Monday, February 12, 2018

How Futures and Options Help you build your Portfolio

investment options
Investment in derivative instruments such as futures and options is widely considered as a risky affair. While derivative instruments do carry a high risk, they can also be used to reduce risks with proper planning and analysis. Unlike equity investments, futures and options don’t require a very high amount of capital investment. You will require just a fraction of the value of stock market investments. The value of derivatives is derived from the future prospect of the underlying indices or stocks. For e.g.when you invest in futures and options, you are making a future promise to buy or sell a particular number of shares of a company at a predetermined price and date. Many traders choose to invest in f & o, as the return on investment is really high. Here’s how futures and options help you build your portfolio:-

Leverage

Both futures and options have become an attractive investment due to high leverage. Leverage is a measurement of the value of an investment relative to the money required to buy or sell the investment. Hence, an investor only needs to put up a fraction of the value of a particular asset when he wants to buy it. This, in turn, leads to high leverage. Generally, a futures and options can be sold or bought within 2% to 20% margin of the actual value of the contract.

Opportunity

An investor can choose from a wide range of futures and options instruments which includes agricultural commodities such as soybeans and wheat, precious metals such as silver and gold as well as foreign currencies such as Canadian dollar and Deutschemark, energy products like crude oil and natural gas, soft commodities like coffee and sugar and much more. Given the wide number of options in the market, an investor is bound to good trading opportunities at any time.

Diversification

Another important factor that makes futures and options investments appealing is diversification. They can provide a high degree of diversification to an investor’s portfolio than traditional financial assets such as stock and bonds. A diversified portfolio on account of options trading will provide returns which are very similar to the performance of the entire market.
  
Liquidity

Liquidity is the measure of the ease of transactions in the market. Futures and options offer very high liquidity to the investor. There are several futures market that can be even more liquid than cash. Sometimes the prices in the futures market are so liquid that the prices of the futures become the industry benchmark.

Sunday, February 11, 2018

How to Claim Health Insurance from Multiple Companies

health care investments
Mr. Narendra Gupta had to undergo an emergency hospitalization. He was convinced that the health coverage he purchased several years ago would suffice the cost of his treatment. He was in for a rude shock when the hospital bill amounted to INR 2.25 lakh. Since his mediclaim policy offered coverage of INR 1.5 lakh, Mr. Gupta had to pay the excess cost.

Had he invested in two plans, he would have enjoyed the benefit of a higher coverage. He could have claimed the balance amount from the second policy, thus eliminating any financial burden.

Given that medical inflation is on the rise, a single health insurance plan often falls short. For this purpose, financial advisors advise individuals to invest in more than a single health policy. Following are three major benefits of purchasing multiple policies.

1. Higher coverage

A major benefit of purchasing multiple health insurance policies is that you will receive a higher coverage. In case your hospitalization bills exceed the sum assured amount of your first insurer, you may seek the balanced amount from the other insurance plan.

2. Hedge against rejection of claims

In case a particular insurance provider rejects your claim application due to whatsoever reasons, you may have to make out-of-pocket expenses. Purchasing a second policy acts as a hedge in such a situation when one insurer rejects your claim.

3. Greater tax benefits

Section 80D of the Income Tax Act, 1961 offers tax benefit on health insurance premiums paid towards your medical insurance plans. By purchasing multiple health plans, you may seek a greater deduction, thus reducing your tax liability to a higher extent. However, it is important to note that you may claim a maximum of INR 25,000 on your mediclaim premiums, while senior citizens may avail of a higher limit of INR 50,000 as per the latest Union Budget.

Procedure to claim from multiple insurance companies

Earlier, the Insurance Regulatory and Development Authority of India (IRDA) had a contribution clause that required insurers to settle the claim in the ratio of the sum assured under the policies. This means in case you have taken two policies of INR 1 lakh and INR 4 lakh, and your medical expenses amount to INR 1 lakh, then both insurers will settle the claim in the ratio1:4. Hence, the first insurer will pay INR 25,000, while the other will pay INR 75,000.

However, IRDA’s health insurance regulations of 2013 did away with the contribution clause. Now, the policyholder may choose the insurer. In case the sum assured is lesser than the claim, the insured is entitled to claim the balance from the second health insurance policy.

Toclaim your hospital bills, you may following either of the two following methods:

1. Cashless claim

In order to avail of a cashless claim through two insurers, you may first make a claim through a single insurer. Thereafter, you may seek the claims settlement summary from them and request them to give you the attested copies of all the medical bills. Post this, you may seek reimbursement of the remaining amount from the second health insurance company.

