11 Things NOT To Do With Your Money

Smart investing is the key to financial happiness. It helps you multiply your money. And it certainly is not as difficult as you think.

If you think you need extra money to start saving, you are wrong! Saving is not about saving extra money. It is about planning your expenses in a manner that lets you save enough money, no matter what you earn, for a safe future.

But handling money is not very easy. So here are 11 tips on what you must not do with your hard earned money.

1. Don't go on depositing your salary in your savings account

Do you rush to the ATM and withdraw money regularly? Well, you cannot afford to be careless about withdrawals. While a savings bank account helps you meet your regular needs, it is important not to deposit all your earnings in the savings account.

While you must keep a portion of the salary in the savings account, make sure you allocate enough money for regular expenses, as well as additional expenses, that you may need to meet unexpectedly.

Excess money in savings account will always also tempt you to spend more money than you should ideally spend.

2. Don't manage money without a good plan

A golden rule in investing is to have a good financial plan. Do not invest money only on the basis of what your friends or relatives say. You must identify your priorities and set realistic goals.

Calculate your monthly expenses and see how much you can save every month. Make a list of things you can and cannot avoid. Learn to strictly stick to you plans.

3. Don't invest all your money in the same plan

No matter which investment plan you choose, you must not invest all your money in just one plan or in one bank. You must allocate your resources across various schemes, be it mutual funds, fixed deposits, stocks or small saving schemes.

It is very important to diversify your investment. Remember, interest rates and services charges vary from one bank to the other. Before you invest money in any scheme, call up banks, financial service companies and make sure you get the best deal.

4. Don't set high savings targets

You must not go overboard on savings. You are the best judge of how much you can save and how much you can spend every month. There is no point in saving all your money and being sad about not having enough for your needs.

If you have a family, you must take care of their needs as well before you start investing. Set a target accordingly. But you should allocate a fixed amount every month. The more you can save, the better.

5. Don't lose your focus on savings

You may have invested your money across various investment options. Don't think that your job is over. In fact, you must keep a watch on interest rate changes and market fluctuations.

If it is stocks you have invested in, check out how the companies are performing, read up, be alert. You have to be proactive to the changes and be actively involved to make your money grow.

6. Don't splurge more just because you got a hike

Most people have a habit of spending more and changing their lifestyle when they get a good hike or bonus. There is no harm in enjoying and have a good time. However, if you would like to save money, you must invest the additional amount to add to your savings.

You must always think about the long-term benefits.

7. Don't shop for unnecessary items

You must learn not to give in to temptations while on a shopping trip. It is important to make a list of things you would need for the month and stick to the list. While it is good to indulge yourself once in a while, you must always be careful about spending money on impulsive buying.

Many items may look attractive but soon you may end up not using it, thus wasting your money.

8. Don't go for too many loans at the same time

It is very easy to get a loan nowadays. Loans are available just by sending an SMS. But beware of easy loans! Your may want to own a car, a home or some other luxury, but ideally you must not go for too many loans at the same time.

Buy things one at a time so that you have enough money for yourself and to save and you are not too indebted.

9. Don't join any scheme without verifying the credentials

There have been several cases of fraud, where innocent investors have been cheated by crooks posing as smart investors or advisors. They may lure you with all kinds of schemes of getting higher returns at the shortest possible time. Always cross-check facts and figures and their credentials before you invest in any plan.

You must also be aware of the fine print. Ask for all the details even it is time consuming. At the end of the day, you must be thoroughly convinced that you have made the right choice.

10. Don't invest your money in risky plans

While it is important not to keep stacking your money in a savings account, it is not important not to indulge in risky investment plans. You must start saving with smaller amounts and try to save more as you go along.

To start with, you must seek the advice of a good financial planner or choose low-risk plans. Remember, slow and steady wins the race!

11. Don't forget the dates, plans

Most people are very bad at remembering dates of maturity of their fixed deposits, or savings schemes or dates of paying premium. Make sure you keep a diary of all the saving plans, their maturity dates and remember to either reinvest the money or go ahead with any plan that you have in mind when the plan matures.

