I came across this tool which one can use to compute savings
over a certain period of time.It takes into account personal
income tax and also accounts for inflation.
You can find it at
http://economictimes.indiatimes.com/Personal-Finance/personalfinance/837555174.cms
Happy Computing!
Sunday, July 18, 2010
Thursday, March 25, 2010
What should you look for in a Health Insurance Plan?
Health insurance protects you from incurring a financial loss as a result of a critical illness, disability or accident. Most Insurance companies cover the same thirty critical illnesses and provide lump sum payments in the event of such an illness occurring.
While looking for a health insurance plan, there are various factors that you must consider, some of them being….
Lifetime cover is essential
Buying a health insurance policy with lifetime coverage is essential because people are expected to live longer. Many people feel that since their employer provides them with a medical cover, they do not need to buy their own insurance plan.But what happens, once you retire or are forced to resign from the company’s services….will you buy insurance at age 55 at an unfavorable rate?
It is always advisable to buy health cover when you are still young and healthy as some products may not be available to people over a certain age or to those with an existing illness.
Statistics suggest that people are expected to live much longer…much after their retirement years, so plan for a life after age 55.
“As charged” Vs plans with limits.
There are two kinds of plans –those that come with certain sub limits –as in per day or for each category and those that do away with limits –or “As charged.”The latter is better as there are no limits on the medical benefits and it means that hospitalization expenses will be paid according to what has been billed subject to any deductible or co-insurance.These plans also automatically take care of the rising health care costs.
Shield plans have deductible and co-insurance features
All Shield hospitalisation plans include a “deductible”, the first layer of charges that the policyholder has to bear. Depending on the type of plan, the deductible is typically about $2,000 to $3,000. The plans also have a co-insurance feature, which means the policyholder shares part of the cost of the bill, usually 10 per cent over and above the deductible. For example, if an A-class ward bill is $5,000, the policyholder bears the first $3,000 as the deductible, and $200 as co-insurance (10 per cent of the remaining $2,000). The insurer pays the remaining $1,800. Insurers offer riders which waive the deductible and/or co-insurance, for a premium.
Go for a complete package –one that includes a deductible and a co-insurance rider ,so that you get covered from the first dollar!
Pre-existing conditions are not covered
Pre-existing conditions refer to medical conditions, known or unknown to the policyholder, that existed before an application was made to buy a health plan. Under personal hospitalisation policies, these pre-existing conditions are typically spelt out by the insurer and excluded throughout the lifetime of the insurance plan.
Guaranteed renew ability
A product that guarantees that your cover will stay in force as long as you pay the premiums on time is naturally better than one that gives insurers the right to cancel the cover by giving written notice before your plan is due for renewal. However, most insurers reserve the right to change premiums, benefits, and the terms and conditions of their plans when they are due for renewal by giving you a written notice.
Limitation to geographical areas
Check to see if your plan covers hospitalization back home,if you’re a temporarily residing in a country.Some plans will cover only emergency treatment anywhere in the world whereas others may cover you for all kinds of hospitalization.So, bear this in mind if you’re a frequent traveler and want your plan to cover you while on a business trip.
Buy one plan to cover all your needs.
While it may be tempting to buy separate plans that cater to accident,illness etc, remember that the total benefit is limited to the actual expense incurred so there is no need to buy extra policies.
While looking for a health insurance plan, there are various factors that you must consider, some of them being….
Lifetime cover is essential
Buying a health insurance policy with lifetime coverage is essential because people are expected to live longer. Many people feel that since their employer provides them with a medical cover, they do not need to buy their own insurance plan.But what happens, once you retire or are forced to resign from the company’s services….will you buy insurance at age 55 at an unfavorable rate?
It is always advisable to buy health cover when you are still young and healthy as some products may not be available to people over a certain age or to those with an existing illness.
Statistics suggest that people are expected to live much longer…much after their retirement years, so plan for a life after age 55.
“As charged” Vs plans with limits.
There are two kinds of plans –those that come with certain sub limits –as in per day or for each category and those that do away with limits –or “As charged.”The latter is better as there are no limits on the medical benefits and it means that hospitalization expenses will be paid according to what has been billed subject to any deductible or co-insurance.These plans also automatically take care of the rising health care costs.
