NPS is a retirement product. Specifically targeted to accumulate funds for retirement. Here is how NPS can help you accumulate funds for retirement. You accumulate money until you retire. You withdraw from the corpus after you retire. You can invest your money in a diversified portfolio of equity and debt. You can withdraw a portion lumpsum and use the rest the purchase an annuity plan. The annuity plan can provide you with an income stream during retirement. But you can do all the above (and more) with mutual funds too, right? You can invest in MFs while you are working. You can start with ..read more

LIC has recently launched a plan aimed to fund children’s higher education. LIC Amritbaal (Plan 874). Hence, here goes another review. While I am usually biased against insurance-and-investment combo products, let us start this review on a positive note. I must concede that there are a few things that only insurance products can do. And mutual funds cannot. Provide guaranteed returns (non-participating plans can do) Provide tax-free returns (subject to conditions) Provide cashflow structures that you can easily relate with your financial goals (kids’ education, retirement) Let us consider a ..read more

Over the past few years, NiftyIndices and S&P have launched various factor indices (Value, Momentum, Low Volatility, Quality, Alpha, or multi-factor) for Indian stocks. And the AMCs have launched various index funds on such indices cashing in on the popularity and the latent demand from the investors. So far, so good. When any index is launched, there is a launch date and there is a base date. Launch date is the date on which the index was launched. And the live data for the index is available after the launch date. Base date is an old date from which the index provider has provided the ba ..read more

Which was your first equity mutual fund? Mine was an equity fund from Fidelity about 17-18 years ago. I picked up this fund after reading the best-selling book “One up on Wall Street” by legendary fund manager Peter Lynch. During 80s and 90s, Lynch worked as a fund manager with Fidelity. I was so impressed with his writings that I picked up a fund from Fidelity AMC in India. Yes, Fidelity had presence in India and later sold their business to L&T MF. I don’t remember when I exited this fund but am sure the fund helped me learn a few things about how markets work. Well, at least for us (exi ..read more

Under time pressure to save taxes, you bought a traditional life insurance plan in the last week of March with an annual premium of Rs 1 lac. After a couple of months, when you got time to review the product, you did not like it any bit. You wanted to get rid of the plan, but the free-look period was already over. And when you checked with the insurance company about the surrender costs, you were politely told that you wouldn’t get anything back since you have paid just one premium. Your woes didn’t end there. Even if you had the patience and money to pay a few more premium installments, you d ..read more

LIC has launched a fresh life insurance product. LIC Jeevan Utsav (Plan no. 871). In this post, let’s break down LIC Jeevan Utsav and see how it works. The good and the bad points, and the returns you can expect.  And finally, should you invest? LIC Jeevan Utsav (Plan 871): Non-linked, Non-Participating Plan Non-linked means LIC Jeevan Utsav is NOT a ULIP. It is a traditional plan. Non-participating plan means the returns from LIC Jeevan Utsav are guaranteed. In other words, you will know upfront how much you will get (and when) from the plan. No confusion surrounding bonuses etc. This al ..read more

Recently, I read about a couple of life insurance companies highlighting the launch of small cap index funds.  Link 1 Link 2 This is a new phenomenon. You don’t often see a life insurance company launching index funds. Usually, mutual fund companies do that. Hence, this came as a surprise to me. However, there is a catch. To invest in that small cap index fund by a life insurance company, you will need to invest in a ULIP (Unit-Linked Insurance Plan).  A life insurance company can add an index fund to its suite of ULIP funds. But you can invest in these funds only if you invest in a ..read more

The online transactions have picked up. So have the frauds. Getting more creative and sophisticated. Recently, I came across a bizarre method of fraudulently withdrawing money from bank accounts. A victim posted shared the following incident on LinkedIn. The money was withdrawn through Aadhaar enabled payment system (AEPS). Going by the victim’s account, he is simply NOT at fault. He didn’t share account details, card number, CVV, or OTP. Still, the money was withdrawn. If biometric verification is not safe, what else is? Note: I understand we can’t take anything we read on social media at fa ..read more

Do you invest in NPS? I have seen quite extreme opinions about NPS on social media. Mostly negative. While NPS has its share of problems, I have never agreed completely with very strong negative opinions on NPS. I have found most such opinions either ill-informed or simply biased. Like every investment product, NPS has its pros and cons. And I am sure there are several investors who find a lot of merit in NPS. While I will leave the decision to invest in NPS to you, I thought of writing about two recent changes in tax rules that may affect your decision to invest in NPS. As the facts change, y ..read more

Do you think you earn well but are unable to save or invest enough? The paycheck is big but monthly investments are not commensurate. With my limited experience, this is not an uncommon problem.   And the worrisome part is many of us can’t exactly figure out or explain to a friend/adviser why that is the case. Where is the money leaking? As an adviser, I regularly come across investors who express such concerns. In this post, let’s revisit basics about saving money and the concept of budgeting. Our money habits are deep rooted. You have to get out of your comfort zone and take those extra ..read more