MY VIEW ON LIC'S JEEVAN ANAND

JEEVAN ANAND
At first glance, Jeevan Anand looks attractive. All insurance policies look great while buying and look quite meagre when you receive it.

Sample this -

A 30Y old male person `ll put in 27550 Rs. prem. per annum for a 20Y policy. Now look at the bonus announcements of past years for this policy.

2004-2005 - 43 Rs. per 1000 Rs. Sum assured
2005-2006 - 40 Rs.
2006-2007 - 41 Rs.

From the above bonus rate, u can expact an average bonus rate of around 41 Rs. for all the 20 years (not guaranteed).

So after completing 20 years -

A. Total prem. paid over 20 years = 27550*20 = 551000 Rs.
B. Total accrued simple reversionary bonus = 20*500*41 = 410000 Rs.
C. Loyalty addition = 100000 Rs. (not gtd.)
D. Total Maturity amount after 20 years = 1010000 Rs.

E. Now ur family `ll get 5L Rs. more after ur death from the maturity date of policy, it may happen any time in next 10-20-30 years. = 500000 Rs.

Plz. do note in case ur death occurs, during the normal prem. paying term, the benefit of receiving Sa again after maturity of the policy `ll not be there.

On a simple note, u r not even getting double of ur money after paying for 20 years & the remaining cover of 5L in case of death after maturity, may seems high at present but think for next 45-50-60 years & think about the effect of inflation on this 5L amount.
don`t invest in Jeevan Anand Policy, instead ask ur agent for following 3 policies.

1. 1 Anmol Jeevan - 1 Policy of 10L Sum assured for 25 years
2. 1 anmol jeevan - 1 policy of 15L Sum Assured for 20 years
3. 1 Amulya jeevan - 1 policy of 25L Sum assured for 15 years.

Plz. do note all the above mentioned policies r term plans of LIC & u `ll not get any money back from ur prem. pmt. for these policies but on the other hand, ur total prem. paid for these policies `ll not be more than 25-30K (depending upon ur age) whereas ur Jeevan Anand Policy prem. `ll be around 2.25 to 2.75L per annum (again depending upon ur age). U can invest the saved prem. as per ur choice & by the end of 20 years or 25 years (ur term selected in Jeevan Anand policy) u `ll have more money than Jeevan Anand policy.

Insurance is not Investment. Go for PURE TERM COVER. The difference in premium if invested in mutual funds will give you far higher returns. Remember your insurance agent gets 35 to 40% commission on your first premium .

Insurance is an EXPENSE, not an INVESTMENT. No amount of money put in INSURANCE will make you richer or recover the loss suffered by your dependants in your absence. As policy holder if you receive any money from Insurance - you are a loser because you have taken a policy which is costlier than a basic term cover. As nominee if you receive money - you are the biggest loser . What you receive from insurance will only give you temporary relief. The best thing for a nominee is the policy holder staying alive and earning well. So do not look for returns when you are choosing an insurance policy. As policy holder look for the least premium payable per lakh of sum assured. Best & cheapest is PURE TERM COVER.


For investment go for Mutual Funds. And note, nowadays, even most Mutual Funds do offer you Life Insurance Cover.

Do consult your financial advisor before investing.

Best of luck,

Srikanth Shankar Matrubai






Visit http://goodfundsadvisor.blogspot.com for Mutual funds
visit http://equityadvise.blogspot.com for Stocks and Shares

IDFC India GDP Growth Fund

IDFC has recently launched a New Fund Offer named IDFC India GDP Growth Fund.

The IDFC India GDP Growth Fund seeks to invest the assets in the sectors representing the three components of India's GDP viz., Agriculture, Services and Industry. The allocation to these levels of GDP will be in the same proportion as their contribution to the overall India's GDP, and will normally be revised on a semi-annual basis, or whenever the GDPgrowth estimates are revised.

COMMENTS AND RECOMMENDATION :

The Fund is innovative and aims to capture the Growth in India's GDP. The Fund would act as a Good Diversified Fund as it will be investing in Stocks in Sectors and Industries across market captilisation. The Fund Manager, Mr.Ajay Bodke has had a good expertise in managing Funds and has performed reasonably well. The Fund may a Good Pick for Long Term Investors.

The Fact that India's economy is relative insulated from the Global meltdown and that India is better positioned better than most countries makes Indian Markets attractive and India should better GDP numbers going forward. This in turn will help the Fund give good returns.

The Fund, however, may not find it easy to mirror the GDP. Besides, there are not many great performers in the agriculture sector and getting right stocks in optimum proportion would not be very easy. Also, not all the sectors of the economy would perform in a similar manner at any given point and hence the fund has to remain invested in a particular sector in a particular proportion and this is a negative of the new fund.