Shield plans have deductible and co-insurance features
All Shield hospitalisation plans include a “deductible”, the first layer of charges that the policyholder has to bear. Depending on the type of plan, the deductible is typically about $2,000 to $3,000. The plans also have a co-insurance feature, which means the policyholder shares part of the cost of the bill, usually 10 per cent over and above the deductible. For example, if an A-class ward bill is $5,000, the policyholder bears the first $3,000 as the deductible, and $200 as co-insurance (10 per cent of the remaining $2,000). The insurer pays the remaining $1,800. Insurers offer riders which waive the deductible and/or co-insurance, for a premium.
Go for a complete package –one that includes a deductible and a co-insurance rider ,so that you get covered from the first dollar!
Pre-existing conditions are not covered
Pre-existing conditions refer to medical conditions, known or unknown to the policyholder, that existed before an application was made to buy a health plan. Under personal hospitalisation policies, these pre-existing conditions are typically spelt out by the insurer and excluded throughout the lifetime of the insurance plan.
Guaranteed renew ability
A product that guarantees that your cover will stay in force as long as you pay the premiums on time is naturally better than one that gives insurers the right to cancel the cover by giving written notice before your plan is due for renewal. However, most insurers reserve the right to change premiums, benefits, and the terms and conditions of their plans when they are due for renewal by giving you a written notice.
Limitation to geographical areas
Check to see if your plan covers hospitalization back home,if you’re a temporarily residing in a country.Some plans will cover only emergency treatment anywhere in the world whereas others may cover you for all kinds of hospitalization.So, bear this in mind if you’re a frequent traveler and want your plan to cover you while on a business trip.
Buy one plan to cover all your needs.
While it may be tempting to buy separate plans that cater to accident,illness etc, remember that the total benefit is limited to the actual expense incurred so there is no need to buy extra policies.
Friday, March 19, 2010
How much do you need for your retirement?
I found this very simple and easy calculator to compute the amount you
would need for your retirement.
It addresses different aspects such as
1)What you need to save?
2)How fast will your savings grow?
3)Can you retire early?
4)Get income for life?
5)When you will be a millionaire?etc.
I've pasted the link below.Though it may not give you a complete picture,it will
get your pulse ticking and soon you will be asking questions and finding solutions
to your problems!
Have fun with it at
CNN and Money Magazine Retirement Calculator
http://cgi.money.cnn.com/tools/
would need for your retirement.
It addresses different aspects such as
1)What you need to save?
2)How fast will your savings grow?
3)Can you retire early?
4)Get income for life?
5)When you will be a millionaire?etc.
I've pasted the link below.Though it may not give you a complete picture,it will
get your pulse ticking and soon you will be asking questions and finding solutions
to your problems!
Have fun with it at
CNN and Money Magazine Retirement Calculator
http://cgi.money.cnn.com/tools/
Sunday, March 7, 2010
How many benefits can a monthly investment plan have?(Count them and see!)
1.Become a disciplined investor.
Being disciplined -it's the key to investing success.With a SIP -Systematic Investment Plan or a MIP -Monthly Investment Plan, you commit an amount of your choice to be invested every month.Think of each MIP payment as laying a brick.One by one,you'll see them transform into a building.You'll see your investments accrue month after month.It's as simple as giving at an auto debit instruction to your bank for a fixed amount in a scheme of your choice.It's the perfect solution for irregular investors.
2.Reach your financial goals.
Imagine you want to buy a car a year from now,but you don't know where the down -payment will come from.By investing an amount of your choice every month,you can plan for and meet your financial goals,like funds for a child's education or a comfortable post -retirement life.
3.Take advantage of dollar cost averaging.
Most investors want to buy stocks when the prices are low and sell them when prices are high.But timing the market is time consuming and risky.To illustrate this we'll compare investing the identical amounts through a MIP and in one lump sum.
Imagine John invests $1000 every month in an equity mutual fund scheme,starting in January.His friend James,invests $12000 in one lump sum in the same scheme.The following table indicates how their respective investments would have performed from Jan to Dec.
John's Investment James' Investment
Month NAV Amount Units Amount Units
Jan-10 9.35 1000 107.01 12000 1284.11
Feb-10 9.40 1000 106.39
Mar-10 8.12 1000 123.11
Apr-10 8.75 1000 114.29
May-10 8.01 1000 124.81
Jun-10 8.93 1000 112.04
Jul-10 9.10 1000 109.87
Aug-10 8.31 1000 120.34
Sep-10 7.57 1000 132.14
Oct-10 6.46 1000 154.75
Nov-10 6.93 1000 144.28
Dec-10 7.60 1000 131.58
Total 12000 1480.60 12000 1284.10
As seen in the table,by investing with an MIP,you end up buying more units when the price is low and fewer units when the price is high.However,over a period of times these
Market fluctuations are generally averaged.And the average cost of your investment is often reduced.
