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Radical Memorandum between IRDA and ULIP on Disclosing Financial Transactions

Shakti Singh Dulawat — Sun, 25 Jul 2010 07:16:32 +0000

Just very recently, a radical move has been proposed and agreed upon by the governing agency over all Life insurance companies of India primarily to bring into the scenario a more dependable and stronger foundation of the Life Insurance system all over India. The reality of disclosing the assets and financial status of these Life Insurances are basically the one which is demanded by IRDA so as to check and balance all of the income and expenditures of the many Life Insurance businesses mushrooming in India. This is both beneficial to the clients to be, the government of India and the Life Insurance Companies as well together with their possible investors.

Hence, because of this memorandum of agreement, Life insurance companies planning to raise money from bourses will now have to provide a financial account and disclose the investment performance of various unit-linked insurance plans (Ulips) over the past five years in order to help prospective investors gauge risks better. In this way, investors will be able to decide on whether to invest or not from those said prospective Life Insurance Companies.

Moreover, these companies will also have to give guidance on earnings from their present business and agreements with foreign promoters this way, clients and investors alike will be able to have a bigger and clearer picture of the entire business company where they will invest their money. This set up is basically to be followed and implemented according to new norms cleared by an inter-regulatory panel set up by SEBI. Good thing is, most of IRDA’s suggestions on disclosures have been accepted by the panel, said a senior official privy to the development. This new development is therefore close to being a great success.

It is interesting to note that Ulips are similar to equity schemes of mutual funds, but with an insurance cover thrown in. This is something safe and secured due to the cover insurance itself. This category accounts for over 80% of the portfolio of private insurers. Insurance watchdog IRDA, which has been granted the right to regulate Ulips after a public spat with SEBI, has tightened regulations to ward off criticism against untoward selling of this hybrid product. This practice will prevent abuses from the Life Insurance Companies.

Finally, loss-making companies will be allowed to tap the equity market since given the nature of the business, insurers can’t wait forever till they make profits, said another person familiar with the developments. “They should make all disclosures and let investors take the call,” the person said. This may not be a good signal to these losing companies but the most important fact is that all parties will be able to find where to stand and start all over again by finding the remedy with the help of everyone concerned.

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As a conclusion, IRDA, all Life Insurance Companies, the would-be investors and all prospective clients should exert efforts in trying to iron things out and finding the best possible solutions to remedy the problem that may emerge from the Life Insurance Companies’ not disclosing their respective assets and financial transactions. This would provide all sectors the best plans and evaluation in view of making the most of their business endeavors that will surely bring the economy to its apex progress and the lives of the citizens and these said companies stable.

Difference between IPO and mutual funds

Shakti Singh Dulawat — Tue, 15 Sep 2009 20:46:00 +0000

IPO (Initial Public Offering) is a float or an offer to buy a company’s stock or shares while mutual fund is an investment company that invests its pooled funds in a diversified list of securities. Diversify means to invest in the securities of different companies in different industries.
Mutual funds can be closed-end funds, open-end funds, large cap funds, mid-cap funds, equity funds, balanced funds, growth funds, no load funds, exchange traded funds, value funds, money market funds, international mutual funds, regional mutual funds, sector funds, index funds and funds of funds.
In our previous article we mention detail about what is IPO
Closed-end funds
Closed-end mutual fund has a set number of shares issued to the public through an initial public offering.
Open-end funds
These are operated by a mutual fund house which raises money from shareholders and invests in a group of assets.
Large cap funds
These seek capital appreciation by investing primarily in stocks of large blue chip companies.
Mid-cap funds
Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies.
Equity funds
Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies.
Balanced funds
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds
Growth funds
Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks.
No load funds
Mutual funds can be classified into two types – Load mutual funds and No-Load mutual funds. Exchange traded funds
Exchange Traded Funds (ETFs) represent a basket of securities that is traded on an exchange, similar to a stock.
Value funds
Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation.
Money market funds
Money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid.
International mutual funds
International mutual funds are those funds that invest in non-domestic securities markets throughout the world. Regional mutual funds
Regional mutual fund
This is a mutual fund that confines itself to investments in securities from a specified geographical area, usually, the fund’s local region.
Sector funds
Sector mutual funds are those mutual funds that restrict their investments to a particular segment or sector of the economy.
Index funds
An index fund is a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market.
Fund of funds
A fund of funds (FoF) is an investment fund that holds a portfolio of other investment funds rather than investing directly in shares, bonds or other securities.

