6 Points to Remember While Buying Health Insurance

No one loves to get ill and spend a lot of money to get cured. In today's time medical expenses are very high and it is rising at 20% annually. A small operation can cost few Lakhs and which can surely impact one's finances. To protect our self from such sudden disasters we all must buy a Health Insurance.

There are many companies offering health insurance schemes. One can search the internet for the same but you will find every health insurance is different, you have to select the one suiting your requirement. Premium varies with the age bracket so figure out your premium and their claim settlement ratio.

One can remember the below six points before taking the health insurance:

a.) One should go with a health insurance which provides the life long renewal. This is an important feature of health insurance. Some insurance companies provide renewal till certain age but we all know that as we grow old, our medical expenses rise. My advice would go with opting an insurance policy which provides a life long renewal.

b.) One can consider the In-house processing in comparison to Third Party Administrators (TPAs).

c.) Some of the insurers might offer discounts for not having the TPA, but you may have to give up other features instead.

d.) If you are internet savvy and can buy insurance online then you can avail discounts offered by some insurers for buying online. By eliminating the agent you save money on premium.

e.) Be utmost serious about making complete disclosure about one self. Insurance companies look out for even the slightest discrepancy to deny the claim.

f.) Mediclaim also cover Pre and Post hospitalization expenses such as, doctors visit, diagnostic test etc.

By following the above points you can surely select the best health insurance which can help you at the time of emergency. I hope you would surely get one which suits you the best. As Buddha said, "Without health life is not life; it is only a state of languor and suffering - an image of death"

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4-Baby Steps Towards the Financial Plan

We earn salary every month which gets accumulated in our saving bank account after spending on household expenses and paying on our loan installments (if any). Sometimes we start keeping money in Fixed Deposit (FD) one after the other; according to many of us this is the best investment option which one should take, unmindful that our principal amount is losing money...A Big Thanks to Inflation!!

Usually during the period of January to March our focus shifts towards tax saving schemes and under guidance of our beloved friends, family member or an agent we buy some worthless life insurance without even evaluating the return which we will get in respect to inflation. And one day when we wake up we realize that our finances are in complete mess and We Start Worrying. But it should not be this way; we all can plan our finances in an efficient manner. Below are the four baby steps which one should take to improve his or her financial life:

a.) Online Term Plan: If you have dependents, you should buy one Term Plan. It will help your family in case you are no more with them. The term plan is far better than the normal life insurance policy which charges high premium with very low return and small amount of life insurance. On the other hand term plan will charge you very low premium and will give you a cover of high amount. It is recommended one should go for term plan with amount around 10 times of his or her salary.

b.) Saving and Investing: By nature, we all are fond of spending. We love spending our hard earned money on trivial items. We love to buy big car, big house, good clothets, good jewellery etc. Why we are not fond of saving and investing the same, life is not sprint its a marathon. We should at least save around 50% of our salary and invest it cleverly so we can earn better return and can multiply our money subsequently.

If one wants to calculate EGO; he should subtract his savings from income. Now your expense in term of percentage with your income is your ego.

c.) Find your own Tax-Bracket: If you are in the 20%+ tax bracket, saving on taxes is critical. Investing Rs. 1.5 lakh every year on Equity Linked Saving Scheme (ELSS) can give you really good returns. There are other tax saving option also available but I would like you to go with ELSS only.

d.) Health Insurance: Own a Health Insurance?? If yes, you did a great job but if you don't possess you should take one immediately. It will help you & your family financially and emotionally at the time of emergency.

The above 4 baby steps are very simple to follow but at least 80% of savers are still not doing this. Don't become one of them.

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Investment Philosphy

Are you thinking of investing in Shares??

Do you know how share market behaves??

Perhaps you have the answers to the above questions; if not and you are starting the equity-investment just because your friends have made their fortune out of it then you should rethink about your decision of investing in equity. May be your friend is putting lot of time in reading, understanding and learning the fundamentals of the share market and then putting his money in. Probably you are not aware about his or her hard work into it. Many of my friends also have started investing after seeing me but I genuinely do not have any idea that how are they doing, what fundamentals are they following etc. I would like to make few points here as to what one should follow before starting investment:

a.)  Know Yourself: First step looks pretty simple but very complicated to implement. You have to ask yourself that what are you expecting from it and how will you achieve it. If you think share market is a gamble then I would certainly suggest don't bet, you will lose your hard earned money. If you are confident that you can earn money with your intelligence from share market then immediately start reading Good Books; they will help you in defining the way of thinking for shares and making you capable enough for understanding the Philosophy of Investment. It will provide you a foundation upon which  you will make your building of wealth.

b.) Work Hard without Emotions: There is no other way to build wealth than to put lot of hard work. As market is full of opportunities & threats as well. To make use of the opportunities you have to keep all the points learnt from section 'a'. If you become emotional with your investment and fall in love with some shares OR reluctant towards some of your shares, you can lose your wealth in either case. Hence you have to keep your eyes wide open to the company's fundamentals, events, news, analysis and market fluctuations too.

c.) Trading OR Investing: If you are thinking that you have to trade every day to make lot of money YOU are 100% wrong. For making the fortune you have to stick with your good investments and have to invest in + monitor them at regular interval. Trading keeps people awake in the night as they have to worry about the next morning therefore Philip A Fisher said, "Conservative Investor Sleep Well".

