as the investment term decreases.
To understand better, let us see the amount three friends – Ajay, Vijay and Ram – would get at the end of their investment tenure. If Ajay starts investing INR 2,000 per month at the age of 25, for his retirement at age 60, and two of his friends, Vijay and Ram, begin investing 5 and 15 years later, respectively, then the future values of each will be different.
It is seen in Table 1 that the future value reduces with the reduction in the investment term (subtract the age of the person from the retirement age).

Table 1: Effect of delayed investment
Even though they have all earned the same rate of returns per annum on their investment, Ajay who started investing early will have the biggest corpus by far at the time of retirement. Therefore, starting the investment journey early is a boon, if you want to build a huge corpus for your financial goals.
In fact, let us assume that even though Vijay delays his investment by five years, he invests an additional sum of INR 1.20 lakh per annum to catch up with Ajay, and Ram invests INR 3.60 lakh per annum to catch up with both. Even then, the corpus will be INR 1.11 cr for Vijay and INR 99.05 lakh for Ram, which is less compared to Ajay’s future value. The difference is nothing but the cost of delay.
2. Choose the Right Asset to Deal with Volatility and Risk
Choosing the right asset is important as it will help in growing wealth for you. Equity as an asset class can help you grow your wealth manifold but along with higher returns comes its volatile nature, which investors tend to confuse with risk.
Volatility reduces over a period of time but risk may not. Risk is about choosing the right product. For example, if you chose a company with bad management, it could be a risk; irrespective of how the market moves, the price of the share may never appreciate.
The stock of Kingfisher Airlines is a perfect example (graph 1). The stock in 2006 was at INR 76, and later in 2007 it reached its peak of nearly INR 300+ only to fall drastically and never recover. In the end, an investor would have lost all his money because the stock was delisted. This is a classic example of a risky proposition which resulted in a permanent loss; but it was not volatility.

Graph 1: Price movement of Kingfisher Airlines
Now, if instead you choose a company with good management, the price may be stagnant and may not move for a really long period of time, but eventually it will deliver results. Choosing a management is risk and the price movement is about volatility. Volatility is a market related phenomenon and risk is more intrinsic.
For example, the price of Reliance Industries remained within the range of INR 400 to INR 500 from 2010 till January 2017. Later, the stock rallied and has kept its momentum (as seen in graph 2). The stock price moved from INR 544 in February 2017 to INR 2,370.25 in December 2021.

Graph 2: Price movement of Reliance Industries
When you choose equity mutual funds you are investing in a basket of multiple stocks of various companies. This diversification prevents you from larger losses when the market gets tepid. So while you still have to deal with volatility, the risk factor is reduced. This is one of the primary reasons that mutual funds are an ‘all season’ investment plan.
Equity markets by nature will be volatile. It is a given. In the short term the volatility will be more and as the time horizon increases, volatility reduces.
The best way to understand volatility is to look at rolling returns. In the table 2 given below the maximum and minimum rolling returns over 20-year periods have been taken.
What this means is that if you had invested on any day during this period and held the investment for one year, your minimum return was -51.70% and maximum return was 97.32%. As the time period increases the difference between the two becomes less. In the third year, the minimum returns are negative still, but the gap between the negative and positive maximum returns reduces.
Further, in the 5th year, the minimum returns have turned positive along with maximum returns and the difference between the two has decreased further. Lastly, in the 10th year, the difference between the minimum and maximum returns narrows and both are positive. So, if an investment was held for 10 years, an investor never made a loss and the minimum return made was 6.38% and the maximum was 22.08%. In reality, the investor’s actual return would be somewhere in between.

Table 2: Volatility range
 So, to grow wealth by investing in equity mutual funds, you should think long term as the volatility tapers and only the minimal market risk remains.

3. Invest Regularly and Diligently
While investing in equity mutual funds, do it via systematic investment plans (SIPs) as you are reducing the risk factor further by investing a fixed amount at regular intervals, irrespective of prevalent market conditions. This is because when markets are down, you get more units and when markets are up you buy fewer units.
For example, if you are investing INR 10,000 monthly in a SIP and assuming that the Sensex drops by 5% every month for the next 6 months and then it rises 5% every month for the remaining six months, at the end of the year, the amount you receive is INR 1,45,971 on an investment of INR 1.20 lakh even though you saw a rise of 30% and then a drop of 30% in the markets.
If you observe, you started with an NAV of INR 10 and at the end it was again back to around INR 10 after a year (refer table 3 below).
The Sensex is just a reference point to show market movements.

