Tuesday, January 6, 2015

Cover Risks in Investment Planning

Cover Risks in Investment Planning





By securing insurance, they make sure that their dependants and investments are protected.

 

You may not be able to predict misfortune, but you can have the right tools--insurance and contingency corpus--in place to counter it. Most people with robust finances ensure that they cover their risks adequately. In fact, according to the Economictimes.com survey, as many as 61% of the respondents said that they had both life and health insurance. However, there's a vast underinsured population that considers it a wasteful expenditure, confident in its ability to never fall sick or die.

Yet others make the mistake of overlapping insurance with investment. While such plans can form the debt portion of your portfolio, they do little in terms of risk coverage. So, even before you start working towards your goals, make sure you have adequate life cover (this should be 5-7 times your annual income, plus loans), health cover (`5-10 lakh family floater plan in metros; `3-5 lakh plans in tier II cities), accidental death and disability insurance, as well as a home cover.

To complete the risk cover, ensure that you have a contingency corpus equal to 3-6 months' expenses to take care of eventualities like job loss.

IF YOU DON'T, YOU SUFFER FROM OPTIMISM BIAS

This bias will force you into building a rosy picture about your future and financial situation. You firmly believe that you are less likely to be impacted by anything negative in life, be it health issues or monetary losses. So you do not take corrective or preventive measures to avoid such a situation.

HOW TO OVERCOME IT:

The only solution is to pore through the existing data, research well and conduct an analysis about the financial service or product in question in order to arrive at a true picture. Consult a planner and take preventive measures.

 
Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

 

1.       ICICI Prudential Tax Plan

2.       Reliance Tax Saver (ELSS) Fund

3.       HDFC TaxSaver

4.       DSP BlackRock Tax Saver Fund

5.       Religare Tax Plan

6.       Franklin India TaxShield

7.       Canara Robeco Equity Tax Saver

8.       IDFC Tax Advantage (ELSS) Fund

9.       Axis Tax Saver Fund

10.    BNP Paribas Long Term Equity Fund

 

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

 

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