Sunday, August 31, 2008

Keep in mind while trading OPTIONS

Below are some tips to keep in mind, while trading OPTIONS:

1) 20 - 100 rule: Make sure that you will not tolerate the Loss of more than 20 % of premium money you are invested per trade (say 3 out of 10 trades=30%), and lock in 100 % profits of premium money per trade (say 7 out of 10 trades=70%)

So in the long run for every 3 losing trades you will be having the 7 winning trades.

Get out when you see a drop in 20 % of the premium money.

2) Make a simpler strategy and trade with the above rule.(You might be reading books and have arrived upon many strategies, but trade one strategy at a time. That too it should be plain simple one.)

3) Don't use more than 10 % of your account money in one trade. (As a general rule, if you have 1 lakh with for trading per trade you should not be putting more than 10K, and the rule no. 1 stands at 2K stop loss.)

4) Do a paper trade and gain experience and then starts with the real money trading.

5) Don't switch strategy often.

6) Use conservative strategies in the beginning, then once you are experienced you can take the more rewarding ones.

7) Remember the Premiums that you will be paying will get eroded with time decay. Be prepared for that.

8) Before you enter the trade make sure that you have plan like

  1. What is the stop loss for the trade?
  2. What is the target you set for the trade. (In general, you should set 100% but for starters they can set 50%)
  3. What is the probability of reaching the target ?

9) Always remember to exit once the profit reached.

10) Always monitor your positions.

Friday, August 29, 2008

Planning your finances early

The first job for any individual marks a turning point in his life. The first paycheck acts as a gateway to new opportunities and of course, financial independence.

It could also mean preparing to shoulder responsibilities, if your family budget is in need of augmentation.

Even if you are not required to contribute, you still owe it to yourself to handle your finances with care.

Below are some of the steps, which you must take to ensure financial independence:

1. Insure yourself
The first thing that you need to look at once you get your salary is insurance — for yourself as well as your dependents. You should opt for a term life insurance cover now that you have a steady stream of income. If you buy a life insurance cover at a young age, you will have to pay lower premiums. The value of the cover can be 10 times your annual cost-to-company (CTC). Life insurance premium paid is eligible for tax deduction under Section 80 C, but protection, and not tax benefits, should be the criterion for taking such decisions.

However, there is no need to get a life insurance policy in the first year of work-life if you have no dependents. You would be better off acquiring a mediclaim with a cover of Rs 3 lakh-5 lakh. Even if your organization offers a health insurance cover, it would still be worthwhile to sign up for a standalone insurance policy. In addition, you can claim a deduction of up to Rs 15,000 under Section 80 D on health insurance premiums. You can get a health insurance cover for your parents. It entitles you to an additional tax deduction of up to Rs 15,000.

2. Avoid loans
Next, you need to guard against the temptation to borrow funds to purchase cars, bikes or consumer durables.

You should leave such decisions for the second year if not later. Consumption loans are not a good idea.

Also, if at all you have any surplus left after addressing your needs, it is advisable to avail of a home loan jointly with your parent/s.

3. Strive to save
If you are single and living by yourself with a monthly income of less than Rs 25,000, your target savings rate can be 40%; while it can be 50% for those earning Rs 25,000 to Rs 50,000.

For people with an monthly income of above Rs 50,000, the ideal savings rate would be 60%. A part of the savings could go towards building a corpus for meeting emergency needs.

Ideally, you should direct a minimum of 25% of your gross income towards investments. If you are jittery about dealing in equities, you could put small amounts of money into Unit Linked Insurance Plans (ULIPs), Public Provident Funds (PPFs) and Fixed Deposits (FDs).

While FDs can yield a return of around 10% at the moment, you should go for them only if you fall in the no-tax or low-tax brackets. PPF, which carries a return of 8% p.a, offers tax breaks under Section 80 C. Investing small sums on a regular basis , in Unit Linked Insurance Plans (ULIPs), could result in a sizable corpus over a period of time.

If you invest Rs 5,000 every month in a PPF, your kitty would swell to Rs 17.40 lakh after 15 years. The returns are certainly not comparable to those offered by equities, but it is better than letting your money lie idle in a savings account.

