​​​​HOW REGULARLY GROWING YOUR SIP CAN BOOST YOUR WEALTH
HOW REGULARLY GROWING YOUR SIP CAN BOOST YOUR WEALTH!
Have you ever grown a tree from a seed? If yes, you will know that it requires investment in the form of good soil and a reasonable amount of water and sunlight. And with that, your seed soon grows into a plant. Now, if you want the plant to become a full-grown tree, it will need an increasing amount of soil, fertiliser, water, space than previously required. After years of this care, a seed transforms itself into a beautiful tree, the sweet fruits of which can be enjoyed for many years to come.
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A rupee today is worth less than a rupee yesterday. This reality escapes many investors who think they will invest or save more only when they have enough money. With inflation constantly eroding the value of money, the amount that seems substantial today will not have the same value a few years down the line. For example, with inflation of say 7%, today's Rs.5,000 will be worth Rs.4,650 next year, Rs.4,021 in 3 years and Rs.3,479 in 5 years. Meaning, you are saving less with fixed SIPs. That is why growing your monthly SIP amount is more of a requirement to overcome inflation. In our case, this SIP should have grown by at least Rs.500 every year to stay ahead of the inflation loss.
A finer point to note here is that the incremental worth of Rs.500 itself will diminish over the years. Hence, one should look to increase SIPs in blocks of say 3 years like for example, grow your SIP by Rs.500 for the next 3 years and then by Rs.1,000 next 3 years and then Rs,1,500 next and so on considering a base SIP of Rs.5,000, keeping in mind just the inflation.
It is not just that your income grows every year. Your standard of living, your aspirations and your dreams too grow in life. A decade ago, our dream car may well have been a Honda City, but today, it may be a BMW /Mercedes or an Audi for most of us. And why not? The point is, our financial goals grow and become bigger with time. The standard of the wedding of your daughter which you imagine today when she is 5 years old would turn out to be very different 20 years later. How can static SIPs take care of this change in aspirations and dreams over years? The answer lies again in adjusting your SIPs every year to match the pace of your dreams!
There are typically three ways in how people define their SIP contribution. First - randomly; second - as a proportion of the income (less) expenses or as a share of your income; finally - as the required amount to meet any financial goal. Equity markets, however, do not move linearly or in a straight line. They can behave irrationally in short periods of time as we saw in the year 2008 and recently at the start of the pandemic. What if your financial goal matures during just this time? What is the safeguard? One way of factoring in this uncertainty is by reducing your equity allocation as you near your goal, but this may again compromise your goal. There is another way out. Increasing your SIP periodically will help you counter against chances of lower returns on your investments or volatile markets, just in case, and help you on track with your financial goals. Your incremental SIPs can potentially add a lot of cushion to your financial goals.
In brief, regularly growing SIPs is a must if we wish to see our wealth grow and keep up with our growing stature and ambitions in life. You can increase your SIPs savings at any time by starting new SIPs and/or by opting for a regular top-up option at the time of starting a SIP. The top-up options of semi-annual and annual frequency can be used to make it convenient for us to automatically increase our SIPs, even if we don't remember to do the same. So, if you haven't increased your SIP over the past year or so, now is the time to do it. Let us start the year 2022, on the perfect note - let us increase your SIP savings!
Wish you a very happy and prosperous New Year!!
NJ E-wealth
MAKE 2022 - A YEAR OF TRANSFORMATION
MAKE 2022 - A YEAR OF TRANSFORMATION:
Change is the only constant. But unless we keep inventing and changing ourselves, we run the risk of being outpaced and outrun by the world around us. Nothing dramatic will ever happen in our lives until we decide to make dramatic changes. While changes can be undertaken at any time, the start of the year is perhaps the best time to initiate them.
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We know that a change in habits leads to a change in life. Good habits are hard to form, unlike bad habits. The key is to start small and then slowly build on the same. Habits can be any set of best practices, done repeatedly with discipline and can be formed to cover all facets of life, including money. What successful investors have, are good money habits which they practice diligently over long periods. Money habits can be related to how you save, spend, manage, lend, borrow and invest money. Most of us would be familiar with these best practices. We would urge that you at least list 3 good ones to develop and identify 3 bad ones to eliminate this year. Remember, if you can improve by just 1% daily, you can be 365% times better in a year.
The respect you give to other people and finer aspects of life is largely indicative of your own character. In the year 2022, we would want you to give proper respect, starting with respect for yourself. Next would be the respect for time, your skills, your work, family, a network of friends & associates and lastly your wealth & position in life. While most of us would feel that we are already doing so, the big difference will happen when you consciously recognise and work towards building this respect and strengthening it. For e.g., if you are respecting time, make sure that the time you commit to everyone is honoured to the minute. If it is work, make sure you are more focused on work during your working hours without distractions. When it is about money, make sure that you think properly and give respect before every major decision. Such small changes over time will shape your personality and will help you become more successful.
This is the knowledge age. Every aspect of our lives will change, driven by technology. Today, learning and knowledge have become a necessity for everyone, businessmen, professionals and even investors. Specifically talking as investors, a basic level of knowledge and understanding of matters like savings, taxation, investment products, investment strategies, asset classes, risk, insurance, budgeting, financial planning, etc is required. Keeping track of changes on these fronts is an ongoing exercise. Associating with a good distributor, an expert does save you from the trouble of doing everything yourself. Even in such a case, learning and expanding your knowledge does no harm.
Motivation to excel, aspire more and achieve your goals is an essential part of growth. Most of us are self-motivated and don't think much about this. But with the right motivation in place and guidance, we can achieve much more than otherwise possible. Having a mentor, a motivating figure to emulate and to learn from in important spheres of life. This is true if you are a professional, businessman or even an employee. This is something we can work upon consciously henceforth.
Proper planning is half the work done. We all have many personal goals but we often do not clearly define the same and set target dates. This is true irrespective of our personal goals or financial goals. Financial goals would be the goals where capital /money is the source of achievement like the purchase of a house, car, higher education for children and so on. Setting SMART - Specific, Measurable, Achievable, Realistic and with a Time frame, is the way to go forward. Sit with your financial expert to help you set out these goals. Once, the plans with targets are in place, review the plan periodically, say at the start of every year, and/or upon the occurrence of any important event in life.
As we learn and grow as investors, we must have our investment approach /process set out. A casual, laissez-faire, changing approach to decision-making on personal finance every other time does not help. Have your own set of factors, criteria to decide your spending, savings, investment, asset allocation and portfolio management. Over time, this would evolve and get better with knowledge, learnings and experiences.
