Money Matters

Continuing our previous article on the policy payment term to be selected, we will continue from the second question that is often asked. “Should I buy insurance till 85-90 years of age, as it guarantees that our nominee will get the sum assured?” As already seen in the Part 1 of the Perfect recipe for Term Insurance , the time value of money plays a major role in calculations of premiums and payouts. Coming straight to the point, let me ask you if an insurance payout by the time you reach 85-90 years of age, enough? Let’s calculate. What you pay v/s what you get? I have compared the plans from Max Life insurance for a 25 Years old non-smoking male. There are 2 plans that I am comparing, one offers insurance till the age of 60 Years and another till the age of 85Years. Shown below are the premiums for both of these. Sum Assured 1,00,00,000 Age (In Years) 25   Plan 1 Plan 2 Cover Till...

One of my friends asked, “Should I Buy term insurance cover till I reach 85 years of age, to get a guaranteed payout?” and another friend asked “Should I opt for limited payment term? It will save me a lot of money.” The answer to both of these questions is ‘Yes, You Should!!’. But it can be so, only if there is no concept of time value of money. Consider the value of money in calculations and you will get an answer that’s opposite to what a simple calculation will denote. To explain this, we have launched a 3 part series of Ingredients to a perfect recipe – Term Insurance, wherein we will analyze all the important things to consider for ensuring you family’s financial security. What is Time Value of money? The price of a material may change in future, these changes may increase or decrease the value of money. This concept of change in value of time is called time value of money. For eg. you may buy sugar for Rs.50/kg today, however, after one year if the cost of sugar increase...

So, how much would you require during retirement? It's difficult to guess and even more so to calculate. Considering the variables and calculations involved, it becomes difficult to arrive at a particular number. So, in this article we will simplify this calculation for you. What Is this All About? Well, we have derived a formula to ease your tension (at least from calculation perspective). That formula is ‘1-30-6’ (Pronounce it as 136).   It says, that in 30 years, your monthly expenses will be an amount equal to your 6 months expenses today, considering current lifestyle is maintained. This rule improvises and builds upon another rule of retirement, the rule of 4%, which says that you should not withdraw more than 4% per annum from your retirement fund. For eg. If you are spending Rs.100/month currently, you should start your retirement panning by assuming that in 30Years you will need Rs.600/month. So, Annual Expense       ...

The Government of India has announced the release dates of  Sovereign Gold Bonds for 2021-2022  (SGB 2021-22). The bonds will be launched in six different series between May to September 2021. So should you invest in these or not?  To start with, what are the different ways of investing in Gold. There are majorly two distinct ways. 1.  Physical  - The majority of us (at least in India) accumulate it in form of jewelry or gold coins. This is mainly done for consumption purpose or even for investment purpose in rural areas where access to banking is still not there, where these jewels are passed on to generations is sold only if all hell breaks loose.   2.  Electronic/Virtual  - Now, there are multiple players in the market and various instruments wherein you can invest in electronic form. If you want to accumulate it, you can choose ETFs, SGB, or electronic gold facility offered through almost all of the wallets nowadays. If you wan...