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Journalism of Courage
8216;What should I buy?8217; remains the question topmost in the minds of the investor. Product choice is probably one of the most difficult things to do. A wrong choice will cost big and a right choice could make you a millionaire.
This space has always advocated a need-based approach to individual money, rather than a product-centric approach. But after the risk profiling and the asset allocation is over, there is still the matter of putting that into action by buying products that suit the risk taking ability and asset allocation. We continue to look at what the top wealth managers of India are buying for their clients. Wealth managers would include financial planners and wealth management divisions of banks. To throw up any conflicts of interest, we ask our guests to make a disclosure of tie-ups and other exclusive arrangements with mutual funds and insurance companies.
Surya Bhatia8217;s Top Choice
Delhi-based financial planner Surya Bhatia is Principal Consultant, Access Financial Services. Here is what Bhatia recommends:
A. Insurance
We believe that insurance is, generally, not a financial investment vehicle. Insurance does have a time and place in financial planning to the extent it provides an assurance that the financial plan that is created survives the plan owner, if need be. The objective is to assess insurance coverage required by an individual and then to select the best possible insurance schemes to cover the gap, if any. Having said that, we would pick the following:
Unit Linked should be picked up more from an investment perspective rather than insurance. If we assume the performance of all the schemes at par as all funds are new in the market, the aim should be to look at those plans which are low on costs, that is, initial charges, administration charges, fund charges and so on. Further they should be also offering flexibility in terms of switches, top ups, withdrawals amongst others. We like:
| nbsp; | Top Picks in Unit Linked HDFC Young Star Plan ICICI Prudential Premier Life |
Why We like these due to low costs and high flexibility options
Term Insurance is the purest form of insurance as it provides assurance of your life and is the cheapest form of insurance. This kind of insurance is highly recommended. The criterion for choosing this policy should be the lowest mortality charges, that is, premium charges as there is no other element involved in the product. We like:
This is based on the assumption of a 30-year-old male, insurance cover for 25 years
| nbsp; | Top Picks in Term Insurance Om Kotak- Preferred Term Plan ICICI Prudential 8211; Life Gaurd Term Plan |
Why We find the mortality charge the lowest on these plans
DISCLOSURE: We have tie-up with agents of all major insurance companies
B. Low risk fixed income schemes
With the Section 88 benefit being replaced by Section 80C, the tax breaks are for all income groups and are of even more importance than before.
c. Mutual funds
Equity: Funds are invested in stocks traded in the market. Within an equity fund also, risk factors can be high as well as low.
Debt: These have been trademarked with returns slightly higher than the FDs. However the last one-year plus period has been very volatile and some funds have ended up delivering negative returns.
Cash: Capital protection is highest in this category. They are used for very short duration parking of funds, as the returns are low.
Within each we give a conservative, balanced and aggressive pick:
DISCLOSURE: We are agents for all AMCs.The recommendations are based on our ratings based on both returns and risk along with other factors.