QUOTE OF THE DAY:
Know what is advantage and disadvantage of a thing and try to analyze it.

CONCLUSION:
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. An initial public stock offering (IPO) referred to simply as an “offering” or “flotation,” is when a company issues common stock or shares to the public for the first time.

What is Demat Account

Shakti Singh Dulawat — Tue, 27 Jan 2009 15:54:00 +0000

Today we will talk about demat account,Demat – means a material is dematerialized. Here the demat mean the documents of shares that is in paper form will be demated and will be kep electronically in an account. This account is opened at many banks and majority of stock brokers. Your own bank where you have a savings account, they too may have this facility please ask them. Anyone who is holding the shares can open this account.

In India, a demat account, the abbreviation for dematerialized account, is a type of banking account which dematerializes paper-based physical stock shares. The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a stock broker.
This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a demat account should possess a Permanent Account Number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007.

How to Open Demat account
DEMAT account helps you to hold the shares in Electronic Format. To open a DEMAT account, it does not matter whether you are a salaried person or not. It is better to open a Trading and Demat account with the same company, so that when you trade shares, the Demat account automatically gets updated for Buy and Sell. You may contact Reliancemoney, Sharekhan, ICICIdirect etc., as per your convenience.

Is a demat account a must
Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing.

Required Documents for Demat account
- A canceled check(MICR)
- Proof of Identification
- Proof of Address
- Proof of Pan card (mandatory)
- Recent photographs, one and, or more

Benefits of Demat account
- A safe and convenient way to hold securities.
- Reduction in paperwork involved in transfer of securities.
- Reduction in transaction cost.
- Nomination facility.
- Transmission of securities is done by DP eliminating correspondence with companies.
- Holding investments in equity and debt instruments in a single account.

Now days demat account provide facility for buy sell mutual fund,stock,insurance,ULIP etc.
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Basics of Fundamental Analysis

Shakti Singh Dulawat — Mon, 19 Jan 2009 17:45:00 +0000

We received too much emails related to Fundamental Analysis, Today I want to show Basics of Fundamental Analysis, before discussion on it we must know about Fundamental Analysis.
What is definition of Fundamental Analysis:
Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the movement of stock prices.
Read Top 10 Treading Rules first.

Here is best book available for Fundamental Analysis

The fundamental information that is analyzed can include a company’s financial reports, and non-financial information such as estimates of the growth of demand for products sold by the company, industry comparisons, and economy-wide changes, changes in government policies etc..
Fundamental Analysis is a method of security valuation which involves examining the company’s financial and operations, especially sales, earnings, growth potential, assets, debt, management, products, and competition. Fundamental analysis takes into consideration only those variables that are directly related to the company itself, rather than the overall state of the market or technical analysis data

Here is some more detail so you can understand fundamental analysis more clearly.
When investing in the stocks, Evey one want the price of his/her stock to rise. Not only do we want our stock price to rise, we want it to rise FAST!It is human nature because we want money fast and as early as possible, this is one of the bad habit because this habit redirect us to wrong path, So the challenge is to figure out: which stock prices are going to rise fast?

Some stocks are cheap and some are costly. Some are worth Rs.1000 and some are even worth Rs 1.Some stock are highly treader and some are called penny stock.
Please remember that price of the stock is not important. The price of the stock does not make a stock good to buy. What is important is how much the price of the stock is likely to rise.