At the end of the 12 months,John has more units than James,even though they invested the same amount.That’s because the average cost of John’s units is much lower than that of James.James made only one investment and that too when the per-unit price was high.
John’s average unit price =12000/1480.60 =$8.10
James’ average unit price =$9.35
4. Grow your investment with compounded benefits.
It is far better to invest a small amount of money regularly, rather than save up to make one large investment.This is because while you are saving the lump sum,your savings may not earn much interest.
Imagine John was 20 years old when he began working.Every month he saves and invests $5000 till he is 25 years old.The total investment made by him over the last 5 years is $300,000.
James too started working at age 20 ,but does not invest any money.He gets a large bonus of $300,000 at age 25 and decides to invest the entire amount.
Both of them decide not to withdraw these investments till they turn 50.At 50.John’s investments have grown to $46,68,273 whereas James’ investments has grown to $3617084.(Figures based in 10%pa interest compounded monthly).
John’s small contributions to a MIP and his decision to start investing earlier than James has made him wealthier by over $100,000 .
5. Do all this effortlessly.
Investing with an MIP is simple and easy.All you need is an auto debit instruction to your Bank for the required sum to be debited every month.However, do read the terms and conditions of the MIP before enrolment.
All you have to do after that is sit back and watch your investments accumulate.
Being disciplined -it's the key to investing success.With a SIP -Systematic Investment Plan or a MIP -Monthly Investment Plan, you commit an amount of your choice to be invested every month.Think of each MIP payment as laying a brick.One by one,you'll see them transform into a building.You'll see your investments accrue month after month.It's as simple as giving at an auto debit instruction to your bank for a fixed amount in a scheme of your choice.It's the perfect solution for irregular investors.
2.Reach your financial goals.
Imagine you want to buy a car a year from now,but you don't know where the down -payment will come from.By investing an amount of your choice every month,you can plan for and meet your financial goals,like funds for a child's education or a comfortable post -retirement life.
3.Take advantage of dollar cost averaging.
Most investors want to buy stocks when the prices are low and sell them when prices are high.But timing the market is time consuming and risky.To illustrate this we'll compare investing the identical amounts through a MIP and in one lump sum.
Imagine John invests $1000 every month in an equity mutual fund scheme,starting in January.His friend James,invests $12000 in one lump sum in the same scheme.The following table indicates how their respective investments would have performed from Jan to Dec.
John's Investment James' Investment
Month NAV Amount Units Amount Units
Jan-10 9.35 1000 107.01 12000 1284.11
Feb-10 9.40 1000 106.39
Mar-10 8.12 1000 123.11
Apr-10 8.75 1000 114.29
May-10 8.01 1000 124.81
Jun-10 8.93 1000 112.04
Jul-10 9.10 1000 109.87
Aug-10 8.31 1000 120.34
Sep-10 7.57 1000 132.14
Oct-10 6.46 1000 154.75
Nov-10 6.93 1000 144.28
Dec-10 7.60 1000 131.58
Total 12000 1480.60 12000 1284.10
As seen in the table,by investing with an MIP,you end up buying more units when the price is low and fewer units when the price is high.However,over a period of times these
Market fluctuations are generally averaged.And the average cost of your investment is often reduced.
At the end of the 12 months,John has more units than James,even though they invested the same amount.That’s because the average cost of John’s units is much lower than that of James.James made only one investment and that too when the per-unit price was high.
John’s average unit price =12000/1480.60 =$8.10
James’ average unit price =$9.35
4. Grow your investment with compounded benefits.
It is far better to invest a small amount of money regularly, rather than save up to make one large investment.This is because while you are saving the lump sum,your savings may not earn much interest.
Imagine John was 20 years old when he began working.Every month he saves and invests $5000 till he is 25 years old.The total investment made by him over the last 5 years is $300,000.
James too started working at age 20 ,but does not invest any money.He gets a large bonus of $300,000 at age 25 and decides to invest the entire amount.
Both of them decide not to withdraw these investments till they turn 50.At 50.John’s investments have grown to $46,68,273 whereas James’ investments has grown to $3617084.(Figures based in 10%pa interest compounded monthly).
John’s small contributions to a MIP and his decision to start investing earlier than James has made him wealthier by over $100,000 .
5. Do all this effortlessly.
Investing with an MIP is simple and easy.All you need is an auto debit instruction to your Bank for the required sum to be debited every month.However, do read the terms and conditions of the MIP before enrolment.
All you have to do after that is sit back and watch your investments accumulate.