Alternatively, you may fill the authorization forms of both the insurance providers. The hospital will send out these forms to both the insurers and the bills will be settled between the hospital and the insurance providers.

2. Reimbursement claim

In such a scenario, you will have to pay all the expenses incurred towards your hospital bills. Later, you may seek a reimbursement of the medical expenses. Submit all the original bills to the first insurance provider, stating the amount you wish for them to pay. Once this claim amount has been settled, you may seek a claims settlement summary as well as copies of all the bills. The hospital will attest these copies. You may then forward the same to the second insurance provider for getting the remaining reimbursement from them.

Having multiple health insurance policies is indeed a boon in this time of rising medical inflation. Therefore, you may invest in more than one policy and secure your financial well-being in case a medical contingency were to occur.

Saturday, February 10, 2018

Aegon Life iTerm Yields Coverage for 100 Years - Find Out More

insure your life
A term life insurance policy plays a crucial role towards meeting some of the primary financial objectives of a family. The concept of developing term life plans focuses on supporting an individual or his family in the event of his permanent or partial disability besides covering the risk of an accidental death. In the event of a policy holder's death, a death benefit worth a lump sum is to be offered to the claimant or beneficiaries of any term life insurance policy.

Does Age Leave an Impact on the Term Life Insurance?

It’s truly beneficial for an individual to achieve term life coverage at an early age. You’ll need to pay premiums at an affordable rate for availing high coverage and tax benefits. Moreover, if something were to happen to you, your family will be take care after you. So, get yourself covered the sooner you start earning.

Is it Worth Picking Term Life Insurance Plans forOver 100 Years Coverage?

The insured person may achieve whole life coverage benefits under his term life plan if he intends on shopping for a wide array of such policies in the insurance market. Under most circumstances, the policy holder is likely to be covered for under 100 years. Keeping this idea in mind, Aegon Life now offers life cover up to 100 years thanks to iTerm Plan. With iTerm, a policyholder can secure the financial future of his/her family till the age of 100 years by paying a monthly or annual premium route. Most term policies provide cover for up to 75 years, but with Aegon Life iTerm you can insure your family’s future for long term.

How to Achieve Term Insurancefor Individuals up to 100 Years?

All term life plans can be compared and their costs determined with the help of any term insurance premium calculator that you find online. You'll need to compare a few good plans to find a term life policy that fits in with your requirement and budget. It's in your best interest to choose a plan that covers you for 100 years, like iTerm. You're bound to feel more confident once you're aware of the salient features of a term life policy and know how much you can save.

Check out few of the salient features of Aegon Life iTerm Plan:

1. iTerm insurance yields considerable flexibility by enabling you to increase life cover as your family grows
2. iTerm plan offers 25% of death benefit on diagnosis of terminal illnessfor no future premiums. 
3. Policyholders are entitled to receive tax benefits on their paid-up premium under section 10(10D) and 80C of the Indian Income Tax Act.
4. Under iTerm, a policyholder can opt for additional cover against accidents, critical illnesses, and disability for a nominal charge
5. iTerm allows you to choose your pay out option: lump-sum payment or fixed monthly payment for 100 months or a combination of both

Saturday, January 20, 2018

"Fender" Way To Buy Your Car: Your Options If You Can't Afford A Car Outright

car money
We all know that, in the modern world, buying a car is pretty much a necessity for all of us. But going about buying one isn't easy. There are various options to consider, you can buy a car outright, you could lease a car, or you could scour the personal ads in the hope that something fantastic and cheap will arise. It's important for you to understand the best options, and what are these?

Using A Personal Loan

If your credit rating is good, you can get a decent loan from any bank or finance provider. The great thing about this is that you can spread the cost over many years, usually between 1 and 7. When picking a loan, it's always best to make sure that it's not secured against your home or other collateral. The great thing about a personal loan is that it's usually the cheapest alternative. The issue of a personal loan is that it could affect other borrowings, and there could be a wait for the funds to go into your bank account. So if you found a car you need to buy right away, such as an ex-demo model, this could be frustrating. However, some lenders put the funds into your account immediately.

Credit Card

If your credit rating is good enough, and you've got enough of a balance on your card, you can use your credit card to purchase the car. Some of the benefits of doing it this way include extra protection should something go wrong. This is on condition that you meet your monthly car payments. But, as with most credit cards, there will be a charge and can be up to 3%. Some dealers don't accept credit cards at all, which can be very annoying, so it's much better for you to ask at the outset if you have this intention.