IN A NUTSHELL, THERE ARE MANY TOP PERFORMING FUNDS WHICH OFFER SIMILAR FEATURES AND HAVE A TRACK RECORD TO BOAST OF. RISK AVERSE INVESTORS WOULD BE BETTER OFF TO WAIT FOR THE FUNDS PERFORMANCE TO COME OUT AND THEN TAKE A CALL. OTHERS CAN TAKE THE SIP ROUTE AND INVEST IN THE FUND.

Best of luck,
Srikanth Shankar Matrubai


Visit http://goodfundsadvisor.blogspot.com for Mutual funds
visit http://equityadvise.blogspot.com for Stocks and Shares

Advise on My Portfolio...

My old friend Akhil sharma wrote :


Hi Sir,

Hope you are doing really well and your Family and loved ones are in the Pink of Health.
I've finally thought of starting a new SIP in Fidelity Equity Fund.

As of now i'm invested in the following funds:
Sundaram Capex Opportunities - Rs.5500 ( Latest Value :Rs. 3156 )

Reliance RSF Equity - Rs.5000 ( Latest Value :Rs. 2753 )

Reliance Diversified Power - Rs.5000 ( Latest Value :Rs. 2434 )

Kotak Indo World(Closed Ended)- Rs.5000 ( Latest Value :Rs. 1982 )

ICICI Pru Infrastructure Fund -Rs.5000 ( Latest Value :Rs. 2407 )


This is as per My Portfolio On MoneyControl Website.

My question is should i redeem from all of these Funds and invest at a single place or should i stay Invested in them and wait for recoveries.

The thing i'm thinking here is even these funds will have to come to that NAV on which i invested(which have actually fallen by 50%) to give me a NO Profit- No Loss situation.Then my Funds will start giving me returns.That may take a lot of time.Although i have long term horizon of minimum 3-4 years but still should i redeem from these funds and invest the whole lumpsum amount(whatever i finally get!) in a good fund like DSP BR TOP 100 Fund.

NOTE: It has been 14 months approximately that i have invested in these funds.


SRIKANTH SHANKAR MATRUBAI replied :

Dear Akhil,


Well Akhil, better late than never. It is indeed good news that you have thought of starting a SIP in Fidelity Equity fund. This Fund has been a favourite since its launch and it has not disppointed me.
I am surprised by your existing investment. Inspite of being in touch with me, I wonder why you have had so much exposure to One Sector (Infra)???. In fact, expect for Reliance RSF Equity, all your other investments is in those Funds which are directly investing in Infrastructure related stocks. You need to diversify and diversify soon. Thankfully, all your investments have around 5000 and not more.
I will analyse each of them one by one :
Sundaram Capex Opportunities Fund : Even at loss, prefer switching to better performing Sundaram Select Focus Fund.

Reliance RSF Equity : Continue for now

Reliance Diversified Power : Again a Sector Fund. Consider Switching to Reliance Growth Fund

Kotak Indo World : Being Close ended, no option but to continue your investment. Take a call when the Fund becomes Open Ended.

ICICI Pru Infrastructure Fund : Among the Better Performing Infrastructure Funds. I would have had no hestitation in suggesting you to switch to ICICI Dynamic Fund, but for your Age profile (24) and Risk Profile, I suggest you to Continue your holding in the same for the time being.

No need to take hasty decision like Selling all the Funds at one go and investing the whole proceeds into other funds (your choice DSPBR Top 100 fund, by the way, is good), would not be such a Bright Idea.
Instead, consider the above switches and wait for better times. In future, invest only in Well Diversified Equity Funds and preferably invest through SIPS.
Best of luck,
Srikanth Shankar Matrubai.


Visit my blog
http://goodfundsadvisor.blogspot.com


Visit http://goodfundsadvisor.blogspot.com for Mutual funds
visit http://equityadvise.blogspot.com for Stocks and Shares

NOT ALL NFOs ARE BAD

This letter written by me was published in Outlook Money Magazine.

In the 9 April 2008 issue of the Outlook Money magazine, the article "Why have NFOs lost their lustre"? made interesting reading. However I beg with the author with some issues. Avoiding all NFOs would not be a very wise thing to do. You have to invest in some NFOs which are exceptions to the existing schemes like DSPML World Gold Fund, etc especially if they are Close-ended funds because you may not be able to invest in the fund for another 3 years.
Also, the author says that some fund houses give even upto 8.5 percent commission to distributors. I myself being a distributor have never come any fund house giving even 5%!!!! He should be careful before writing such non factual informations.

Thanking you,
Srikanth Matrubai


Visit http://goodfundsadvisor.blogspot.com for Mutual funds
visit http://equityadvise.blogspot.com for Stocks and Shares