Table 3: Rupee Cost Averaging benefit illustration:

So, SIP investing in an equity mutual fund, irrespective of market movements, is an extremely helpful tool in the hands of the investor.


4. Be Patient and Disciplined
The road to wealth generation requires patience and discipline, just as Rome was not built in a day. Over a short term period, the market is very volatile and the returns generated are in a broader range. But over the longer time period, market volatility subsides and the returns are within a narrow range.
For example, look at the performance chart given below of a large cap fund vis a vis the S&P BSE Sensex over 15 years. You can see that despite the sharp falls in the years 2008-2009 (Lehmann crisis), 2015-2016 (post-election) and March 2020 (COVID crisis) in the graph 3, the fund has done well and outperformed the S&P BSE Sensex.
If an investor had invested INR 10,000 in HDFC Top 100 Fund in Jan 2006, when the Sensex was up in December 2007, the value reached INR 19,451. Later when there was a market fall between 2008 and 2009, the value crashed back to 10,602 (March 2009). However, if the investor continued to stay invested, the value was at INR 55,202 in Jan 2018.
Now if the investor had been patient, for a span of 12 years, the value increased nearly 5x, but in March 2020, the value dropped to INR 39,495 consequent to the Covid scare. However, if the investor continued to hold on, the value as on date would be INR 77,516.
This shows that when you invest in equity, being patient helps you grow wealth.

Graph 3: Long-term growth despite short term volatility
 Values taken to the base of INR 10,000
When you invest in equity mutual funds you don’t have to worry about the stock selection process. Instead, you should focus on your goal and continue investing systematically, without giving in to market turbulence related panic.
There are roughly 250 trading days a year, making it 2500 days for a decade. A large portion of a stock’s return in a decade happens in 50 to 60 trading days. This means that what happens in 2% of the days, decides your decadal returns.
Even market guru Warren Buffet, advocates that, “Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things take time: You can’t produce a baby in one month by getting nine women pregnant.”
Therefore, when you invest in equity mutual funds, be patient, show perseverance, diligence and let your funds grow, without timing the market. Time in the market is of essence.

Bottom Line
We earn monthly and we spend monthly; so why shouldn’t we cultivate the habit of investing on a monthly basis? Treat an investment journey as a marathon not a sprint. So think long term, and equity mutual funds are an ideal product to create long term wealth if you follow two mantras for investment: the best time to invest is now and the best way to invest is regularly, in other words every month.

Source: Forbes

How to plan your finances for the New Year 2022

As we inch closer to the new year, forming resolutions becomes imperative in order to set goals for the forthcoming year. Setting a budget, getting finances in check and carefully analysing your savings and investments comprise a key part of the financial aspect of resolutions. However, there are multiple other factors that are kept in mind while making that decision. There are multiple methods and practices along with financial tools that one can use to plan finances carefully and ensure a level of financial wellness.


The Guide to Financial Planning this New Year

December is the time everyone starts setting resolutions for themselves and before the new year arrives, here are a few easy-to-implement ways in which you can plan your finances for the coming year:


Budgeting: The Foundation of Financial Planning

Almost all financial planning depends majorly on having a budget and following it diligently. It is important to analyse past income sources, expenditure, investments and savings to get a clear picture of your financial standing and then plan accordingly how you want to spend, save and invest your future income.

A fixed budget puts a healthy constraint on your expenditure as well as gives you a number that you should ideally aim to save. Adopting the 50-20-30 rule, as mentioned in the famous book All Your Worth: Ultimate Lifetime Money Plan” by Elizabeth Warren, could be a great way to start as it allows you to have a better, more crisp idea of how to spend your money while also saving a particular amount.


Monthly Savings: Your ‘Rainy Day’ Saviour

When setting up a budget, it is imperative that you set an amount aside as savings or “rainy day fund”. A financial resolution that you should strive to include in your list of resolutions is to either save an amount of money every month or have a bigger goal and amount for the end of the month.

