Posted on

Here’s Why SIPs Are A Great Idea!

We’re all taught how to dream big from day one. Be it your dream house, owning that Porsche or going on that bucket-list trip, we’ve been encouraged to aspire.
While everyone teaches us to dream big, no one shows us HOW to reach these goals.

On some days, we’re confident of ourselves and our dreams. On other days, we feel like we’re working hard for nothing. How does one stay motivated?

Here’s some food for thought : If investing was taught to us as a subject in school, can you imagine how revolutionary the economy would have been, with individuals who were confident of their money management skills?

Aspects like how to have an analytical mindset, how to take calculated risks, how to invest the right way, what are the financial risks involved, how to have more than one stream of income, how to calculate risks v/s returns and more, would have transformed us from individuals to successful investors, do you agree?

At a time like this when we’re left feeling overwhelmed and confused, what we need is an investment strategy that will see us through on a rainy day. Speaking of which, have you considered SIPs?

What are SIPs? How can they help you achieve your goals? How can they help you stay financially independent? Here’s a quick 101:

What are SIPs?
A systematic Investment Plan is an investment tool through which you can invest in Mutual Funds. While in several other investment tools, the individual has to pay a large sum of money at once, SIPs use a systematic method of investing a fixed sum of money over a period of time.
The time of investment could be monthly, quarterly, semi-annually etc.
This gives us the advantage of making many deposits over time without the burden of investing a lump sum at once.

What are the benefits of investing in SIPs?

1.Compounding.
When you invest in a SIP, you can enjoy a compounding return on your investments. It has substantial practical implications as and when an individual invests in SIPs regularly, the returns they have earned also gets reinvested. Over time this creates a snowball effect which helps an individual get more returns from the investment over a long time. In essence, if you begin investing in SIPs at a young age, the more benefits you can enjoy!

2. Low initial investment.
Through SIPs, you can invest in Mutual Funds with a monthly cost as low as ₹500, making it very affordable while not hampering daily needs. You could also increase the amount of investment if you have a raise in income. Meaning you can start with an amount as low as ₹500 – ₹1000 and then gradually increase the amount of investment through which you can reach your dreams at a faster rate.

3. SIPs are super convenient.
So many of us do not have the time, knowledge and tools required to study the market and do extensive market research. You will have to choose a good fund and let the platform you’ve chosen do its job of automating the payments. It will save a lot of time and effort, making it more convenient.

4. Rupee cost averaging.
When you invest in a SIP, the funds are purchased according to the market rates. It means that you can buy fewer units of the fund when the market is high and buy more units of the fund when the market is low, averaging the cost of the units in the long run. This makes investing steady and helps keep your investment away from market volatility.

Simple tools like SIPs are helping people invest small funds over a long period of time, taking it easy on their bank balances while turning dreams into reality. SIPs will definitely help you achieve your goals making it suitable for your investment needs.

Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.

Posted on

5 Money Questions To Ask Yourself

The pandemic has made us realize how important it is to be prepared to meet a crisis. While we try to make ends meet during this time of uncertainty, we’re constantly left wondering whether we’re financially equipped to fight a situation. 

It’s true that the pandemic has made people take their finances seriously. Knowing where you stand in the financial abyss, you need to be ready for what you are going to be facing in the future. 

There are several different ways one can check their financial health and be ahead of the crisis.  To start with, here are a few questions to ask yourself to see how financially sound you are.

  1. What is your income source and frequency? 

The first question you need to ask yourself is about the money you are earning. It may be your salary, a return on investment or any form of profit earned from your business. All of these are considered as your incomes.  These incomes will determine how much you can spend. You also need to ask yourself how often your investments are giving returns, and how frequently you are getting a salary. It is important to ask this question in order to determine a pattern of income which can help you use the money wisely.

  1. How much do you spend?

While many people spend their income on their needs and wants, one has to ask how much they can spend on a specific goal. You need to plan how you spend your funds so that you have stability even if a sudden expense occurs.  The best way to be safe from such risks is to spend according to a predetermined plan that you have set up for yourself. If you follow the money management rule, it will effectively help you determine your income and make efficient use of it. 

