insurance

Individual Health Insurance

In India, the cost of treatment is growing in double digits, and more than 80% of the population do not have access to health insurance. Out of pocket health expenditure is higher in India. The burden of the high cost of health is pitched towards the poor.
There are plenty of reasons why health insurance is not just a good idea but also necessary. Many people face a financial crisis when they have to fund for medical treatment and medical costs. So people dive into their savings and drain it. In such situations, a health insurance plan could be a real “life-saver” because it covers your hospitalization expenses.

Let’s talk on Individual Health Insurance:

Costly treatments and unseen medical emergencies made individuals to understand the need of having health insurance. Individual health insurance covers both pre and post hospitalization expenses, including ambulance charges and diagnostic test charges.
Daily cash plans are also covered under individual health insurance but are subjected to specific terms and conditions. Even pre-existing diseases except for injuries due to accidents are treated only after the completion of a defined waiting period.

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short and long term loan

Short and long term loan

A loan that needs to be repaid in regular payments over some time is called a term loan. The tenure of most of the term loan is between one to ten years. The tenure of the term is decided at the time of application by the bank or financial institute. The categories of the term loan are secured loans and unsecured loans. The loans which are for short duration usually less than one year are called short term loans and loan which have a span of five or more years are classified as long term loan. In some instances, customers have the option to choose between a fixed rate of interest and a floating rate of interest. A fixed-rate of interest stays constant throughout the term loan, which means that the borrower will pay the interest based on the rate set at the time of loan application.
On the other hand, a floating rate of interest fluctuates with market conditions, which changes the installment amount as well. A fixed-rate of interest is advisable for long term loans the borrower of short term loan can take floating rate interest.

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loan against mutual fund

Loan Against Mutual Fund

“Vision without execution is daydreaming.”
-Bill Gates

Financial crises can occur at any time. Loans are handy and are the first option most of them opt for. So today we would look into one the topic: -Which is the better option between loans against mutual fund and a personal loan? The answer is a loan against mutual funds because it allows you to borrow by putting your mutual fund investment as collateral with the bank. And since an asset class backs the loan, the interest rates are usually lower than the personal loan. You cannot redeem the mutual fund units as long as they are pledged with the bank but can redeem if you default.

Each bank offers a loan against mutual fund as per the list of approved mutual funds. It’s the agreement that banks own, on sale and hold your investments. The banks have all rights to sell your funds in case of default or non-payment of the loan amount.

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types of unsecured loan

What are the various types of Unsecured Loans?

What is an unsecured loan?

An unsecured loan is a loan that is not backed by collateral to guarantee the repayment. Unsecured loans check the creditworthiness of the person. The creditworthiness of the borrower is assessed based on the five C’s of credit: character, capacity, capital, collateral, and conditions. Let us look at some of its types:

1. Personal loan

A personal loan is the most common type of unsecured loan. The personal loan can also be paid in installments. You can repay the loan in equated monthly installments (EMIs). Banks and NBFCs (non-banking financial companies) offer personal loan through online and offline process.

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SIP vs SWP vs STP

Choose between NAV, SIP, STP, and SWP

STP (Systematic Transfer Plan)

In simple words, STP means transferring money from one mutual fund to another. STP is a smart strategy of investment over a specific term to reduced risks and balanced returns. Here, an AMC (Asset Management Company) permits you to put a lump sum in one fund, and transfer a fixed amount to another scheme regularly.
STP is a useful tool in mutual funds to average your investment over a specific period, which depends on three factors:

  1. Market view
  2. The risk profile of the investor
  3. An investor’s current allocations to equities.

Things to remember while investing via STP:

  • STP is the method that requires discipline; it’s not you who gets to cook your money overnight; it will take time to cover your returns.
  • It would help if you kept an eye on the underlying assets and their phases.
  • STP is one of the most reliable risk-reducing investments in which you can invest.
  • Go with STP only if you have a lump sum amount to invest.
  • You need to make at least 6 STPSs as per the SEBI guidelines.

In short, STP is a useful strategy to manage risks without affecting your returns significantly.