All the papers must be safely kept in either a bank locker or any safe place. You must also keep a photocopy of all the important papers incase you lose the original will be useful.

Source : Email from Ms.Pramila

Senior Mediclaim

Do you always wonder why most of the best things in life come at high cost .I sometimes wish how would it be if you ate cheese and you would be thin or if you have sweets and your sugar levels will decrease.

Similarly wouldn't it be best if the medical insurance premiums will be cheap when you need them the most? Yes we are talking about old age, as the age increases so does the need of the medical cover and the premiums increase.

More than any other age group, senior citizens require health cover the most. However, given the number of senior citizens being hospitalised, insurers have hiked rates to a large percentage of the sum insured.

For instance, if a 25-year-old individual pays 1.5% of the sum assured as a premium, then the same number can be as high as 8% of the sum assured for a 60-year-old individual. “An insurer prices a policy based on two risk factors.

One; for how long an individual is required to stay in the hospital and two, what the individual stands to lose because of the sickness. These risk factors are high and are common among the senior citizens

However, the fact remains that despite high prices, senior citizens need insurance as medical treatment can actually wipe out their savings. Today, there are a number of public as well as private sector players offering mediclaim for senior citizens.

Some policies come with sub-limits. Common sub-limits imposed by insurers are room rents, doctors’ fees and diagnostics. These policies typically cap the room and boarding cost at 1% of sum insured a day and at 2% a day for those in an intensive care unit.

The overall limit is capped at 25% of the sum insured for an illness or injury. So, when you sign up for a policy, check if the insurer has assigned a maximum amount for a specific expense.

Also consider that, in order to check malpractices and offer uniformity in the text of health insurance policies, General Insurance Council (GIC), a statutory body of all non-life insurers, has come out with a uniform definition on pre-existing diseases. Also, all policies issued from 1 June will cover pre-existing disease from the fifth year of the policy.

What this means is that for a fresh policy, no pre-existing disease will be covered for four years. After these four years of continuous coverage and no claims on account of the ailment in question, the pre-existing disease will be included under the cover.

The best part here is that this applies to all health insurance companies.

These are basic guidelines and areas to address, do take help of a financial planner to decide the right product and premium for you.

Inspiration & Source : Mrs.Revathi Sreedharan & ET

Take your “Umbrella” when going abroad for studies?

If you have seen most of the insurance advertisements depict an Umbrella as a way of risk cover and to most extent they are right.

Most of us who go abroad for studies are going through using some form of educational loan. These loans are given in lieu of either an asset like property, gold etc. or a guarantor .It’s the moral responsibility of the person taking the loan to accommodate the risk that he /she is taking in case any unforeseen event

The student should at least take the amount of life insurance equivalent to the loan amount if not more so that the dependents or the asset heirs interest’s are taken care of.

Another area where insurance is of help is medical insurance with new whether patters and different food patters one is exposed to some health uncertainty especially when you have not visited the country earlier, more so important factor is that health care in countries like UK and US is very expensive as compared to India.

Medical insurance is mandatory for students heading for most foreign universities. A few educational institutes insist on you getting an insurance policy on the campus. But the lucky ones, whose university allows them to select their own insurance policies, can put their money to better use by carefully selecting an insurance scheme in India.

Policies issued at home equip you with essential tools to manage your ever-bulging expenditure when you are out. Domestic student insurance policies would help prune the policy cost by over a third of the investment required by foreign insurance companies.

Moreover, foreign insurance policies would offer coverage merely for your medical expenses.

Even if a foreign policy offers other add-on benefits, they would not be in line with the expenses an Indian student would usually incur. For instance, a foreign student policy would offer coverage for expenditure on drug addiction rehabilitation and pregnancy, while a domestic policy would help you manage more relevant costs such as an emergency visit by either the student or the relative back home, loss of passport, an interruption in studies on medical grounds or loss of checked in baggage.