Best Example
If you invest Rs.1000 in one stock of Rs.500 and the price goes up to Rs.1100 you will make Rs.100. However, if you invest Rs.1000 in a Rs 1 stock, you will have 1000 stocks. If the price of the stock goes up from 50paise to Rs.2, then the Rs.2000 you invested is now Rs.2000. You made a profit of Rs.1000.
If you understand this, you can see that the price of the stock is not important. What is important is the rise in the stock’s price. More specifically the “percentage” rise in the stock price is important.
If the Rs.1000 stock becomes worth Rs.1100 then that is a 10% rise. This 10% rise only makes us Rs.100. On the other hand when we invest the same Rs.1000 in the Rs 1 stock and the stock price goes up to Rs.2, it is a 100% rise as the stock price has doubled. This 100% rise makes us Rs.2000.

The point is that when picking a company, we are interested in a company whose stock price will rise by a large percentage.

Please note: Rs 1 or Rs 2 These really small stocks are very volatile and unless you know what you are doing, do NOT get into them.Read what is Penny stock.

However, the point to be noted is that we are interested in stocks that will have the highest % rise in the stock price. Now the question is, how do you compare stocks.

How do you compare two companies that are in different fields and different industries? How do you know which one is fundamentally strong and which one is week?

If you try to compare two companies in different industries and different customers it is like comparing apples and elephants. There is no way to compare them!

So fundamental analysts use different tools and ratios to compare all sorts of companies no matter what business they are in or what they do!
Keep reading us.
Do you have suggestions for improving the blog, or types of content you’d like to see more of? We’re all ears, so please feel free to leave us a comment below. It’s a brand new year, and we’re ready to get started!

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Employee what to do in recession

Shakti Singh Dulawat — Thu, 11 Dec 2008 15:25:00 +0000

We all know that cost cutting is running, so if you are employee then remember this 21 point to make your life secure in this recession period.

Do not take too much vacation
Do not complain
Do not waste time gossiping
Don’t resist a transfer
Don’t resist travel
Don’t resist a salary cut
Don’t resist extra-work load
Don’t resist extra time at office if needed
Don’t change jobs in this market. It is too risky
Be punctual to office
Ensure you pick up new skills
Ensure you deliver as per deadlines
Ensure that you contribute to knowledge forums etc
Do something innovative
Take training programs
Organize team meeting to improve productivity
Always be engaged & productive
Work doubly hard and save money for your company
Do not take too much tension
Be cheerful, keep smiling, life goes on
Be happy always

Follow above point and make your life cheerful, if you loss job then do not worry because when god close one door then 100 more are open for you.
“Nothing happens by chance, my friend… No such thing as luck. A meaning behind every little thing, and such a meaning behind this. Part for you, part for me, may not see it all real clear right now, but we will, before long.”
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Do not forgot to read Unit Link Insurance Plan(All in One)

Mutual funds vs ULIP

Shakti Singh Dulawat — Wed, 26 Nov 2008 16:29:00 +0000

uAlmost all investor ask question that what is different between ULIP and mutual fund, it is necessary to know about both scheme before investing.
We are mention two different article that show the some difference between both. Before reading this article you must read.
Read What is ULIP
Read before buy ULIP
Read what is mutual fund
Read advantage of SIP

1) ULIP are not a mutual fund, even though in some ways their structure is quite similar. In the sense, they too invest in the equity and debt markets. The risk lies on the investor. ULIP issue units and reveal the net asset value of these units. That is where the similarity ends. ULIPs are a mix of investment and insurance.
Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house.

2) ULIPs invest for the long term, as they expect investors to stay for the long term. And the purpose of a ULIP is also different build assets through a pension plan, retirement plan or child plan. All of which, need very long term investing, say 10-15 years or even more.
Mutual fund investment is also best for long term, but it show result after 3-5 years. In my opinion if you are not getting profit after 3-5 years in mutual fund then your invest plan is wrong.