The surest way of getting wealthy is by creating multiple, alternative sources of income. Irrespective of your primary earning source, create at least a couple of alternative sources. For e.g., the older generation often can be seen to have multiple income sources like pension, interest from bank FDs /PPF and rental income, to sustain themselves. If you are in business, diversifying and having small exposures to different businesses can help. If you are a professional, things like consultancy, teaching, etc can be explored. If you are an employee, you may explore training, consultancy, any permitted side-business, being an investor in good businesses of those around you, and so on. This is one major change you can undertake this year.
Emotions and money are a bad combination, never to be mixed together. We are familiar with different emotions like greed, hope, fear which can potentially negatively influence your decision-making. In addition, we are also susceptible to behavioural biases, either consciously or subconsciously. As investors, these are the things to work upon this year.
It is only when we fully experience life without restrictions that we can expand our horizons and be happy. Unfortunately, we keep doubting ourselves and those around us for many things. It is one thing to try and fail to achieve our dreams and another thing to never try at all. True failure can only happen when we give up. We should be ready to accept failures as stepping stones and learning opportunities on the way to realise our dreams. You can only grow and become more capable, learning from mistakes and failures. Be realistic of your capabilities but never doubt and stop yourself.
Finally, your happiness, your image, your personality, is your responsibility. Take positive actions to better yourself and also better present yourself. Invest in yourself, either by way of experiences, learnings, connections, dressing /grooming and so on. While you may be doing all things necessary for those around you, also take out time to unwind, relax and enjoy so that you stay recharged and don't drain out. Strive to have a good work-life balance too.
The ten points shared here are not like any other new year resolutions. Each of the points mentioned above deserves your thinking time and consideration. A few may seem vague, too broad-based but only when you go deeper and identify specific actions to address the same, can you see the potential benefits it can have on your life.
NJ E-wealth
MAJOR REASONS FOR INSURANCE CLAIM REJECTIONS
MAJOR REASONS FOR INSURANCE CLAIM REJECTIONS
Imagine that you have just suffered from a serious ailment. You are looking at spending lakhs on your hospitalisation and treatment. At the hospital, you make the application for the cashless claim. To your dismay, your claim application is rejected. Now you are stranded and are wondering how to arrange for the hospitalisation.
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Whenever you are entering into an insurance policy, you are required to share complete and accurate details as required by the insurers. Your claim is likely to get rejected if the insurer has reasons to believe that you did not disclose full material information and this information is related to the cause of the claim.
An insurance policy is based on the principle of utmost good faith and the insurer relies on the information shared by you. Information related to age, occupation, income, medical history, lifestyle habits, smoking & drinking is primarily required to be disclosed. It is also important that you disclose existing insurance policies taken for similar cover. People often are tempted to disclose false information or hide a few facts so that the premium is lowered or there is no issue in policy issuance. This is a dangerous gamble and can come back to haunt you at your worst moment. The best way to avoid this situation is to disclose all information and ensure that the data is true to the word.
If you have not renewed your policies timely or the premiums are not paid on time, the policy runs the risk of lapsing. Most insurance companies provide a grace period to policyholders to pay the premium amount in the specified time frame due to any reason. The policy will stand lapse if the policyholders fail to pay the premium even after the grace period. Premium payment before the due date is the best way to ensure that we do not run the risk of an event happening post due date and then the claim getting rejected. Claims are paid out only for active insurance policies. Although companies remind policyholders to pay premiums regularly via messages & texts, it is always a good practice to set personal reminders for premium payment & continuation of policy.
There is a finerprint to every insurance policy. The policy document covers the terms of insurance in detail wherein you can find information like the insurance person/asset, policy limits, responsibilities of the parties, risks covered, along with exclusions & risks not covered. Insurance companies also apply the principle of proximate cause to find out the closest reason or cause for the event, in case of multiple causes, and check if this was covered under the policy. Every insurance provider states certain conditions under which claims get rejected. An example is term insurance, where death due to suicide, drug overdose, and so on are generally not included in the policy coverage and are bound to be rejected by the company. Similarly, several diseases are capped or not included in the policy coverage of most health plans. Most policies also have a waiting period for certain risks to be covered. To ensure that you have maximum coverage of risks, including those specifically excluded in your base policy, you may explore adding riders to the base policy for that extra peace of mind.
The insurance companies give a reasonable time to file a claim. Claims getting rejected due to delayed filing are rare these days, but it can happen if the delay is beyond the specified period. Although, IRDAI has directed insurance companies not to reject claims citing delays with genuine reasons. However, it is better to not take chances.
As is expected, one is required to take reasonable care and take steps to minimise the chances of any event happening. One cannot be irresponsible or negligent just because you have insured the subject matter. A claim might be rejected if the insurer feels that you did not take due care and acted irresponsibly ultimately leading to the loss /happening of the event. An example is you leaving valuables on display in your car or your mobile phone on the bus, your insurer might see this as a reason to contest your claim.
Insurance is a contract that is based on certain principles which have to be upheld for the proper functioning of the contract. Claims are often rejected if any of these principles are compromised. Hence, it would be our own responsibility to make sure that we are well aware of the risks covered and not covered in the policy and that we disclose all material information asked in the proposal form. Ideally, the proposal form must never be filled by the insurance agent as he/she may not be aware of the information asked. Take your time and do not rush through things to avoid nasty surprises later.
At an industry level, IRDAI requires that the insurance providers share detailed information related to claim rejections and specify the reason for rejection. Insurers are required to establish clear-cut procedures to let policyholders get clear and transparent communication at various stages of claim processing. Today, claim processes of insurers are more efficient than ever and insurers are also taking reasonable care that fake and fraudulent claims are rejected. Genuine claims only make policies cheaper for everyone.
Thankfully, claim rejections are rare these days. There are multiple reasons behind this like regulatory oversight, growing awareness, competition, improvement in quality of insurance agents and simplification & streamlining of claim processes. The high claim settlement ratios of insurance companies are evidence that insurance companies do not wish to reject genuine claims unless you give them the reason to. If you have deliberately done something wrong in the past for an existing policy, we would suggest that you have a word with your insurance advisor.
loans