However, your risk-taking capacity would be high when you are in your 20s. Investing in equities — either directly or through systematic investment — could be your best bet. To start with, you need to invest 80% of your target savings in equity through the Unit Linked Insurance Plans (ULIPs).

If you stay invested with a long-term view, equities can offer you far better returns than other avenues.

Besides, investments of up to Rs 1 lakh in some equity MF schemes — equity-linked saving schemes (ELSS) — are eligible for deduction under Section 80 C, thus presenting you with the dual benefit of tax-saving as well as investment.

So, when are you starting your investment and looking forward to build a great corpus???

Honesty is the best insurance policy

On March 16, 2001, Kumar had taken a life insurance policy for himself for a sum assured of Rs 10 lakh. He had given the following answer to a question in the proposal form that asked:
“Do you consume alcohol”? Yes/No; average usage per day.
Ans: Yes, 1 peg per week.

Seven years later, Kumar died of liver cirrhosis, caused by chronic alcoholism. Because of the false statement in the proposal form, the insurance company repudiated the claim. Kumar must have been embarrassed to admit his problem of chronic alcoholism while filling up the proposal form, but little did he know that in spite of paying premiums regularly and taking a policy, he would leave his family stranded in its hour of need.

Policyholders are in danger of seeing claims on their insurance policies turned down because they fill the proposal form very carelessly or make the agent do the job (irrespective of whether they are literate or illiterate). What the proposer doesn’t realise here is that this document will be referred back to at the time of claim and a careless “yes/no” will prejudice the claim settlement. A proposal form is the foundation on which an insurance contract stands.

Insurance contracts are based on trust. Since the insurance company knows nothing and as a proposer you know everything about the risk, it is your duty to make a full disclosure of all the facts that will affect the insurer’s decision to insure you and the terms on which they insure you. A lot of times, people tend to lie about their health for fear of not getting the policy, or having to pay up a higher premium. While this may get you a policy easily; at the time of a claim, you will land in trouble. And then, you may get cynical about insurance and find yourself in agreement with someone who said, “Insurance is like marriage. You pay and pay but you never get anything back.”

Insurance agents also tend to play smart. They will prompt your answers at the time of filling a proposal form and make it sound like it’s just a formality, lest they lose out on a customer. But the law says “buyer beware.” The contract is between you and the insurance company and not between you and the agent. As a party to the contract, you are expected to maintain utmost good faith in the insurer.

An essential part of the insurance contract is the understanding that each has taken the other entirely into confidence. If there were to be any question of one withholding from the other what he needs to know, the entire transaction would be void. So you need to watch out - as mistakes can prove costly.

The insurance regulator in India has also made it mandatory for insurance policies to be issued with the proposal form duly filed in.

All too often, customers and insurers are only too happy to complete a transaction without this important document - leaving the door open for disputes on what was intended to be covered or excluded.

Some tips:

  • Be honest and forthright in responding to the questions in a proposal form as any erroneous information could result in the insurer denying you coverage.
  • Don’t sign on a blank incomplete proposal form. You will be held responsible once you sign on the document. You should check the correctness of the information before signing. And keep copies of the filled & signed proposal form.
  • You need to bear in mind that your duty to disclose is of an ongoing nature. Many people do not realize that every renewal of an insurance policy is a new policy, i.e. a new contract requiring disclosure. Say Ravi took his first health insurance policy in 2004 from Sigma Insurance Co and for the question in the proposal form pertaining to “Whether you have any other health insurance policies in force,” he replied in the negative, which was true. But it was no longer true when the policy was renewed with the mutual consent of both parties in 2005, as Ravi had taken another health insurance policy from a different insurer. Ravi was obliged to inform Sigma Insurance Co about the new policy that he had taken because the original proposal form becomes incorporated into the renewed policy and continues to form the basis of the contract.

As always, the devil is in the detail, lurking in the fine print of your proposal form. So, please take some time off before signing the proposal form as some investment in time today will help avoid any heartburn later. The unexpected happens all the time… so just having an insurance policy tucked away somewhere is not enough; due diligence while filling the proposal form is of utmost importance.