Besides offering medical expenses coverage of up to $500,000, Indian policies offer coverage for personal accident, lost baggage (checked), bail bond, personal liability and two-way tickets in case of medical emergency. Some others offer minimal stay facility charges along with two-way tickets for a relative to be with a student who has been hospitalised for more than seven days. Also, to battle out a financial crunch caused by the death of the person sponsoring your education abroad, the insurance company would reimburse the tuition fees, to a maximum limit of $10,000.

The coverage period for student overseas insurance policies ranges from 30 days to a maximum of 365 days, which can be extended once for an additional period of 30-365 days. The travel care insurance policy for students offered by Reliance General Insurance provides protection for a maximum of two years.

The policy premium, which is a one-time payment, is based on whether the student has opted for a university in the US and Canada or any other country. Medical costs in the US and Canada are higher than those in other countries and so are the premiums of policies tailor-made for the respective regions. You would need to invest less if your university is in, say, London.

The cost of getting a high-end plan for education in the US is at least 100% more than the policy meant for a student pursuing education in a non-US destination. Almost all policies offer four plans, differing in the medical expenses coverage and add-on facilities offered.

The low-cost plan would offer fewer facilities at a lesser premium. Few insurance companies offer plans for non-medical expenses. Such plans are meant for students whose universities insist on an in-house insurance policy.

Students planning to study abroad should make sure that the insurance company they are opting for has collaborations with international organisations. It makes sense to take a policy that offers cashless service, meaning that a third party administrator (TPA) would take care of the hospital bills, and the student can avoid the running around for reimbursement of bills.

TPAs are overseas partners of Indian insurers and they would have your policy details to settle the bills. The policyholder has to inform the TPA using an international helpline number provided by the insurance company in case of an eventuality.

Insurance players can register a policy in your name only when your student visa has been issued and the foreign university has confirmed your application. The overseas student insurance procedure takes 24 hours. However, make sure you start looking out for a suitable plan at least a month ahead of your departure. The coverage clock starts only from the day you take off

Conclusion:

Life cover and medical cover are a must for normal person. With uncertainties associated with new land and travel it’s a must for students planning to study abroad. Please always take help of a financial planner to decide the optimum amount of insurance cover that one needs.

Source : Ms.Kiran Chalke ,DNA

Do I Need Insurance ?

Well this is question most of ask ourselves after we tell the irritating caller that "I am not interested".

There are two kinds of people [Es duniya mein do tarah ke log hote hain]

• Type 1 : No I don't need it as "it" can never happen to me.OR
• Type 2 : I already have one.

Well if we carefully look around us.We will find enough instances to prove that we need insurance.[unless you have no dependents and will have none in future]

Some people may argue "you know all members in my family have lived till 80 my term insurance will be over by 60 , more so I do not get any money back .So why should I pay the premium ?"

Lets say you live in a society its highly probable that there has never been a theft ? Does that mean you stop locking the house ?

Do you get your money back from where you bought the lock if there is no theft ?

Though there is no comparison of ones life with a theft in the house but it does puts things in some perspective

Secondly through there are endowment plans which give returns .Term Policies are efficient . A term policy + a company deposit may give you better returns and cover as compared to an endowment plan.[However let a good financial planner decide whats best for you.As endowment plans once taken make forced disciplined saving ]

Type 2 : I already have insurance .You may have insurance which you took few years back to save tax .You need to evaluate your cover need from time to time .

E.g,A housing loan,Marriage,Personal Loan,Increase in Salary,Change / Upgrading your lifestyle,Birth of a child,Retirement of a parent,purchase of any big asset.

All these events are examples of events on which you should check your insurance cover
When income levels are low you might not be able to mitigate all your risk
For a typical individual the priority can be in the following order.

1. Life
   
2. Medical
3. Accident
4. Assets

For a typical individual life cover should at least be three times the annual salary.Here the presumption is that he has no liability and that his family / dependents will find alternate sources of income within 3 years.

By now you can see that insurance is more than a tax saving instrument or a compulsion by law [e.g.Car Insurance] its a need.

So be informed and take a decision on whether you have enough cover for a rainy day.

What is Insurance ?

Insurance in its basic form is defined as “ A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event."

A more technical definition would be:

Insurance, in and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.