  1. How much debt do you have to pay?

The word debt can cause uneasy feelings and create anxiety. Debt management is an important part of being financially and mentally healthy as too much of a loan can put you under a lot of stress. So check how much you owe and plan to reduce its burden as soon as you can. Remember, being debt free is a great stress reliever and will help you grow financially stronger. 

  1. Do I have funds for emergencies?

The core aspect of a financial plan is putting cash away for emergencies. Uncertainty will leave you with no choice but to drown in debt. To avoid this, you can start saving money for emergencies. You can start small and be consistent. You could also consider insurance for your family, which is a smaller expense. 

  1. Are your risks covered? (Insurance)

Being insured is one of the best ways to be safe from the uncertainty that life brings. Returns may vary for each investment. While being insured is an additional expense from your pocket, it will help you in times of emergencies like pandemics, economic recessions, inflation or any other form of a problem you face with your income stream. 

These are the few crucial questions that will help you know where you stand as far as money management is concerned. It’s important to have the right financial plan to get through circumstances stress-free, and with minimum damage to your lifestyle. Do you think you are financially healthy? Leaving you with this food for thought for the time being. 

Posted on

5 Money Mantras for 2021

2020 might possibly be the most dynamic teacher we have had in our lives. The year really pushed us to take a step back and take a long, hard look at how our lives are built, the foundation of everyday lives and the framework of how we go about doing it. While the importance of health and a clean lifestyle was brought to the fore, so was the discussion around financial health. 2020 was a year filled with challenges; while the market took a hit, we also saw one of the best equity rallies in a long time! Job security, savings, health insurance and more were the talk of the town, and with good reason. Job security, savings, health insurance and more were the talk of the town, and with good reason. 

This is precisely why we’ve come up with 5 simple yet incredibly effective Money Mantras for 2021, to ensure smooth sailing and a strong back-up plan. Read on to know more. 

BUILD A BUDGET

One of the easiest yet effective things you could do for your money right now is starting to build a budget. It’s the ultimate tool to help you control your expenses and channel your finances towards achieving any goals you might have set. Budgets, at their core, exist on a balance—if you want to spend more on something, you’ll have to forfeit or spend less on something else. This simple practice gradually teaches you how to prioritise your earnings and spend them wisely on things that actually matter. Usually a budget is a combination of your household, transport, personal and miscellaneous purchases. Nowadays, there are many budget-calculating apps that you can download to help you track your expenses—or better yet, talk to your financial advisor for a more detailed approach. 

INVEST IN A GOOD HEALTH INSURANCE

As mentioned earlier, health insurance is the topmost priority in today’s time, and should be treated as such. A good health insurance should cover the basics—this includes hospital charges, pre & post hospitalization included. It should also cover not just you, but your family as well, ensuring that should you ever require the help of your insurance, paying the bill will be the last thing going through your mind. One of the biggest blunders we as a customer make, is to simply assume that we will not require health insurance until we are much older. However, on the contrary, being well-prepared when it comes to your health from an early stage in life will only pay off in the long run.  

BUILD AN EMERGENCY FUND 

Out of all the financial years so far, if 2020 has not convinced you to build yourself an emergency fund, we doubt what else will! If you’ve been thinking about starting your emergency fund, there’s no better time to do so than now. This will help you face potential job cuts/salary cuts, household damage repair and any medical emergencies with the reassurance that you have your emergency fund to help you out. 

DIVERSIFY YOUR INVESTMENT PORTFOLIO

It’s never a good idea to put all your eggs in one basket. The same goes for your investments—diversifying your portfolio will help you stay afloat in the event of an unexpected market crash. And the best part is: it’s not that hard to implement. Diversification operates on a simple idea, that an investment portfolio consisting of different investment types will essentially lead to optimizing the risk. A well-diversified portfolio might include- cash, bonds, stocks, mutual funds, exchange-traded funds. To know more you can contact us and find just the right diversification model for you. 