Tuesday, August 19, 2008

Win 25 USD and 2000 EntreCard (EC) Credits

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Thursday, August 14, 2008

Bear markets? ULIPs are still a good bet

For holders of unit-linked insurance plans, the current market conditions do not matter much. The markets have fallen considerably from the highs of January this year, and the possibility of a long-term, sustained recovery is largely seen in the context of three factors - oil price, the Indian growth story and the US economy.

A common thread going through these factors is that their impact can be measured only over a period of time. Ulips are bundled investment products designed to boost long-term savings more than short-to-medium duration ones. The benefit is reflected in low costs if the savings are over a long period of time.

Should the weakening stockmarket worry investors who take the Ulip route to equities? The product is best for generating wealth over periods not less than 10 years. There is also enough evidence to show that equity outperforms other assets and can give annualised returns of 15-20 per cent over the long term.

Existing holders: If you are holding Ulips with full exposure to equity, stay invested that way till maturity is around five years away. Ulips allow investors to switch their corpus to non-equity options like debt or balanced funds. If the fund value has eroded over the last six months or so, stick to the equity option.

If you have been putting premiums in the debt fund option, now is the time to move into equity. You can do this in two ways - by moving the entire corpus in one go or by transferring smaller amounts at regular intervals.

New buyers: Invest in a Ulip for the right reasons. Weak or strong market conditions should never be the cue for starting savings in any asset class or financial product. The equity fund option is the best option, so go for a fund that takes 100 per cent exposure to stocks.

The other way to go about it is to put the premium in a debt or a balanced fund and then switch to equity when you feel that the market is strengthening. The problem with this is that you will have to time the market, which you should ideally avoid.

Switching options: Insurers provide a specified number of free switches among fund options in a year. These can be done both offline and online.

What to do? Shift gains from equity funds of more than 20 per cent in any year to debt or balanced funds. Markets move in cycles and there could be three or four opportunities of extraordinary returns in a 15-20-year holding period.

While restructuring fund options, ensure that optimum balance is maintained between returns and life coverage. If you lower the sum assured to maximise returns, your life cover may fall below your requirements. Finally, uncertain market conditions, as are being seen now, should never be the reason for a full exit from Ulips. Costs in most Ulips are front-loaded and, hence, it is important to make them run their full course.


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Monday, August 11, 2008

Now insurers can`t refuse health cover renewal

In a move that will bring cheer to health insurance policyholders, non-life insurers are finalizing the contours of a new product that will have a common minimum standard cover and will be renewable and portable across companies.

The move being pushed by the General Insurance Council, the self-regulatory body, will mean that insurers cannot refuse renewal of policies on grounds of adverse claims. Similarly, all benefits will continue to be available to an insured person even if he or she switches to a new company.

While pre-existing diseases are only covered after four years of a policy, an insured will be eligible to these benefits from the first year of switching to a new company. In addition, cumulative bonus and discounts will also be available after the change.

General Insurance Council Secretary General K N Bhandari said those buying a health cover at an early age will not be denied renewal on grounds of adverse claims. So, if someone buys the new cover at, say, 30, he will still get a cover at 50 years even if the he has developed heart problems and has filed for claims.

Insurers will approach the Insurance Regulatory and Development Authority (IRDA) for approval of the new product that will come with all these features later this month. Premium is, however, yet to be finalized, but will be affordable, Bhandari said.

“Insurance companies will not refuse renewing the health insurance policy except on specified grounds such as moral hazards. In case the insured has cheated the insurer or not disclosed the full facts regarding his health or in those cases where there is no correct exposure, we will refuse renewing the cover,” he added.

Health insurance policies contain the renewability clause that specifies the type of the contract and terms for renewal, which are of three types.

The first type is optionally renewable, where the insurer has the option to renew the policy on its terms. This is the cheapest policy for the insured.

The second type is guaranteed renewability, the premium rating for which depends on the claims experience.

The third type, which is the most expensive variant, cannot be cancelled and renewal is guaranteed, but the price can vary.

Sunday, August 3, 2008

3 most necessary life insurance policies

I would like to explain in details the investment and insurance options, so that I can help you in making informed decisions and you can invest in a better way and generate capital in longer term and also protect yourself from the unexpected occurrences of illnesses.

We'll review 3 most popular and most necessary life insurance policies which any individual should have in his/her insurance portfolio for a financially independent life-style.