SIP – The recommended option

A SIP (Systematic Investment Plan) is an ideal way of investing in mutual funds. It allows you to invest in regular intervals. It is also called the “planned way of investing.” It helps investors to cultivate a habit of saving and accomplish the goal of wealth creation.
Through SIP, you can invest in a quarterly, monthly, or weekly basis as per your convenience. A fixed amount is debited from the policyholder’s account and invested in mutual funds. As you start investing a pre-decided number of units get allocated as per the current market price. Besides, mutual funds plans are flexible in nature, and you also have the option to discontinue it whenever you wish. However, you make the most out of Mutual Funds investments, remember to stay invested for a long period.

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Is equity exposure safe?

Equity-Exposure

“Long shots almost always miss the mark.”
—Peter Lynch (American investor and mutual fund manager)

What is an equity fund?

Equity funds generate high returns by investing in the shares of companies of different market capitalization (large cap, mid cap & small cap). They generate high returns than debt funds or fixed deposits. The whole thing depends on is how the companies performance, which results in profit or loss and how much an investor can make based on his shareholdings.

Market Capitalization:

It is the aggregate value of the company based on the current share price and the number of outstanding stocks. Market cap is calculated by multiplying the current market price of the company share with the total outstanding shares of the company.

How does equity fund work?

An equity fund invests 60% or more of its assets in equity shares of companies in varying proportions. It might be the purely large cap, mid cap, or small cap fund or a mixture of market capitalization. The investing may be by value-oriented or growth oriented. Allocating a major portion of equity shares, half will go to debt and money market instruments. This will take care of a sudden fall in the market.

Performance of Equity funds in India:

All most all categories of mutual funds, equity funds deliver the highest returns. On average, equity funds have generated before-tax returns of 15% or more. The returns may fluctuate as per the market movements as well as the economic conditions.
To earn returns with good expectations, you need to choose your equity fund carefully. If you want to invest in Equity, remember the secret is to stay invested for a long period (>5 years).

Features of Equity Funds:

  • 80C tax exemption: Equity Linked Savings Scheme is the only tax-saving investment under Section 80C of the Income Tax Act. With the shortest lock-in period for 3 years.
  • Cost of investment: When one is frequently buying and selling equity shares it often impacts the expense ratio. While currently, SEBI has fixed the limit of expenses ratio at 2.5% for equity funds and they are planning to reduce the rate too.
  • Cost-efficiency and diversification: One who is investing in equity funds can start investing at a nominal amount.
  • Holding period: When one redeems the units of capital funds, one can earn a capital gain. This earned capital is taxable and this rate of taxation depends on how long you stayed invested in equity.

Taxation of Equity Funds:

Capital gains earned on the holding period of up to one year are called short term capital gains (STCG). STCG is taxed at a rate of 15%. Capital gains on the holding of more than 1 year are called long term capital gains (LTCG). LTCG in excess of Rs 1 lakh will be taxed at 10% without the benefit of indexation.

So what is better lump sum or SIP?

1. Systematic Investment Plan (SIP)

A SIP is where the monthly investment happens automatically on the pre-decided date. Where one can start investment from Rs. 500. Where we have to just grant permission to the fund company to deduct the investment from your bank account. SIP gives you the benefit that when the market is high you would be allowed a few units. And when the market is low, you will get more units.

Benefits of SIP:

  • SIP is considered to be a disciplined approach to investment.
  • One can achieve long term financial goal with SIP.
  • SIP can be started with a small amount of money.
  • Reduces risk because of Rupee cost averaging.
  • Timing the market is not necessary.

2. Lump-sum

This method can work over time. Because not everyone is feasible to arrange for a large sum. A SIP allows an investor to invest a fixed amount of money at regular intervals. It also gives an advantage of averaging the cost of units besides providing benefits of compounding. So we can say that opt for SIP rather than Lump sum investment.

You should invest in equity funds as per your investment objectives, your investment capabilities, and your risk-taking ability. Equity funds are not meant for short term investment. Maximum your funds will cook for five years of investment, accepting the versatile market one should invest in mutual funds.