CURB IMPULSE PURCHASES

Our last point ties back to where we started: setting a budget! When you know you have a budget that allows you a certain amount of expenditure, it automatically helps you steer clear of purchases that you really do not need. One of the best ways to figure out whether what you want to buy is something you really need is to give yourself a waiting period: give it 24 hours or sleep on it. If you still feel the need to purchase it, then compare prices online to pick the best one. If not, you’ll realize that what you almost spent your money on was simply a phase. 

Although these Money Mantras look simple, their impact is anything but. Stay consistent with your budgeting, investing & savings, and trust us—you’ll see your bank account flourishing in due time. For more information, get in touch with us at cagrfunds@gmail.com

Posted on

Company health insurance or Separate health insurance?

Health Insurance vs Corporate Insurance

“At CAGRfunds, we do a weekly session of knowledge sharing within the team. Last week, we had a rather long discussion on whether a separate health cover is required if the employee is covered by his or her company health insurance (Mediclaim) policy.

So we started digging into the various critical reasons as to why we need health cover at all. We realized that depending solely on the health insurance provided by our companies can land us up in the following situations:

Corporate Health Insurance coverage is the same for all

The employer decides our coverage amount. So, if your coverage amount is 5 lacs and your hospital bills amount to 7 lacs, the balance comes out of your pocket. Therefore, you need to ascertain the adequacy of the coverage as per your own health conditions.

You may not be rewarded for being healthy

Most companies (especially the small and midsized ones) deduct insurance premiums from our salaries. For people having the same coverage amount, the premium is also the same year on year, irrespective of how healthy or unhealthy an individual might be. So, if you are a healthy non-smoker individual, you are perhaps paying the same premium as your colleague who is slightly unhealthier than you are.

Also, in an individual health insurance, a lot of policies give either “no claim bonuses” or discounts on subsequent premiums for claim free years. That means you have more security and you save more money if you take care of your health.

You do not have the flexibility to prioritize the features you want

Corporate Insurance is a general insurance that covers a group of employees. So, the features are generic and may not be completely in sync with what you prefer. For example, if there is a history of cancer or diabetes in your family (which puts you at risk for the same), there is a chance your corporate insurance will not cover it. Or, your corporate insurance may be capping your room rent to a small % of sum insured which is unlikely to cover even half of your actual room rent.

You will have zero health cover just when you need it the most

Corporate Insurance will only cover you till you are employed with the company. So, if you are currently depending on your corporate health cover, you will have none on retirement. If at that point in time, you decide to take a private health cover, it will cost you significantly higher than what it would cost if you take a policy when you are young.

You might face several issues on changing your employer

Drop in coverage amount

Your new employer may offer you a lower coverage than your previous employer. You might want to go for a separate health cover when that happens, but do take into consideration the increased premium that you will have to take at a higher age. Also, every new policy has a waiting period for pre-existing diseases. This means that the Insurance service provider will not sanction any claim arising out of any pre-existing disease during the tenure of the waiting period. In most cases, this period ranges between 2-4 years. The older you are, the longer it is.

Lesser Dependents

Many companies today offer health insurance for not only you but also your spouse, children, parents and (occasionally) your in-laws. But, not all companies offer the same protection. If you change your company, your new employer may only support you, your spouse and your children. Having your dependants not covered in future can lead to a considerable risk of an unforeseen medical expense.

But, what should you do if your corporate health cover seems to be adequate?

Well, it is certainly possible that your company adequately covers you and your family and also provides you with the features that you prefer to have. You can choose to adopt any of the following routes:

  1. Secure your cover for post-retirement: You can take a small cover separately so that you do not have to shell out a huge premium for taking a new policy post-retirement. A new policy at retirement will also subject you to the long waiting periods for pre-existing diseases which of course defeat the purpose of the policy at that age.
  2. Secure the possibility of a massive medical emergency: Corporate covers are at best, generally adequate for normal medical situations. In case of a massive unforeseen emergency, the chances of incurring a huge expense are quite likely. Therefore, you might want to secure that eventuality and take a large health cover separately to take care of the same.

Want to know more about health insurance? Contact us on +91 97693 56440 to know more about the suitable plan for you.