1. Health Insurance:

First and most important is health insurance.

Hospital rooms. Doctor's Bills. Stress. Worry. Tears. Frustration.

Life seems to be over the moment one is diagnosed with a critical illness. Critical illnesses, like cancer or heart attack are extremely unpredictable and can strike anytime, anywhere.

With Health First from TATA AIG LIFE, life doesn't have to come to a standstill. Because the financial cover it offers plays a large role in contributing to your peace of mind and subsequent recovery. If you are ever diagnosed with any of the 12 Critical Illnesses, or need surgery, this special benefit provides you with a lumpsum amount.

The 12 Critical Illnesses covered are: Cancer, Stroke, Heart Attack, Chronic Renal Failure, Aorta Surgery, Heart Valve Surgery, Major Organ Transplants, Coronary Bypass Surgery, Parkinson's Disease, Paralysis, Benign Brain Tumour, Total Blindness.

Features of Health First:

  1. Daily Hospitalization Benefit: Rs.250 per day for Max 90 days
  2. Post Hospitalization Benefit: Rs. 125 three times within 30 days of discharge.
  3. Surgical Benefit: Rs. 12,500 per unit
  4. Critical Illness: Rs. 1,25,000 per unit.
  5. Death Benefit: Rs. 1,000 per unit.

The Annual Premium of Health First for one unit is shown below and the total benefit of one unit is Rs. 2,50,000

Age of life assured Male Female
18 786 765
19 792 775
20 801 791
21 841 835
22 886 882
23 928 929
24 970 982
25 1022 1044
26 1073 1113

So, even if you go for 4 units, then you need to pay approximately just Rs. 3600 yearly, i.e. Rs. 300 per month only and you will have the coverage of Rs. 10,00,000.

For more details, please visit

2. Unit-Linked Insurance Plans (ULIPs):

Second is an insurance with investment perspective.

If u are still young you can generate tremendous wealth if you start early.

But before I show you the real wonder, lets see what are the benefits you can have if you act right now by investing in equities:
  1. Equities, even being volatile in the short term, are the best instruments for long term growth of capital.
  2. Regular investment will help compounding your wealth.
  3. It will help to fight Inflation.
  4. It will help to plan for your financial goals.

The 2 tables below shows the effect of the inflation:

i. Effect on our Bigger Spendings:

Spendings on Year - 1985 (Price in Rs.)Year - 2008 (Price in Rs.)Inflation(% per year)
Balcony Ticket1524013.43%
Hotel Bill1001,20011.96%
Petrol 8/litre56/litre9.00%
MBA Course40,0008,00,00014.59%

ii. Effect on our Daily Spendings:

ProductYear - 1985 (Price in Rs.)Year - 2008 (Price in Rs.)
Toothpaste 550
Masala Dosa525
1 Kg of Sugar422
1 Kg of Salt210
1 Kg of Onions318
1Litre Milk424

Compared to inflation above the increment in the salary was negligible, as shown below:

PostYear - 1985 (Salary in Rs./month)Year - 2008 (Salary in Rs./month)Increment(% per annum)
Accountant 5,00024,0007.39%
Manager 8,00040,0007.59%

Investing in Equity is Risky, but not investing in Equity could be Riskier...

Growth is a NEED today, and not an option.

The best ULIP in the industry at present is TATA AIG LIFE's INVEST ASSURE FLEXI...

I have an excel file where you can input the Yearly Premium to pay and Rate Of Interest you assume to get, and you will get the result for the next 40 years...

You can download the excel file from this location:

Download File

Just edit the 2 cells, with black background and red text:

  1. Premium, which is 25000 by default
  2. ROI, which is 20% by default.

You will not believe, but the power of compounding is great. Compound interest is the 8th wonder of the world.

Investing just Rs.25000/year, for 40 years, will give you Rs. 13,43,36,909!!!

Believe me 13 crores against an investment of just 10 lakhs.

Delays could severely affect your wealth creation goals.