MyWay

MyWay Wealth offers you to invest your funds in Equity. Being a smart investor one should choose the best investment option. One should always opt for investment which matches their financial goals and risk appetite. Equity definitely gives more returns than gold, real estate, and FDs.

Happy Investing!!

Know more on Growth and Dividend Option

Growth-or-Dividend

There are different kinds of mutual fund options available in the market. Every mutual fund scheme you choose will have two options: growth or dividend option. You can differentiate them based on their Net Asset Value (fund’s per share market value). Always remember, the various factors such as the behavior, objective, fund manager are all the same but the performance and results delivered are different.

Growth Options:

Under the growth options, you have to stay invested for a longer period to see the growth. The returns you earn are not realized immediately. You will not receive any payment in the form of dividends. The returns are realized only when you sell the units. The NAV on the date of the investment will be your cost price and the NAV on the date of sale becomes a selling price. The difference will be your returns.

The profit your funds make remains in the market and you get the benefit of compounding over the years. The number of units you buy remains the same, but the price or NAV keeps going up. It best suits for the investors who don’t need an income from their investments today but are targeting a corpus for future use.

Dividend Options:

The dividend options allow you to book profits periodically. This option is good for investors who need periodic income from their investments. The amount of dividend is not certain. When the NAV reaches a certain level, the fund house pays out the dividend. The dividend-reinvestment is different from your dividend options. In the dividend reinvestment option, profits are booked, but instead of declaring a dividend, the fund’s house buys more units at the current price. So your number of units goes up but the NAV remains the same.

Which option is best to choose?

This depends on factors like your investment objective and tenure. For Equity Mutual Funds, the growth option would be the best because you can make compounding earnings. If you plan to invest in the short term, Debt mutual funds will be the best. For short term investment in debt funds, you can go for a dividend option.
Thus,

  • Long-term needs: Equity Mutual fund with growth option is better.
  • Short-term needs: Debt Mutual funds with dividend option is advisable.
  • Mid-term needs: Debt Mutual funds with growth options can be better.

MyWay

You can invest in hand-picked funds through MyWay Wealth– India’s most trusted Mutual fund app for Direct Plans.

So start investing in Mutual funds to make your dreams come true.

Mutual fund as an Investment Option

Mutual funds

 

One of the best ways to ensure that you reduce the risk associated with your investment portfolio is through diversification across various asset classes. The percentage of investment in various asset classes will depend on your individual goals, risk appetite and time horizon for your investment.
Mutual funds are one of the most preferred investment options to investors who are wanting to invest in equity as they offer diversification and offset the risks.

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Invest Before It’s Too Late

term Insurance

“The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.”
Henry Ford.

Why you need a life cover?

Not to save taxes, not for a secure retirement, not because the advertisement agency put together images of happy families doing cool things together. Not because you are arm-twisted into buying a policy by a family member, a friend, a neighbor, your bank or just a ‘wont-take-a-no-for-an-answer’ agent.
You need a life insurance cover for only one reason: To protect your family’s financial health if you die an untimely death.

It’s you who has to figure out how much the family will need to live without you bringing in the monthly income and how much money is required for the further of your kid’s education and marriage.

Now let’s look at some of the plans that help you to get a cover.

1. What is typically an endowment plan?

An endowment plan offers a life cover as well as a saving option. Your nominee gets the money in case of your unfortunate demise if you outlive the policy period.

  • Price: On the other hand, the endowment plan provides a maturity benefit, along with the additional features such as maturity benefit, rider benefit, terminal bonus, reversionary bonus, of this policy makes it so expensive.
  • Sum assured: The sum assured is not high in the endowment plan as compared to the term insurance plan. This is because the endowment plan fills the aim of savings. You need a lover sum assured but also a maturity benefit.
  • Aim of cover: The endowment plan helps you to save for your future goals. It gives you guaranteed returns and caters to future savings.
  • Payment options: In an endowment plan, the payment is lump sum either at the death of the policyholder during the policy term or as a maturity benefit on the completion of the policy term.