Lot of people enter into the share market and lose lot of money. Same happened with me initially but I learnt the basics of investing and have been following them only since then. Therefore I strongly suggest people to select a good company after reading their fundamentals and invest in it for at least 3-4 years. Never cross your portfolio above 10 shares. By keeping limited number of good company's help you focus on each of them.

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A book is a dream that you hold in your hand

We all have just landed in the New Year; carrying some of our old dreams which could not be met with and lot of new dreams, new goals & new expectations. We are filled with lot of new energy to accomplish our dreams. The best we can try is to move at least a single step every day towards the fulfillment of our dream. 

'Whenever you read a good book, somewhere in the world a door opens to allow in more light'

–Vera Nazarian

I have thought of taking the small step with opening a door of enlightenment for me with lot of good knowledge so I can implement it in my long term investment strategy and become a value investor. And, I believe this enlightenment can be brought upon by reading quality books. Below is a list of books which I am targeting to read this year:

1. The Intelligent Investor by Benjamin Graham (Re-read)

2. Security Analysis by Benjamin Graham

3. One Up On Wall Street by Peter Lynch

4. Common Stocks And Uncommon Profits by Philip Fisher (Re-read)

5. The Little Book That Builds Wealth by Pat Dorsey

6. Buffett: The Making of an American Capitalist by Roger Lowenstein

7. Value Investing: From Graham To Buffett and Beyond by Bruce Greenwald

8. 100 To 1 In The Stock Markets by Thomas Phelps

9. Poor Charlie's Almanac by Peter Kaufman

10. Accounting For Value by Stephen Penman

11. How To Pick Stocks Like Warren Buffet by Timothy Vick

12. The Five Rules For Successful Stock Investing by Pat Dorsey

13. Conservative Investors Sleep Well by Philip Fisher

14. The Most Important Thing by Howard Marks

15. Thoughtful Investor by Basant Maheshwari

16. Stocks For The Long Run by Jeremy J. Siegel

17. The Essays of Warren Buffett: Lessons for Corporate America Lessons for Corporate America by Lawrence A. Cunningham

So, this is all about my list. Recommend every reader to find his/her interest area, their dreams and books in relation to that field. There is no friend as loyal as a book. A book is your best guide, friend, pathway or whatever you like to call it....but it never leaves your hand.

Someone has very rightly said:

'If one cannot enjoy reading a book over and over again, there is no use in reading it at all'

–Oscar Wilde

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Shining Investment: Gold

Every one likes the shine of Gold. We all love to buy gold or like to invest in gold; specially Indians. Our parents always like to accumulate physical gold whenever they have money so they can use it in their children's marriage; but is that the only way to procure gold. Do they know or gave a thought that there are other ways also available for investment in gold.

In this blog I will explain three different ways by which one can invest in gold:

1.) Physical Gold: Many people like to buy physical gold but I would not recommend this. One can buy physical gold in the form of gold coins, gold bars and gold ornaments. But with some considerations:
a.) The cost of keeping it safe is really high as you have to have a locker in bank to keep it there.
b.) One has to be sure of the quality of the gold (Purity).
c.) There are making charges also which people eliminate from the costing of gold very often.
Therefore there is additional cost associated with the physical gold which we should remember. As in my view, from the investment perspective you should look forward to the other two options described below.

2.) Gold Mutual Funds: This is a better way to invest in gold than buying a physical gold. By this way one can invest even a small amount say Rs. 500 per month in gold and can accumulate big sum in long time like 10-20 years for their future purpose. When the gold is required in physical form one can go for the fund's conversion into hard cash and can buy the physical gold (this saves your procurement and safety cost). One can buy Gold Mutual Fund by opening an account with mutual fund companies which offer these schemes in electronic form.

3.) Gold Exchange Traded Funds (ETF): One can buy Gold ETF through his demat account. So, it removes the worry of theft. One can buy an amount of Gold as low as 1 gram and in multiple of 1 gram. These are valued every day on the gold rate of market. Normally people who want to trade in gold would like to go for this option.

I hope you all can clearly understand the other two ways are very simple and much better way of investing in gold. You can set up Systematic Investment Plan (SIP) for Gold Mutual Fund, so you can regularly accumulate gold for future purpose.

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Evil: Credit Card Or Our Habit

Now a days banks put lot of efforts on getting clients for their Credit Card Services. Every time you visit a super market or a mall you may encounter credit card sales man, who keeps telling you about the benefits of credit card. But 90% of the times we keep ourselves distant from them because we hear lot of negative thing about credit card.