A few ways you can save more are by sorting priorities, differentiating between essentials and non-essentials, setting up fixed or recurring deposits with a bank, etc.


Building an Investment Portfolio: Your Retirement Companion

Investments assure present and future financial safety. They enable you to increase your wealth while also generating inflation-beating returns.

After you have a fixed plan for savings, the next important step is to figure out how and where to invest. Investing instills financial discipline by establishing a habit of getting away a specific amount each month or year for your investments.


Expenditure Control

In today’s day and age, when everything is available at your finger steps, people don’t realize how vastly their spending capacity has increased. The use of mobile apps and mobile-based payments have made it easier for consumers to get things done quickly, and that has changed the way a transaction is perceived now in comparison to earlier. Preferring food delivery overcooking, multiple streaming platform subscriptions, etc are now opted more by the millennial generation.

This in turn has given rise to a lot of expenditure that is non-necessary and can be avoided very easily. Expenditure control can help increase savings and allow more assets to be invested, as the more you save, the more you can invest.


Insurance: Your Safety Net

Insurance is essentially a financial safety net that you can rely on in times of distress. It is an extremely important and valuable financial tool. Purchasing insurance is critical because it ensures that you are financially secure in the event of a life crisis, which is why insurance is such a vital aspect of financial planning.

It not only allows financial security but also reduces stress at a later stage in life, especially when things would go south. A prime example of this was the pandemic when an unprecedented crisis struck the world, and it got extremely difficult to manage finances with the increasing costs of medical expenses and aftercare. The peace of mind that insurance provided to people in such a time is also what makes it a widely appreciated policy.


Summing Up

These are the most common ways in which you can plan your finances for the upcoming year. Since these methods are evergreen, they are sure to work perennially and also across the years.

Having said that, it’s important to take these methods seriously, as most people are aware of them but tend to overlook them.

Another critical point to keep in mind is to set realistic goals and aspirations to not overburden yourself and keep things going smoothly.

These are a few ways you can ensure your financial wellness, but it is essential to keep in mind that it is a step-by-step process that you need to take one day at a time.



Be Your Own Santa This Christmas With These Financial Gifts

Christmas is upon us, and it is that time of the year when we eagerly look forward to giving and receiving secret Santa gifts. However, what if this Christmas is a little different from the rest, and instead of expecting gifts, you present yourself some. And, what if they are financial ones that can help you going forward?

Read on to know the multiple financial Christmas gift ideas to help you secure your future and augment your riches. Let’s get started.


Mutual Fund Investment

Mutual funds need no introduction. They are one of the most potent financial tools to help you accumulate a corpus for different life goals – short and long term. Thanks to rising financial literacy and innovative campaigns such as Mutual Funds Sahi Hain, they have become quite popular among investors.

This Christmas, you can contemplate investing in mutual funds to achieve your goals.

If you are investing in mutual funds for the first time, you need to be KYC-compliant, post which you can invest in your chosen fund. You can invest through a systematic investment plan (SIP) or lump sum. In the former, a certain amount of money is deducted and invested in your chosen fund on a specific date. On the other hand, in the latter, you invest a chunk of money at one go.


Long-term Stock Investment

Long-term stock investment can help you gain inflation-beating returns. Investment in fundamentally strong stocks can help you nullify the effects inflation has on your wealth. Note that stocks are volatile in the short term. Only if you remain committed to them for the long haul can you make real gains.

When markets crashed in March 2020, many investors panicked and took the exit route. However, those who remained committed to their investments enjoyed meaty gains. So, if you are investing in stocks, adopt a long-term strategy and stay committed to your investment, come what may.


Building Emergency Fund

An emergency fund is an absolute must, and Covid-19 has further accentuated its importance. While earlier it was advisable to have an emergency fund equivalent to six months’ expenses, given the recent experience, it’s recommended to have a fund close to a year’s expense. You can build it by investing in instruments such as liquid funds that invest in debt instruments maturing in 91 days.

For that matter, you can also contemplate investing in a bank fixed deposit to build an emergency corpus. Make sure the corpus is easily accessible. Don’t chase returns, and capital safety should be your prime concern.