Hire Purchase

A considerably popular way right now. Hire purchase is buying the car on finance. The loan is secured against the car itself, you then need to pay a deposit of approximately 10%, and then make monthly payments for the fixed amount. So the benefits in this are that you can shop around and get some really competitive interest rates, the deposit is low, and it can be done really quickly. The other benefit in this is that you are able to pick a higher spec of car, so if you are looking for a car like a Subaru XV or something that packs a bit more punch for your money, then it's more feasible than buying an old banger second hand. When negotiating this, it's better for you to go for a long-term agreements, up to 60 months is doable, but if you need a short-term agreement for personal reasons, this can be more expensive.

Personal Contract Purchase

A PCP is similar to hire purchase, but with the one notable difference that you make lower monthly payments. Beware with this, as the total amount of money you will pay is usually higher than hire purchase. And instead of getting a loan for the cost of the car, you will get a loan for the difference between the cost as it is at the outset and what the determined value will be at the end of the hire agreement. But, at the end of the payments, you can trade in the car, either for a newer model or something completely different, or hand the car back to the dealer. Your other option is to pay a larger final payment, which is known as a balloon payment, and keep the car outright. Beware of this as the general wear and tear of the car can incur extra fees. Also, if you exceed the determined mileage, this could put you out of pocket.

Peer To Peer Loans

This isn't something you hear about much when it comes to buying a new car. But peer-to-peer loans, allows people to borrow from other people, as opposed to banks or financial institutions. While on the surface this sounds ideal, you still need a good credit score to get a decent interest rate. And, much like a personal loan, if you miss any payments, your credit score will be affected. The best approach is to get your credit score as high as possible so you can negotiate the best interest rate for your money. But, it's advisable to do your research with this, and there's lots of information about peer to peer loans online. There are various websites to give you the information you need, such as this one, but it's important to keep your eye on the interest rates. Sometimes a personal loan will be a better option for you.

Cash Or Savings

Some people choose to save outright for the cost of their car, which can take a long time! Paying with cash is the cheapest way to get any car because you don't need to pay interest, or sign up for any financial agreement. If you do choose to go down this route, it's important to remember that you need more than the cost of your car, ideally 10% more. You need to make sure that there's enough left over in case an emergency arises. But if you don't have enough money to pay the car in full, you can still put down a big deposit, which means your monthly repayments will be lower if you choose to go down the higher purchase agreement route. Or, you can combine your savings, with a credit card payment, and then not only have you been able to pay for the car outright, if something goes wrong with the car, the credit card company is also equally liable with the retailer. This is a little bit more peace of mind!

A car is the second biggest purchase you will make in your entire life after a house. And as it's something you rely on as much as your house, you need to make sure that you get the best bang for your buck. Your financial options aren't always obvious, but these are what you can do if you are unable to afford your car outright.

Wednesday, January 17, 2018

Private Mortgages: An Investment Idea Whose Time Has Come

home mortgage money
It seems like the stock market is on steroids, every day comes the announcement of a record close and many are wondering if share prices will ever go done.  In fact, it is has gotten so frothy (a word which is used in Reuter’s 2018 global projection) that even bullish hedge fund investors begrudgingly parking their money in equities.

Even with all the good news, a growing number of market watchers are beginning to voice concern.  Not only are interest rates starting to rise, but bond yields are dangerously close to an inflection point, and the U.S. Dollar appears to be in an inextricable slide.  However, the market keeps going up and for many times are good.

While there is no doubt the stock market is on an unbelievable run, a hallmark of prudent investment is what is known as asset diversification.  This is concept of spreading your investment across several asset classes – think of the adage of not putting all your eggs in one basket.

As such, it makes sense to look at other investment avenues as a hedge against potential risks in other asset classes.  This is not to say that you shouldn’t enjoy the run-up in equity prices, or that you should invest in assets classes that won’t yield a return.  Instead, the concept to guard against risk – this could include investments in real estate, bonds, gold, or even private mortgages.

That’s right, you can invest in private mortgages.  These are not the infamous ‘subprime’ mortgages from the days of the housing bubble, these are mortgages which are usually offered by sellers to help close a real estate transaction.  If you have heard of private mortgages, then read on this is an investment idea whose time has come.

Why Private Mortgages?

Despite the excesses of a decade ago, real estate remains one of the most secure investment classes around.  The reasons are that prices in most areas tend to appreciate over the long-run.  As such, the question for most investors is how they will enter the market – maybe it’s via acquiring properties directly, or buying shares in a REIT, or a mortgage fund, or the mortgages themselves.