In my view, credit card is a great tool to save money. Credit cards come in various types and each type is meant for/suits to a particular set of individuals. A person can go for a type of credit card as per his requirement not just for sake of having one. You can easily find 2-3 credit cards which will be suitable to your need. Many people believe that credit card are curse and no one should go for it but I personally am a great fan of credit cards because it helps me in saving the money; in fact many a times I get Cash-Back on my regular expenses by using it.

Let me explain what points you should remember whence using credit card which makes it using effectively:

1. Wisely select a credit card: Every one should do a comprehensive research and analysis before deciding on the credit card. Before taking the card, you should carefully analyze certain factors such as: credit card fees, interest rates and other incentive features. You can go for 2 credit cards so that in case of emergency you can use the other one too.

2. Stay within 30% of your credit limit: There will be 2 benefits of it:
a.) You will always use credit card in limit and it will save you from over spending on nonsensical things so that you do not go in debt of the bank. By this way you can easily manage your credit cards.
b.) It will help you improve your credit score for future loan services requirement etc.

3. Track credit card expenses: Normally people do not track credit card expenses on per transaction basis and just like to see the bill when it generates. Many a times people get shocked by seeing the bill amount and curse the credit card for the same. But it is basically our mistake of over spending. Credit card is not meant for spending on whatever you wish to have. Its meant for spending cleverly on the things which are urgent and important. By tracking the expenses you can always keep yourself in limit.

4. Be Skeptical: We should always check our bills the moment it is generated. If you find a transaction that is never made by you; you must immediately inform your lender as soon as it comes to your notice. This way you will exceed your credit card limit without even knowing it and will also have to bear the pain of heavy interest and other charges. A lender can remove the fraudulent transactions and can lock the card instantly to prevent further misuse.

5. Pay the entire Bill, Every Month: The motive behind is to pay off the balance every month. There’s really no middle ground here. In case you do not pay the full bill every month then you have to face huge interest charges on the same and then it can probably become your habit of not paying full amount. You have to have the self-discipline to stop spending when you reach your budgeted limit i.e., 30% of your credit card limit.

6. Using Rewards: After paying regularly via credit card you accumulate the points on credit card, probably the points will be very less in compare to the amount spend. But at least you are getting something in place of nothing as in case of cash payment we get nothing in return.
I am a big fan of the other benefit of credit card which is cash back offers. I always look for the cash back offers before buying or purchasing anything so at least i can save something and in many cases I save handsome amount of money.

It is a well known saying that everything can not be everyone's cup of tea. Do not use credit cards if your past history suggests that your spending exceed your limit. And give yourself a pat on the back for accepting it honestly. The people who are the most successful at managing their money are the ones who know their strengths and weaknesses and make decisions accordingly.

Hopefully now you can understand the credit card is not curse if one uses it in fruitful way. Credit card is not evil, its our habit which makes it evil. So, use it in effective way and keep in mind the above points.

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Rich or Wealthy: Your Choice; Your Action!!

Many people normally think that "Being Rich" and "Being Wealthy" are the same things as both involve having a lot of money. But, there is a big difference between the two. We normally hear about ‘Get-Rich-Quick’ schemes but not about ‘Get-Wealthy-Quick’ schemes. 

Knowledge is the key differentiator between being rich and being wealthy. Rich people only have money but wealthy people know how to make money.  Rich people, may get money in an instant via hierarchy or winning a lottery. However, because of lack of proper mindset and poor money management skills, all of it can be lost in a short period of time. Many people make a lot of money, but all their money goes out of their expense column. Every time they make a little more money, they go for shopping. They often buy a bigger house or a new car, which results in long-term debt and more hard work. Nothing is left to go into the asset column. This kind of behavior that separates the rich from the wealthy.  Some of these people are more commonly known as ‘One Day Millionaires’. Now they have it, the next time they don’t.

Rich people are motivated by money but wealthy people are motivated by their dreams, purpose and passion. Most rich people make a lot of money with their paychecks but the moment they stop working, they stop making money also. The wealthy, on the other hand, don’t have these worries.

The Definition of Wealth

'The number of days you can survive without physically working (or anyone in your household physically working) and still maintain your standard of living.'

For example, if your monthly expenses are INR 20,000 and you have INR 1,00,000 in savings, your wealth is approximately five months or 150 days.

'Wealth is measured in time, not rupee.'

Wealthy and rich people both may experience downfalls and failures in their life span. However, because of knowledge the wealthy person can start all over again and build wealth over time. In contrast, rich people may find it hard to attain what they previously had. In essence, wealthy people are financially free while rich people are not. 

Ultimately, it’s not how much money you make that matters but how much money you keep—and how long that money works for you.

Therefore, Wealthy people say - ''I don’t work for my money. It works for me''.

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