3) The advantage a ULIP has is that it also blends insurance into the same plan. The insurance you buy could be a standard term cover or a critical illness rider is at the same rate as which you would buy it independently. But the advantage is that here it is embedded into the same policy, and that gives additional flexibility to increase the risk cover periodically as you grow older or earn more.
Before some times mutual fund companies also start insurance facility in SIP, but Selling such products was banned by Life Insurance Council, Amfi’s counterpart in the insurance industry.

4) ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.
In Mutual fund Section 80C benefits are available only on investments in tax-saving funds.

Read ULIP FAQ’s

So it is not an issue, of whether a mutual fund is better or a ULIP. It is about your need. Both can co-exist in your basket of needs. So identify your needs with a financial planner and then pick the product suitable for you.
This are top 5 stock at this time you must buy.
Top 5 stock buy for 2-3 years
Read treading rules before investing.

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Do not forgot to read Rules of Success.

Should you Invest at this level

Shakti Singh Dulawat — Thu, 20 Nov 2008 14:57:00 +0000

So friends today market close in down side, One thing this movement will never come again so buy as much you can.People asking question is that the time to buy the stock I am saying yes it is the time.

There is some things we need to remember so please read trading tips before investing.
This are top 5 stock you must buy at the movement.

If you are able to invest monthly then select some best mutual fund at this movement.Now if you are going to invest at this level then
please keep following point in your mind.
1) Do not invest all your money in single time
For example if you want to invest 10000 Rs in stock market then invest 4000 at this level, Now after investing here is two condition

If market move up side then sell those stock and book profit, I am telling this because this is the time to collect profit either it is 100 rs or 1000 rs do not miss that.
If market move down side again then invest 3000 rs in two part this is best way to invest.

2) Invest if you do not need that money for next 2-3 years.
Example if you are going to invest 10000 rs at this level but you need 10000 rs again after 6 month for some function in family or other assist then do not invest at this level.
3) Think for long term As this is my line always “Invest for long term”, so If you are going to invest at this level then think for long term. I can’t guarantee that you are able to book profit in next couple of month.
4) This is the time to invest, but invest your own money only.
5) Last point is for new investor,those are new Please use monthly investment using SIP.

Mutual fund SIP are best option for long term from here. Reliance growth fund and reliance regular saving fund are best option for new investor.
Read more about mutual fund.
At last “If you want to feel rich, just count the things you have that money can’t buy”
Hope you people earn lot of money.

Marriage preparation & jewellery

Shakti Singh Dulawat — Wed, 19 Nov 2008 16:03:00 +0000

Friends today market also close in down term and history is repeating.There are too much investor are shocked about there money. But Those who are waiting for result hope they will got fruits in near future.

Marriage session is running, every one need jewellery, for couple. You can choose jewellery as a best gift option too.Today we are talking about importance of marriage preparation and marriage jewellery. I know one thing most thing in life we prepare for this is exam interview etc.

Marriage is a importance part of life and it never come again so it is necessary to make preparation of marriage.Advantage of preparation is that it make things easier.

Now the best way would be to think of wedded life like a garden. You can have a spot of earth that has the most wonderful view but if you don’t toil on the soil, nothing of beauty is going to grow. So you dig, you buy good seeds or cuttings, you plant, you nurture, you weed and you then have the satisfaction of seeing buds grow and blossoms bloom.

So those who are going to marriage in next couple of month , I am sending my best wishes.

Remember this point before buying jewellery
1) Do not buy jewelry as an investment. You have to cc – manufacturing costs, overhead, and profit, all of which increase f cost of jewelry above the value of the gems and precious used.
2) Check gems from all angles, moving them under the light. although this precaution is essential with star and eye gems, it is also nesessary for other gems.
3) Do not look for bargains or “sales” in fine jewelry precious metals and gems. You get what you pay for, and . for what you get in most cases.
4) Ask about names or terms you don’t understand. Make sure you are satisfied before you buy.
5) Be sure you understand what care you should take in wearning, storing, and cleaning jewelry before you buy it.

This are top 5 stock at this time you must buy.
Top 5 stock buy for 2-3 years
Read treading rules before investing.