Friday, January 22, 2010
Coping with a financial emergency
Have you just been faced by an unexpected financial emergency and don’t know what to do? It could be due to a job loss, some urgent medical expenses or some natural calamity that could alter your financial situation and can be incredibly stressful. The bills still need to be paid, the utilities need to stay on, and you need to put food on the table, so how should you cope with a financial crisis?
Evaluate the cause of the problem
Sit down and carefully evaluate the problem at hand. First, determine what has brought out the emergency –is it is job loss, a natural disaster, a dear one who is critically ill. This is important as you need to have a specific solution for each one. For instance, if it is a job loss –how long before you are able to find another. Each situation can lead to similar burdens, but your plan should be to address the root of the problem and look for an early solution.
Prioritize Expenses
Not all expenses are created equal. There are certain bills that need to be paid before others. Some of the most important items to put at the top of your list should be food and shelter.Once you have established which bills are the most important, you can begin looking for expenses to cut out of your budget.
For instance ,think about those premium channels on cable television that you very rarely find the time to watch. Should they stay or simply go? Check your cell phone plan and consider cutting back or eating at home entirely. It doesn’t take much. If you were to only find five different ways to save $20 each month, you’ve instantly freed up $100 that can go towards your important and necessary expenses.
Negotiate With Lenders
If you’re having trouble with credit cards, medical bills, or even your mortgage, the first thing you should do is call your lender. Believe it or not, they will love to hear from you. People so often make the mistake of waiting until they are already severely delinquent before contacting their lenders, and by then find that they cannot mutually agree on the terms and conditions. So, don’t wait till the last minute before you decide to act on your liabilities.
Find other sources of income.
When we plan for some thing, we always make a back up plan.So, in this case –if you had anticipated this emergency, you may have some money set aside in an emergency fund to help pay for any unexpected expenses. But do you have a back up for this fund, as in what is your plan B?
You can always try to get a loan or use credit cards, but these may only make the problem worse. Another option could be to check with friends and family.While this may put a strain on some relationships, do proceed with caution.
In addition, when it comes to a job loss, make sure you check in your local community for resources to help you get back to work. You may be able to find some workshops that can assist in putting your resume together, polishing your interview skills, and even do some networking to possibly find work.
Evaluate the cause of the problem
Sit down and carefully evaluate the problem at hand. First, determine what has brought out the emergency –is it is job loss, a natural disaster, a dear one who is critically ill. This is important as you need to have a specific solution for each one. For instance, if it is a job loss –how long before you are able to find another. Each situation can lead to similar burdens, but your plan should be to address the root of the problem and look for an early solution.
Prioritize Expenses
Not all expenses are created equal. There are certain bills that need to be paid before others. Some of the most important items to put at the top of your list should be food and shelter.Once you have established which bills are the most important, you can begin looking for expenses to cut out of your budget.
For instance ,think about those premium channels on cable television that you very rarely find the time to watch. Should they stay or simply go? Check your cell phone plan and consider cutting back or eating at home entirely. It doesn’t take much. If you were to only find five different ways to save $20 each month, you’ve instantly freed up $100 that can go towards your important and necessary expenses.
Negotiate With Lenders
If you’re having trouble with credit cards, medical bills, or even your mortgage, the first thing you should do is call your lender. Believe it or not, they will love to hear from you. People so often make the mistake of waiting until they are already severely delinquent before contacting their lenders, and by then find that they cannot mutually agree on the terms and conditions. So, don’t wait till the last minute before you decide to act on your liabilities.
Find other sources of income.
When we plan for some thing, we always make a back up plan.So, in this case –if you had anticipated this emergency, you may have some money set aside in an emergency fund to help pay for any unexpected expenses. But do you have a back up for this fund, as in what is your plan B?
You can always try to get a loan or use credit cards, but these may only make the problem worse. Another option could be to check with friends and family.While this may put a strain on some relationships, do proceed with caution.
In addition, when it comes to a job loss, make sure you check in your local community for resources to help you get back to work. You may be able to find some workshops that can assist in putting your resume together, polishing your interview skills, and even do some networking to possibly find work.
Saturday, December 26, 2009
Make every dollar count
Once you withdraw cash from the ATM,it gets spent some how or the other.This is a problem many of us face.While we know, it is important to stash away an emergency Fund or plan wisely for our retirement ,we fail to do so.For some of us, the process just seems too complex ,for others it is difficult to devote time to it.
Take time to think about how you can better manage your money and reap tangible benefits.It need not be difficult,simple steps can go a long way.