In fact, there are plenty of investors who are looking for people who are selling a mortgage note or two. The idea is simple, mortgage holders (usually seller or private lenders) have well-performing mortgages which they are looking to sell at a slight discount of the future receivables and there are buyers who bundle these assets into larger offerings on the public market.

The lure of private mortgages is that they offer a steady revenue stream without the hassles of property ownership.  Another plus is that these notes are tangible securities which are easy enforce and transfer.  This makes private mortgages a sought-after investment class and managed correctly, they can offer significantly higher yields compared to broader debt investment options.

What Are the Advantages?

There are several plusses to private mortgages including no cost to the investor, monthly income, and protection.   In terms of the cost, sure the investor will need to front the capital for the mortgage but the borrower is the one who must pay to register the note against the title.  As such, the capital requirement is limited to the investor’s share of the overall note.

Beyond this, private mortgages private a monthly revenue stream – one which pays much of the return upfront.  This is compared to other investments, even bonds, which may take months or years to mature.  It is this almost instantaneous payback is one reason why some investors chose to park some of the money in private mortgages.

Lastly, the capital is protected.  This is compared to many other investments which are largely at the whims of the market.  In the case of private mortgages, and assuming the lender has performed proper due diligence, the risk of a loss is relatively low. 

Now, this does not mean that some private mortgage lenders have not made bad loans in the past.  But if proper controls are put in place - such as reliance on credit checks and limiting the loan-to-value ratios – then these investments can be relatively safe.

How to Invest in Private Mortgages?

In general, there are three ways to invest in private mortgages.  First, you can invest in a Mortgage Investment Corporation (MIC).  This is like investing in private equity and while the returns are slightly lower than direct investing, so are the risks as part of the MIC’s value proposition is their experience in assessing loan opportunities.

Another way to invest in private mortgages is through what is known as participatory mortgages.  This is when several investors create a pool to help write one or more loans.  This is a great way to share the risk and the reward.

Finally, investors can finance mortgages on a one-on-one basis.  However, this sort of investment is best suited for those with experience in mortgage underwriting to make sure they are properly pricing the loan and by extension maximizing their return.

Monday, January 15, 2018

Buying Gold Online: 5 Practical Tips to Avoid Scams

gold investments
Gold is considered as one of the most reliable and stable investments when compared to other investments. Therefore, many investors prefer to invest their hard earned money in gold bars or coins. Modern advancements in technology have made it easier for investors to buy and sell gold. They can get in touch with online retailers to purchase precious metals.

However, online trading means that scam artists are more likely to try taking hold of your investment. You must be extremely careful when buying gold online in Australia in order to preserve your investment. Here are some useful tips that’ll help you keep scammers away:

1. Research the Dealer

Not everyone who claims to be a gold dealer can be trusted. You should carry out some research on your own to know your dealer. Always go for a dealer with good reputation. Check their professional website to know how many years of experience they possess. A reliable dealer is always willing to communicate with you via email or phone call to answer your concerns.

Social media can also help you determine the credibility of a gold dealer. If the dealer has a professional account on a social website, you can look for customer reviews. If they have a history of many satisfied clients, there is no harm in doing business with them.

1. Hold the Deal

Don’t be in a hurry to make a decision when it comes to buying or selling gold. Take your time. If you find it difficult to choose the right deal, you can ask the gold salesperson. Well-reputed gold dealers won’t hesitate to answer your queries. On the other hand, scammers try to convince buyers into carrying out a deal without any delay.

2. Research the Coins before Purchasing

If you want to buy gold coins, you should ask online dealers to provide relevant information. Legitimate gold sellers know the value of coins and often prepare material to guide customers about the history and value of the coins. If the gold coins are rare, you should look for their current market value and why they’re so special for coin collectors.

3. Ask Their Buy-Back Policy

At some point in life, you may want to sell off your gold. It’s best to ask the dealer about their buy-back policy beforehand. It’ll ensure you won’t face any problems down the road. Gold dealers know the actual worth of your investment and won’t hesitate in buying back gold they have sold you. However, if they seem to be reluctant in informing you about their buy-back policy, chances are you may be dealing with a scammer.

4. Get Gold in Hand

Never make full payment before you receive gold in hand. Scammers tend to make false promises that you’ll receive gold only after clearing the payment. However, you need to play your cards right to stay safe.

All in all, investing in gold can benefit you in the long run. However, if you aren’t careful in choosing an online gold dealer, you may end up losing your savings to a scammer.