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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Archive for the ‘Insurance’ Category

Positive development

Posted by Muthu on August 24, 2019

By this time, you would have heard about the various announcements made by finance minister last evening.

The budget she presented last month lacked focus to address the problems faced by various sectors in the economy. Not only there was nothing progressive but also there were regressive steps as well.

There has been lot of voices against the apathy showed by the government on economic front.

Finally government has taken series of positive measures. These measures include some progressive steps and withdrawal of some earlier regressive steps.

What this would do immediately is to build positive mind set in the business and investing community.

The beginning of all good things is positivity.

It may take probably six months or so to start seeing the impact of these measures on economy.

I’ve no clue about how markets work in the near term. Still it may start reflecting the development even before it happens. Markets rarely reflect the present but it’s opinion about the future. So I wouldn’t be surprised if markets start recovering from the last 20 months of bear run.

So it is only a matter of time for things to start looking better.

The finance minister has also promised more positive measures to be announced in the coming weeks. This also augurs well for the future.

Bull and bear markets keep following each other. There is no permanent bull or bear market.

In bull markets, the NAV goes up. In bear markets, the units you acquire goes up. In the long run, combination of both only creates good wealth.

Though some of you became very anxious recently, all of you stayed the course.

Ultimately staying the course is what matters and that alone creates wealth.

Be ready for positive things in the months to come.

A good beginning has been made yesterday.

Posted in Economy, General, Insurance, Muthu's Musings | 1 Comment »

Beware of LIC agents pitch

Posted by Muthu on December 2, 2013

I hear that some LIC agents are asking to take policies before 31’st December 2013 as the current ones would no longer be available from 1’st January 2014. 

Probably brisk sales may be going on for LIC policies during the last few months and it may reach feverish pitch this month. 

Please understand that this is a ploy by agents to maximize their revenue in a shorter span for time. 

It is true that existing policies would no longer be available after the end of this month. What is unsaid is that, new policies with better features for customers are being introduced from next month.

 From January 1’st;

 1)     Surrender value would be higher

 2)     Minimum holding period to be eligible for surrender is being decreased

 3)     The insurance cover would be more for the premium paid (sum assured as number of times of premium)

 4)     The commission for agents are being brought down

 5)     LIC would be opting for a new mortality table. As life expectancy has increased in the last decade, the mortality charges would come down. This would result in decrease of term insurance premium and also mortality charges for other policies

 6)     Service tax is levied only by private insurers so far. LIC has been absorbing the same into their pockets. Like private insurers, LIC also would start passing on the service tax to its customers

As we repeatedly mention, all one need is a reliable term cover from a good life insurance company at a competitive cost. Rest is all noise. So I’m confident that you would not be falling for these sales pitches. Still just wanted to write this on the side of caution.

Whenever some one says this is now or never option, be skeptical and completely on guard.

Even in mutual fund space, a closed ended value fund of a fund house was aggressively sold last month even though it has a good performing similar open ended fund. Aggressive campaign and high commission resulted in mobilizing of higher corpus. Before abolition of entry load in August 2009, there was aggressive pitching and selling of funds so that entry load on the same may be enjoyed; similar to what is being done by LIC agents done now.

It’s your money and any one pushing you to take a decision is definitely not working in your interest.

Tail Piece: We always make it a point to keep emphasizing on staying the course and have patience. Last week, Franklin India Blue Chip Fund completed 20 years. Rs.1 lakh invested in the fund 20 years ago is now worth Rs.53 lakhs, which works out to annualized return of 21.95% per annum. This is despite bull and bear markets, up and down business cycles, economic growth and slow down, depression and euphoria, performance and non performance of funds in some years etc… Much wealth is made by not doing frequent tinkering but patiently staying the course. I wish that we get such rewards by developing these traits.

Posted in General, Insurance, Muthu's Musings | 3 Comments »