Is Insurance Really An Investment? The Answer Will Shock You! 🤯
Hello,
How have you been? This week has been hectic, tiring and hard for me! The effects of Union Budget 2023 still seem to be in play as insurance companies have begun facing the repercussions of the proposal to tax income received from Life Insurance policies. This is expected to take a positive effect on Mutual Funds given that insurance policies were thus far sold packaged and pushed as an add-on to an investment yielding premiums. But, you tell me!
That said, here are our top picks for Multicap and Arbitrage Funds so you can research further and start investing. Take a quick look for a head start, read up more about each of these and choose wisely keeping all the risks involved in mind!
* These are our top picks based on performance as of 31st January 2023 ** Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus.***All the returns mentioned are for regular growth plans
Anyway, let's take a step back, and look at the week that was…
Market ka haal: The stock market seems to have stabilized quite well compared to the crazy volatility we saw last week and it looks like we’re up for a steady recovery, so, yay!
Meanwhile, the world's largest stock investor, Norway's sovereign wealth fund, said on Thursday it had sold its stake in Adani Group worth around $200 million. While there is still no clarity on allegations against the Adani Group, the AEL stock seems to be intermittently recovering.
What I was up to: With Niyati being away for her maternity break I am missing her a little too much and it’s safe to say I’m just a wee bit short of going crazy :P However, on the upside, our long-term dream finally materialised as we released our first podcast and it was such a rewarding experience for us. Check it out here and subscribe to our channel if you haven’t already:
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Humara Gyaan: We all grew up in a time when our parents purchased Life Insurance as a measure to secure their future. They had to pay a certain amount as a premium for a pre-fixed number of years and once the vesting period was over they kept getting a fixed amount of money back, along with a Life Insurance cover.
But is getting that money back really worth it? We did the math and this is how it turned out: Instead of buying those policies, if you bought a term insurance policy with the cover amount of the life insurance and simply invested the difference paid as premiums into a good quality equity fund you could be way better off because the entire premium is not entirely invested.
Insurance premiums consist of three parts:
Expenses including commissions
Mortality Premium
Investment
The amount invested from your premiums merely add up to 8-10% of the entire investment. So we believe insurance & investment have two very different roles to play in your portfolio. Insurance is supposed to protect your family against any potential risk while investments should aid the growth of your portfolio. So, let's not mix the two!
“The single biggest advantage a value investor has is not IQ. It’s patience and waiting!”🤗
Can’t tell you guys this enough but please, please PLEASE start planning your taxes ASAP :)
That’s it for this week, take care!
Sayali ❤️
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