For instance, saving $ 200 a month,which is less than $7 a day,throughout your working years (assume 40 years) would grow to over $140,000(assume a conservative return of 2%).Paying credit card bills in full, can also result in substantial savings.
Take the first step today.Make the effort to learn about money matters now.
1)Keep track of expenses
Create a simple XL sheet which can track your monthly expenses.Categorize them into
Fixed and variable expenses.Fixed meaning those that will remain unchanged,for eg –overheads like rent,home installment payments,insurance premia,domestic worker’s pay,school fees etc.Variable like your monthly grocery,utility bills and other miscellaneous expenses.Prepare an estimate of your expenses and treat is as a budget.
Try and stick to your budget.It may not be easy at first,but once you get the hang of it, you will notice that you need not list out expenses in detail every month,just a brief estimate will do.Once you have the figure ready,withdraw an amount at the beginning of the month and try not to make further withdrawals.
2)Save first
Try to limit the outflow of your debt payments to about 30% of your monthly salary,with this you can be sure to save at least 10-30% of your monthly income.Set this amount aside –to create an emergency fund,invest in bonds or equity,monthly investment plans etc.
3)Take time to learn about financial products.
This is the most important step…once you’re done with step (1) and (2).Invest wisely
and according to your risk profile.Remember it’s never too early to start.Enlist the help of a professional financial advisor who can help you to make the right decisions.
Take time to think about how you can better manage your money and reap tangible benefits.It need not be difficult,simple steps can go a long way.
For instance, saving $ 200 a month,which is less than $7 a day,throughout your working years (assume 40 years) would grow to over $140,000(assume a conservative return of 2%).Paying credit card bills in full, can also result in substantial savings.
Take the first step today.Make the effort to learn about money matters now.
1)Keep track of expenses
Create a simple XL sheet which can track your monthly expenses.Categorize them into
Fixed and variable expenses.Fixed meaning those that will remain unchanged,for eg –overheads like rent,home installment payments,insurance premia,domestic worker’s pay,school fees etc.Variable like your monthly grocery,utility bills and other miscellaneous expenses.Prepare an estimate of your expenses and treat is as a budget.
Try and stick to your budget.It may not be easy at first,but once you get the hang of it, you will notice that you need not list out expenses in detail every month,just a brief estimate will do.Once you have the figure ready,withdraw an amount at the beginning of the month and try not to make further withdrawals.
2)Save first
Try to limit the outflow of your debt payments to about 30% of your monthly salary,with this you can be sure to save at least 10-30% of your monthly income.Set this amount aside –to create an emergency fund,invest in bonds or equity,monthly investment plans etc.
3)Take time to learn about financial products.
This is the most important step…once you’re done with step (1) and (2).Invest wisely
and according to your risk profile.Remember it’s never too early to start.Enlist the help of a professional financial advisor who can help you to make the right decisions.
Financial planners can help you manage your money better
With the world economy slipping into a recession last year as a result of the global financial crisis, some people have seen their assets dwindle in value and have suffered setbacks in their investment goals and retirement plans
In such times, a professional financial adviser can help you get a better overview of your finances and draw up a new strategy to ride out the economic downturn.
It is always advisable to periodically review your portfolio and see if it fulfills your desired objectives or goals.There is no common strategy in financial planning as each individual’s circumstances and objectives are different.This is where a financial advisor can step in,assess the situation and dispense advise accordingly.
While,it is important for an advisor to hold the necessary qualifications and have an understanding of how the markets operate,it is most crucial to translate these into financial products which give the client an option to enhance his current lifestyle. Financial advisors also need to act responsibly as many times clients entrust their retirement and the future of their children’s education to them.
Thus, financial planning takes on a much higher perspective as it is just not about numbers but people and the right solutions. Products are only a means to an end, not the end in it-self.
In such times, a professional financial adviser can help you get a better overview of your finances and draw up a new strategy to ride out the economic downturn.
It is always advisable to periodically review your portfolio and see if it fulfills your desired objectives or goals.There is no common strategy in financial planning as each individual’s circumstances and objectives are different.This is where a financial advisor can step in,assess the situation and dispense advise accordingly.
While,it is important for an advisor to hold the necessary qualifications and have an understanding of how the markets operate,it is most crucial to translate these into financial products which give the client an option to enhance his current lifestyle. Financial advisors also need to act responsibly as many times clients entrust their retirement and the future of their children’s education to them.
Thus, financial planning takes on a much higher perspective as it is just not about numbers but people and the right solutions. Products are only a means to an end, not the end in it-self.
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