Buying Health Insurance

Health insurance prevents out-of-pocket expenses during a medical emergency and prevents drying up of savings. This Christmas, you can gift yourself a health insurance policy to ensure funds are not a paucity in receiving the best possible treatment. You can either buy an individual plan or a floater policy that will cover all the members of your family.

Compare different plans and choose the one that best fits your needs. Also, while filling up the proposal form, provide accurate information as any wrong information could result in claim denial. If you live in a metro, it’s wise to have a policy with a sum insured of a minimum of Rs. 5 lakhs. On the other hand, if you already have a health plan, review it to ensure that the sum insured is adequate.



Buying yourself these Christmas gifts can hold you in good stead in the years to come. They will help you accomplish your goals and ensure a smooth ride amid turbulence. Merry Christmas!

In Your Thirties? Avoid These Common Retirement Planning Mistakes!

Are you in your thirties right now? Your retirement may seem a long way away today, but this is really the best time to start planning for it – if you haven’t already. A multitude of factors is increasing the need for maintaining structured, disciplined, and committed action towards your retirement portfolio. Here are four mistakes to avoid on your journey.

Planning only for your Child’s Education

There’s nothing wrong with aspiring for a great education for your child, but it would be a mistake to shovel away every last saved penny towards your child’s education, without paying heed to your own retirement. Remember, you’ll be able to avail education loans for your child’s education, but not for your own retirement. The interest on these loans is fully tax-deductible too. Also, would you really like to become a financial burden on your kids at a time when they’re just finding their feet in their careers?

Being a Low-Risk Taker

When it comes to Retirement Planning, don’t think twice – just divert your regular retirement savings (such as Mutual Fund SIP’s) into an aggressive investment such as a mid-cap-oriented equity fund anyhow. When it comes to Retirement Planning, high risk/ high return Mutual Funds Sahi Hai! If you allow your individual risk tolerance to dictate your choice of retirement savings avenue, you could end up retiring with lakhs of rupees – if not crores – less. Be careful, as a 5-6% difference in annualized returns compounded over three decades, is a lot more than you think.

Choosing the NPS over Mutual Funds

Sure – the NPS is a low-cost investment and represents a massive improvement over traditional endowment life insurance plans and fixed deposits, but they need more reforms before they can become your one-point retirement solution. For one, the NPS bars you from taking more than a 75% exposure to equities. In addition, your equity allocation is mandatorily slashed by 4% every year after your 35th birthday, and this can hamper your long-term returns. While the NPS is definitely worth considering, make sure that the lion’s share of your retirement savings still flows into Mutual Funds.

Getting stuck into a Pension Plan

Buying a pension ULIP is an avoidable step on your retirement planning journey. After all, when your pension ULIP matures, you’re permitted to withdraw just 1/3rd of the funds tax-free under section 10(10D) of the income tax act. The remainder, you’ll need to put away in an annuity that’ll give you a post-tax annual yield of just 5-6%, depending upon your tax bracket, and the option you choose. Just stick with regular Mutual Funds or bluechip stocks during the accumulation phase.

Why Is The Stock Markets Falling In India: Two Important Reasons.

Stocks markets in India are experiencing a downward trend in December. On December 6, Monday, NIFTY 50 has fallen by 284.40 points and SENSEX has fallen by 949.32 points, which has worried investors today and for the upcoming weeks.



The most important reason, because the stocks markets in India are falling, is the new Covid variant named Omicron. In India, a total of 21 cases have been detected that were infected from the Omicron Covid variant, and on Sunday, December 5, a total of 17 fresh cases were reported from Delhi, Maharashtra, and Rajasthan. So, Indian investors are much worried about the inception of another wave from the new variant. The earlier delta variant has already affected the Indian stocks markets largely. During the first two waves, major manufacturing activities were hampered, profits of the companies drowned. Sectors like automobile, real estate, constructions, infra have plunged.

On the other hand, pharma, and IT stocks have gained. In that situation, Indian investors are concerned that if a new Covid variant again surges in the country, affecting the companies.


So, the stock indexes fell significantly today. However, India has reported 8,306 new Covid cases yesterday, and the active cases are 98,416 now. This is the lowest contamination rate in the last 552 days, according to the health and family welfare ministry. So, equity investors are struggling for clarity, should they think the pandemic is under control, or will the Omicron rise as a big threat?