ANSWER: A LAS closure letter (NOC) is a letter that can be issued to clients only if the loan amount is fully paid by the client. It is a kind of proof that the client has fully paid the loan amount and there is no overdue left to be paid.

To get the NOC, Partners/Clients may raise a request from their respective desk:

E-wealth Desk >> Help & Supports >> Send query [Query Type: Loan against security(LAS) related >> Query Subtype: LAS closure letter (NOC) required].

We shall provide the NOC within 1 working day.

Partner desk >> Client Services >> Customer Care >> Send query (select same details as above)
ANSWER: For now, the Partner cannot initiate the loan process on the customer's behalf.

ANSWER: From the EMI Calculator available on the E-wealth Desk, clients can check the EMI, processing fees and documentation charges and the total amount to be paid at the end of the tenure.

Module Path: Login to E-wealth account >> Transact >> Loans >> EMI Calculator.

Fund Manager INTERVIEW
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Mr. Dhawal Dalal CIO - Fixed Income, Edelweiss Asset Management Limited
Mr. Dhawal Dala has over 20 years of experience and an MBA from Dallas University (USA). He has joined Edelweiss Asset Management Limited in the year 2016.
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Kotak Deepak Amrutlal (ARN-127784)
AMFI REGISTERED MUTUAL FUND DISTRIBUTOR

Deepak A Kotak
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  • Mutual Fund:Debt / Equity / ELSS

"We have taken due care and caution in compilation of this E Newsletter.Certain products and services offered may not be traded on exchange. All disputes with respect to the distribution activity, would not have access to the Exchange Investor Redressal Forum or Arbitration mechanism. The information has been obtained from various reliable sources. However, it does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions of the results obtained from the use of such information.In accordance with the applicable laws, we are permitted to only render incidental advice with respect to mutual fund products only to its mutual fund distribution client. For every other purpose, including distribution of non-mutual fund products, this material is for informational purposes only. Investors should seek proper financial advice regarding the appropriateness of investing in any of the schemes stated, discussed or recommended in this newsletter and should realise that the statements regarding future prospects may or may not realise. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance is for indicative purposes only and is not necessarily a guide to the future performance."

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