Advantage of financial planing

Shakti Singh Dulawat — Tue, 18 Nov 2008 12:52:00 +0000

David Dreman say that “Psychology is probably the most important factor in the market – and one that is least understood.”

Some people work without plan in work area,education and life it is not a good way to fight with life.All is related to our financial planing and if we work without plan then it really fail.It is just a small article I am not showing that I am the best but it is just my experience with financial plan I am sharing with it.There is not a particular age when you should think about having a financial plan.If you want to fulfill your dream as soon then plan today for future and work with it.Your financial plan must not be related to any company profit or stock market, it must be based on your future target and dreams.Financial plan play an important role for future dream.If your work according to a plan then you are very close to success.

What we have to add in financial planing

Your marriage
Your retirement
Your Insurance
Children education
House and cars + other expanse
Parents health

Now after creating financial plan you must review it time by time.It is important to review it as your life change.
This are some best reason when we must review it.

Marriage or divorce
Birth/Death in family
Health care issues of elderly parents or other family members
Significant wealth increase or decrease
Changes in tax laws
Purchase or sale of major property

Now Determine your short-term personal goals and objectives and try to achieve them as soon as possible.At last I want to say that Look at your entire financial picture today and plan for the future.

This are top 5 stock at this time you must buy.

Top 5 stock buy for 2-3 years

Read treading rules before investing.

Stupid statement in stock market

Shakti Singh Dulawat — Thu, 13 Nov 2008 15:16:00 +0000

There are some stupid statement in stock market also, means your are psychology disturb form stock market this is called illness when you talk that I learn today 1000 rs and loss tomorrow 2000 this all are stupid statement.
we always talk about the stock and if people do not know much thing then they also talks too much.They provide free advice without knowing about the stock. It is necessary to know about the stock before passing any advice.Some people are habitual for this type of thing. This all called fake advice.
I am not talking for all people there are lot of smart adviser also in this world also they know too much thing related to their field.
Here are five things you shouldn’t say, why you shouldn’t say them and what an experienced investor would have said instead.

1) My invest is in “X” company and it will return me sure profit.
Now remember that if a company is strong then it will surely return a profit.But in stock market we can not say any thing very clearly because this is a game of money.No investment is a sure thing.Some company can have serious problems that are hidden from investors.To protect yourself from disaster, diversify your investments. This is particularly important if you choose to invest in individual stocks instead of or in addition to already-diversified mutual funds.
Read What is mutual fund

2) I never buy stock now
It’s not a good idea to invest in something that is currently declining in price.If the stocks you’re purchasing still have stable fundamentals, then their currently low prices are likely only a reflection of short-term investor fear. In this case, look at the stocks you’re interested in as if they’re on sale. Take advantage of their temporarily lower prices and buy up

3) Now I have new broker
It is not necessary that if you change a broker then your are in profit.Whenever you make a trade, you must pay a commission. Even most online discount brokerage companies charge a fee of at least $5 per trade, and that’s with you doing the work yourself. If you’ve hired an actual broker to do the work for you, your fees will be significantly higher and may also include advisory fees. These fees add up over time, eating into your returns.
Instead of hiring a broker make financial planing so you can earn and learn also.

4) I am safe
No one is safe in stock market, no one can say what happen tomorrow in stock market.Being shares of 500 stocks is better than owning just a few stocks because your investment is diversified.Own a mutual fund that hold too much stock time make your investment diversified.

5) I make money today
In stock market You make money when your investments go up in value and you lose money when they go down.But there are some gain that is only on paper.You can check your value only after selling stock.hat’s yet another reason why you don’t need to worry too much about cyclical declines in the stock market – if you hang onto your investments, there’s a very good chance that they’ll go up in value.And if you’re a long-term investor, you’ll have plenty of good opportunities over the years to sell at a profit.

If you are using this type of statement then correct them.Avoid making the mistakes described in these five verbal blunders and you’ll be on the right path to higher returns.
All the best
This are top 5 stock at this time you must buy.
Top 5 stock buy for 2-3 years
Read treading rules before investing.