The second reason behind this fall is inflation. Indian central bank, the RBI is having its Monetary Policy Committee (MPC) meeting today. The MPC on December 8, will declare its monetary policy, and how are they thinking about the high inflation rate in the country. Surging inflation will drag down customers’ purchasing capacity, which will be a stress for the companies. India’s present CPI inflation is 4.48%, and the headline inflation in the US is above 65, which is the highest in the last 30 years.

Hence, the rising inflation rate is concerning investors more, according to analysts. Commenting on inflationary pressures and bearish trend of the stock markets, Nikhil Kamath, co-founder of Zerodha told English news daily Mint, “Fear surrounding the new variant may lead to travel restrictions and lockdowns,

which can, in turn, reduce oil demand, thereby cooling off inflationary pressures to some extent. The biggest risk to the markets according to me isn’t this but inflation. I believe it’s best to stay defensive until a clear trend emerges.” He also believes that during the pandemic many stocks have gained significantly, and “Omicron alone can erase all those gains”.


Why you need a Financial Advisor – now more than ever!

History tells us that stocks tend to outperform all asset classes over the long term. But while paper returns from equities and equity mutual funds remain strikingly impressive, the unfortunate reality is that few investors end up reaping their rewards to the fullest possible extent. 

More often than not, the reason for this dichotomy between published and actual returns is the lack of support of a qualified, competent, and unconflicted Financial Advisor acting on your behalf.

The need for support from a Financial Advisor becomes all the more pronounced during times like these. Gripped with COVID-19 induced panic, markets have turned fiercely volatile – and most portfolio values have sunk deep into the red. 

Even the haven of debt funds has proved fickle. As an investor, your mind will undoubtedly be spinning with a hundred questions. Should you stay invested or redeem? Should you switch your money to less risky assets… or switch your money into more risky assets? Will markets continue to fall further? Should you rebalance your portfolio at this time? Should you stop your SIPs and restart them at a more opportune time? And, so on and so forth. 

In testing times like these, a Financial Advisor can help you stay on the straight and narrow path to wealth creation. Here’s how.

Saves you from Yourself

Guess who is your worst enemy when it comes to creating wealth from your investments? The answer is – you, yourself! As markets oscillate between the depths of pessimism and the heady heights of euphoria, even the most seasoned investors fall prey to greed, fear, and a host of other behavioral traps. 

By drawing upon their experience of past market cycles, seasoned Advisors can help you sidestep regrettable investment decisions such as bailing out at market bottoms or piling on investments near market tops.

Steers you clear of Avoidable Investments

It’s a sad truth that a poor investment is always lurking around the corner. From the ULIP saga of the 2000s to the YES Bank AT-1 bond write-off crisis this year, investors often tend to fall prey to bad investments – usually goaded by salespeople masquerading as Financial Planners. 

Having a trusted Financial Advisor who can trawl through the fine print on your behalf can be a great source of strength for you, as you’ll be able to steer clear of getting locked into poor investments that can end up destroying a great deal of your hard-earned money over the long term.

Helps you see the Bigger Picture

By aligning your investments to your long-term and short-term goals, A Financial Advisor can help you see the bigger picture concerning your investments. In ensuring that you invest according to a fixed roadmap with pre-defined time-bound milestones, your Advisor can ensure that your investments are perfectly aligned to the tenor of your goals; hence, only long-term money flows into higher-risk assets. 

As a result, you’ll be a lot more immune to the ups and downs of the markets, because your perspective on investing will be dramatically and positively altered.

Helps you pick the right investments

Left to their own devices, most investors tend to use short-term past returns as the barometer for choosing investments. However, this myopic tendency is the exact opposite of ideal, because what goes up comes down – and vice-versa! 

Using their expertise and drawing upon concrete research that is generally not available in the public domain, a Financial Advisor can ensure that you select the right investments for your portfolio. 

In doing so, your Advisor ensures that your portfolio is spread across investments that are poised to outperform in the future and deliver fantastic risk-adjusted returns to you over your defined investment timeframe.

Get in touch with us today to begin your journey to Financial Freedom!

Source: Finedge