 Disadvantages of endowment plan:

  • Its low yield policy.
  • The surrender value is lower than the premium value.
  • The premium is higher than the term plan.

Example:
Mr. Bond is the policyholder. His age is 25 years. The plan for what he has opted is a term plan. Sum assured is 20 lakhs. The duration of the plan is 25 years. And yearly premium he has to pay is 6443.

2. What is the term plan?

The term insurance plan offers you a life cover. It is a simple life insurance plan that promises to pay a sum assured if the policyholder dies during the policy period. If he outlives the term there is no maturity benefit.

  • Price: Since a term plan doesn’t offer any return and only provides risk cover it is less expensive.
  • Sum assured: The sum assured in the term plan is high. That is possible because it covers the risk, by fulfilling the need for protection.
  • Aim of cover: In term insurance, the nominee receives the sum assured in a lump sum, or in equal installments or a contribution in case of the death of the person during the policy period.
  • Payment: The policyholder has the option to customize the payment option based on the family needs.iIt can be a lump sum, monthly or combination of both.

Advantages of term plan:

  • Term insurance is the simplest form of life insurance to understand.
  • Term insurance is a sensible choice for people who are building a family.
  • Lower initial cost when compared to an endowment plan.

Example:
Mr. Bond is the policyholder. His age is 25 years. The plan for what he has opted is an endowment plan. Sum assured is 20 lakhs. The duration of the plan is 25 years. But here in an endowment plan, he has to pay 86616 yearly.

In short:

PlanDescription
Term Plan1. Life cover
2. Fixed term
3. No maturity benefits
4. Death benefits
Endowment Plan1. Life cover
2. Maturity benefits = Sum Assured + Bonus + Additional bonus
3. Death benefit = Sum Assured + Accrued Bonus + Additional Bonus (If Any)

Here are the features of Term and Endowment Plan

BenefitsTerm PlanEndowment Plan
Maturity BenefitNoYes
Death BenefitYesYes
Premium AccountLowHigh
LiquidityNo
Yes
Investment SavingsNoYes
Tax BenefitsYesYes

Let’s look at some of the pointers before you take a cover:

  • How much cover do I need?
    You need to buy insurance for all the debt. Each time you take a large loan – usually a home loan, sometimes on a personal loan – buy a term cover for the full amount for the loan that you take.
  • When it is a good time to buy?
    Buy as soon as you have dependents or the possibility of getting dependants. Touching thirty is usually a good time to buy the cover. You are old enough to have a good income flow and not that old for covers to be too expensive. The cost of life cover rises exponentially as you age.
  • Which policy to buy and how much to buy it?
    Term insurance is a pure vanilla product. You pay a premium if you die the company gives you the cheque to your spouse. Since its the long term plan, so remember you are getting your cover till your retirement.

Now that we know the Term Plan is the best option, Why Delay? Start investing in Term Plan through MyWay Wealth. The app has a user-friendly interface, completely paperless process and charges no fees or commission.

Term Insurance - MyWay Wealth

All you need is a few minutes on your smartphone and you will be able to provide a cover of 1 crore to your family, with the same amount with which you get a Netflix monthly subscription. So Make Your Investments Today.

Protect Your Family with MyWay Wealth!

Why MyWay is India’s most secure platform for investment?

Dear Customer,
I noticed you haven’t started with the investment process yet. People often hesitate to invest in digital platforms because of security and trust issue.

Don’t worry, investing in MyWay Wealth is 100% safe and secured. Here is how we ensure safety and security:

  • 256-bit Secure Socket Layer (SSL) encryption
  • All payments are routed via BillDesk (PCI – DSS Compliant)
  • All  orders are executed via Bombay Stock Exchange (BSE)
  • MyWay is a SEBI registered Investment Advisor (INA200005323)

Also, we have built a smart fund recommendation to suit your investment goals and style.
I assure it would hardly take 2 minutes to complete the process. For your ease, I am adding a direct link for the same.

If you have any concern, please write to us at ask@mywaywealth.com or call at +918048039999we would be happy to answer your query.