Follow the simple rule below:

Start Early + Invest Regularly = Create Wealth

Start Early:

The example below shows the benefit of starting early:

YouYour Friend
Current Age (years):2525
Start (age):TodayAt age 30
Invest for (years): 520
Amount invested per year (Rs.):18,00018,000
Total Invested Amount (Rs.):90,0003,60,000
Redemption at age (years):6060
Amount accumulated at 60 years, assuming 20% return (Rs.):2,19,83,8001,68,73,411

As you can see your friend, even after investing for 20 long years could not beat your investment of 5 years, simply because he started late. Only 5 years late. I hope you don't want to be late.

Invest Regularly:

Even small amounts invested regularly can grow substantially.

Buying MORE units @ low prices & buying FEWER units @ high prices helps AVERAGE out your purchase price.

Rs.1,500/- invested every month for 20 years = 18,000 * 20 = Rs. 3,60,000

Fund Value at 20% return per annum = Rs. 30,76,680

A whooping Rs.30 lacs, 10 times the invested amount!!! So, you might be eager to invest today, right now. Won't you?

For more details, please visit Flexi.htm

3. Term Life Insurance:

Third is term life insurance, which you must take if you are not going for a ULIP.

If you have lesser savings at present you can start with a term life insurance, and then when your savings increase you can go for ULIPs. Because, when something wrong happens to you (I hope it doesn't, but this is the reality of this world), all your dependents will have hard times living, as you are the bread-earner. If they receive a lumpsum amount, they could plan and live on their-self. Even if you have too much money and you have bought property (land) all across, if you don't have insurance, the value of that property will decrease drastically, once you leave this world. Because all the buyers will know that your family needs money and they need to sell the property or anything to leave their life.

By the way Term Life Insurance is the best form of life insurance and its the real insurance. Others such as ULIPs, or Money-Back Plans or Endowment plans are modified form of insurance with an investment perspective.

For term life insurance you need to go for RAKSHA from TATA AIG LIFE, as it has the lowest charges. You can compare with any other company.

This is premium table of RAKSHA for sum assured Rs. 10,00,000:

Age of life assured Policy term 10 year Policy term 15 year Policy term 20 year Policy term 25 year
18 1720 1780 1830 1900
19 1750 1780 1870 1940
20 1770 1830 1900 1980
21 1790 1850 1930 2020
22 1810 1870 1960 2060
23 1820 1900 2000 2110
24 18401920 2040 2150
25 1860 1960 2080 2210
26 1880 1990 2130 2270

For more details, please visit:

Plus there are many more products, which can give you guaranteed returns, which can assure your retirement plans, which can plan for your children's education or marriage, which can plan for a holiday abroad, which can protect you for the life-time, which can give you monthly returns after your retirement. But those can be discussed on specific needs. We need time to discuss those things. If you have any other requirements you can always forward your query.


Tata AIG Life is the one of the most trusted Life Insurance Companies in India. Since its inception in 2001, it has grown by leaps and bounds. Today, Tata AIG Life is present in 24 states and 156 cities across the country. It covers over 22 life insurance products and has over 250 product combinations. It is hardly surprising that Tata AIG Life has been voted No 1 in customer satisfaction* among life insurance companies in India.

* Source: Consumer Voice Survey 2006


You must have come across the frauds and false sales made by the advisors of life insurance companies, in the newspapers or might have experienced yourself too. They sell wrong products with wrong targets, and wrong promises. Do you know why? Because its their job. They get commission for that, and they are solely dependent no. of policies sold. They don't have any other source of income. So to fulfill the needs of themselves and their family, they need to sell life insurance policies anyhow. They try all the combinations and give false commitments and fly away with their commissions. This is not the case with me. I am a Software Engineer, I have my monthly salaries credited in my bank account regularly. I work as a Life Insurance Advisor, so that I never get cheated by the frauds all around us. I protect my friends, family members and relatives too. I help them to take informed decisions, and never give false targets or false promises. If I sell a policy or don't, me and my family don't have to worry about the money. So, I make trusty and true sales and build a long-term good relationship. So its on you to choose an advisor who thinks of your profits or who thinks of his/her own profits. Hope you take a smart decision.

For brochures of the life insurance products discussed above or other products you have heard off, or any queries regarding investments contact me as soon as possible.

Even if you don't buy insurances from me, feel free to discuss your requirements.

Any queries will be highly appreciated. I will feel you have learnt something from this.

For any other detail, you can have a look at the official website of the company:

I also want you to look once at the newly launched website of the company: